Cetera conducts an internal audit inspection of all branch locations on at least a three-year cycle. A more frequent cycle (one or two years) will be employed for those locations that are identified as requiring more frequent inspections.
Here are some tips to prepare for the audit and help your audit go more smoothly:
Audit Preparation Tips:
- Confirm your and your staff’s email signature blocks, letterhead, fax cover sheet, business cards, website, and static LinkedIn profiles all have current Ad Review approval.
- If your LinkedIn profile is more than just a “static” profile, (including posting content, liking others' content, or commenting on other posts) it needs to be linked to Cetera’s Social Media Tool.
- Note: we have noticed that some LinkedIn profiles get removed from the Social Media Tool - often with no notification to you. Be sure to check that it is actively linked to the Social Media Tool. You may need to “re-link it. Contact the Network Compliance team if you have questions.
- Confirm all computers have full disc encryption and meet the firm’s requirements.
- Look at your SEC Books & Records in Smartworks and clear out any missing or incomplete registrations. (We have noticed this as a common audit finding lately).
- Listen to your voicemail message and confirm it meets the firm’s standards. We recommend listening to the message during office hours as well as after office hours, just in case it is different.
- Review your Outside Business Activities on Brokercheck for accuracy and correct as needed.
- Review the personal securities accounts listed for yourself in the ECM tool in Adviceworks for accuracy and correct as needed.
- Confirm your Pinpoint checks, correspondence, and gift logs have all been submitted (including attestations for months when you had none).
- Any non-registered staff should confirm their quarterly Pinpoint gift logs have been submitted or attested to having none.
- Do you share office space with any non-affiliated persons? If so, make sure you have an approved Office-Sharing Request form CET 702 on file.
Top Audit Findings:
- Missing current Ad Review approval for items in use. (website listings, email signatures, fax cover sheet, letterhead, business cards, brochures).
- If it has been more than 2 years since your email signature block has been approved, we recommend you send it in for a fresh approval.
- Missing Form CRS delivery documentation. Reminder: Form CRS must be delivered separate and apart from account opening paperwork. Relying on the Form CRS that is part of the AIF is not sufficient. Relying on the Form CRS that is included with Adviceworks Docusign is not sufficient.
- Form CRS must be delivered when opening a new account, doing a rollover from an employer-sponsored plan, adding margin, or adding options.
- Forgetting to deliver a form CRS for a rollover to an existing account is a common audit finding.
- Missing IRA to IRA Transfer Disclosure documentation delivery. Reminder: The IRA to IRA Transfer Disclosure must be delivered to clients via email when recommending an IRA to IRA transfer. If delivered other than via email, the IRA to IRA Transfer Disclosure form must be uploaded as Outgoing Correspondence in Pinpoint.
- Disclosure forms are missing, incomplete, or inaccurate. Examples: 529 Disclosure, Annuity Transaction Worksheet, etc.
- Late Pinpoint attestations for Correspondence, or Checks/Securities, or Gift Logs. These should be completed by the 15th of the following month. For example, May 2026 logs should be entered into Pinpoint, or attested to none, by June 15, 2026. The 2Q 2026 Gift Log should be entered into Pinpoint, or attested to none, by July 15, 2026.
- Missing BIC Rollover reports. The auditors run reports looking for incoming rollover deposits, and then look for the BIC Rollover report. The rollover reports should be completed at or prior to the rollover recommendation. BIC Rollover reports completed after the rollover is received is considered late and is a common finding.
- Missing the BIC Switch report
- Inaccurate Annuity Transaction Worksheets
- Missing AIF form and/or missing or incomplete registration information in Smartworks/Adviceworks.
- The liquid net worth listed in the account registration appears inaccurate when compared to transactions and other client holdings.
- BIC Investment Recommendation report- missing for purchases of mutual funds, UITs, ETFs, or annuities in a commission-based account.
- Missing or incomplete/inaccurate check blotters. Missing copies of checks or copies of shipping labels when the check was sent outside of Mobile Deposit.
- Missing annual client contact for advisory accounts in Pinpoint
- OBAs had not been disclosed to the broker dealer. Common OBAs that are missed are notary and rental income.
- Computer did not have evidence of whole disc encryption
- Static Linked In profile missing a current Ad Review approval
- Voicemail message missing instructions not to leave trade requests or missing Cetera BD disclosure.
- Not encrypting emails that contain sensitive information such as the client’s social security number or account number.
“New” audit findings we have recently noted:
- Reports provided to clients do not have an Ad Review approval for the report template
- Hypothetical Portfolio Performance reports, such as Morningstar Snapshot, were provided to a client without complying with the SEC Marketing Rule or the disclosures listed on the report.
- Not following the Qualified Client process of uploading the Form 925 with a copy of the deliverable into Pinpoint Ad Review. Not having pre-approval for the report marked as “Qualified Client Use Only."
- Texting outside of MyRepChat. Did you know it is free of charge?
- Using your personal email address for any business-related communications, which is prohibited. This includes emailing to a co-worker’s approved email address. Another example is emailing a report to your personal email address so you can review it from home over the weekend.
- Having an LLC with another person without having an approved Private Securities Transaction (PST) on file. A common example is your DBA name is an LLC owned by you and your business partner/ fellow advisor.
Please contact the Prosperity Network Compliance team with any questions about how to prepare for an audit. We can also assist you with the audit response in Pinpoint. We are here to help!
913-529-5500 Option 2 or compliance@prosperityadvisors.com
Internal Use Only