The state of Kansas recently implemented a new financial reporting requirement as reflected in an amendment to K.A.R. 81-14-9. Per section K.A.R. 81-14-4(b)(6), all Kansas registered investment adviser (RIA) firms are now required to not only prepare but maintain a balance sheet each month. The monthly balance sheet must be dated the last day of the month and completed must be within 10 business days after the month’s end.
While the regulatory compliance requirement for investment advisory firms to maintain a positive net worth has not changed per K.A.R. 81-14-9(d), an amendment has been made requiring all registered investment adviser (RIA) firms in Kansas to ensure that their written supervisory procedures are updated to include policies requiring a monthly computation of the advisory firm’s net worth. If an registered investment adviser (RIA) firm has a negative net worth, they are required to notify the Kansas Securities Commissioner by the end of the next business day. As RIA compliance consultants, we recommend that all Kansas investment advisers review their polices and procedures manual to not only determine if additional procedures are required to be adopted due to the this new registered investment adviser (RIA) compliance requirement, but also to ensure that any other recent business model changes are properly reflected in the compliance manual.
The full amendment text is available online at the Office of the Kansas Securities Commissioner. We encourage Chief Compliance Officers (CCO) to review the complete overview of the recent update.
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