Today’s investment adviser operates within a broad compliance landscape, one that includes MNPI governance, trade surveillance, valuation controls, cybersecurity, marketing rule compliance, portfolio oversight, vendor diligence, and a growing set of operational and disclosure obligations. While this universe spans many interdependent domains, examinations consistently concentrate on the operational layers where most supervisory actions, recurring tasks, and evidentiary requirements live.
Across recent exam cycles, two areas emerge as the most consequential for demonstrating whether a compliance program is actually functioning as written:
- Firm-wide supervisory oversight — the operational engine behind policies, approvals, testing, regulatory filings, monitoring, and issue remediation; and
- Employee-level Code of Ethics compliance — the conduct-driven framework under Rule 204A-1 that governs personal trading, conflicts, outside activities, and fiduciary alignment.
This guide focuses on these two domains not because they represent the entirety of a compliance program, but because they generate the largest volume of day-to-day activity, produce the densest documentation burden, and reveal the clearest indicators of operational integrity during SEC examinations.
They are also the areas where fragmentation — workflows in one system, personal trading in another, approvals in email, evidence in spreadsheets — most often results in exam deficiencies, gaps in supervisory narratives, and challenges during document production.
In 2026, the SEC’s expectation is unambiguous: advisers must be able to demonstrate that these core oversight functions operate cohesively, consistently, and through a unified evidentiary record that aligns with the firm’s written procedures.
Why the Standard for “Audit-Ready” Has Shifted
Recent exam cycles show a clear regulatory trend: the SEC is prioritizing proof of implementation over policy design. As the SEC’s Division of Examinations explains in its Fiscal Year 2026 Examination Priorities, when reviewing advisers’ compliance policies and procedures, staff will focus on “whether the policies and procedures are implemented and enforced.” This is the heart of the 2026 shift: audit-readiness now hinges on whether firms can demonstrate that their programs operate as written, in real time.
Recent SEC risk alerts and enforcement actions, as well as law-firm commentary, have emphasized that fragmented or reconstructed records are often treated as evidence of an ineffective compliance program, not just an administrative nuisance.
Pillar One: What Firm-Wide Audit Readiness Requires in 2026
Firm-wide oversight remains the backbone of the adviser’s compliance program. But examiners now expect firms to show traceability: a defensible record of supervision, timing, and decision-making.
1. Policies and Procedures Must Map to Actual Controls
The SEC is increasingly probing whether firms can demonstrate how controls operate, not just what the controls say. This includes:
- workflows that execute the policy
- ownership and supervisory checkpoints
- evidence linked directly to procedures
Firms often fall short because their compliance workflows don’t match their written controls.
2. A Unified, Evidenced Regulatory Calendar
Annual reviews, ADV amendments, filings, marketing reviews, and testing must be tied to a centralized system of record. This calendar should:
- assign clear ownership
- timestamp activity
- attach documentation
- include supervisory review
Law firms increasingly warn that reconstructed calendars or untracked activities can lead to exam deficiencies.
3. Documentation Must Be Searchable, Immutable, and Credible
Examiners frequently question documents that appear recreated or lack clear version histories. Immutable audit trails and consistent metadata are now essential to withstanding scrutiny.
4. Issue Management Must Show Real Supervision
Error logs, vendor failures, policy breaches, and late filings must demonstrate:
- identification
- escalation
- remediation
- supervisory involvement
- documented closure
A firm’s ability to demonstrate its supervisory response often determines whether an issue is viewed as isolated or systemic.
Pillar Two: The Employee-Level Component — Where Weaknesses Surface First
Employee-level compliance is one of the most operationally demanding components of the compliance program, and often the first place examiners identify weaknesses.
1. Preclearance Must Be Real-Time and Defensible
Examiners increasingly focus on timing, completeness, and rationale for preclearance decisions. For firms with MNPI exposure, real-time or near-real-time review is quickly becoming the expected standard.
2. Account and Holdings Oversight Must Reflect Reality
Static annual certifications are no longer sufficient. With more app-based brokerage accounts, alternative assets, and private investment vehicles, Code of Ethics oversight now requires dynamic and continuously updated information.
Recent SEC staff commentary underscores how frequently these issues surface in real examinations. In its Risk Alert on MNPI and Code of Ethics compliance, the Division of Examinations noted that “deficiencies related to Section 204A and the Code of Ethics Rule have been among the most commonly observed.” These included incomplete or missing personal trading and holdings reports, failures to obtain required pre-approval, and a lack of documented supervisory review, all direct indicators of weak or static oversight.
For 2026, this means advisers must maintain:
- dynamic account inventories that update as new financial apps and custodial accounts emerge
- reconciliation workflows where broker feeds are incomplete or unavailable
- holdings data tied directly to preclearance and trading activity
- timestamped supervisory review of submissions
These aren’t administrative preferences, they’re core evidence examiners rely on to determine whether a Code of Ethics program is actually being implemented.
3. Gifts, Entertainment & Political Contributions Require Pattern Review
Examiners assess cumulative behavior, not isolated incidents. Patterns may reveal conflicts, marketing rule concerns, or pay-to-play risks.
4. Outside Business Activities Must Tie Directly Into Conflicts Governance
Examiners increasingly expect firms to show:
- when they learned of the OBA
- how conflicts and MNPI implications were evaluated
- how disclosures and monitoring were updated
- where supervisory review is documented
5. Certifications Must Function as Evidence
Certification processes must reflect:
- linkage to the correct policy version
- immutable timestamps
- supervisory review for exceptions or non-responses
- complete, exportable logs
Incomplete or outdated certifications have been central to several recent enforcement actions involving Code of Ethics compliance.
Why Audit-Ready Programs Must Be Fully Connected
Historically, advisers have used separate systems for firm-wide workflows and Code of Ethics oversight. But recent exam cycles show that fragmentation doesn’t just create inefficiency — it creates regulatory exposure. Examiners increasingly evaluate the adviser’s compliance program as a single operational ecosystem, and gaps between systems often become findings.
A unified approach is essential because:
1. Conflicts and MNPI Risk Span Both Domains and Examiners Review Them Together
Employee behavior (trading, OBAs, political contributions, private investments) often triggers or amplifies firm-level fiduciary, conflicts, and MNPI risks. These risks cannot be evaluated in isolation.
The SEC’s MNPI/Code of Ethics Risk Alert emphasized that deficiencies often stem from incomplete information flows between Code of Ethics processes and broader supervisory systems — leading to gaps in conflict identification and ADV disclosures.
If employee activity sits in one system and firm oversight in another, examiners will find inconsistencies.
Unified systems prevent these blind spots and allow compliance teams to detect risk holistically.
2. Fragmented Records Fail the “Implementation Test”
In the 2026 Examination Priorities, the SEC stated that it will examine whether compliance policies “are implemented and enforced,” not just drafted.
When firm-wide tasks, Code of Ethics submissions, and supervisory reviews live in different systems:
- timestamps don’t align
- exceptions look unaddressed
- policies don’t map cleanly to certifications
- supervisory actions appear inconsistent
Even if the program is functioning, the evidence will appear fragmented, and examiners increasingly treat inconsistency as a program-effectiveness deficiency.
Unified systems solve this by producing synchronized, contemporaneous, system-generated evidence — the kind that examiners prefer and trust.
3. Exams Now Demand Rapid Production
The SEC repeatedly notes that delays in producing records, or incomplete responses, may indicate underlying compliance failures.
During exams, staff often requests documents spanning multiple domains simultaneously, such as:
- preclearance approvals + related trading records
- OBA disclosures + conflicts assessments + ADV updates
- certifications + policy version history + testing logs
- marketing materials + supervisory review + employee trading to test MNPI controls
If these records live in siloed systems, firms struggle to produce a cohesive supervisory narrative, which examiners are explicitly looking for.
Unified systems eliminate this friction — enabling fast, consistent, cross-referenced production that signals a program is operationalized, not recreated.
Conclusion: Translating Expectations into Action
Audit-readiness in 2026 requires more than well-drafted policies or an annual review cycle. Examiners now evaluate whether a firm can demonstrate a single, coherent system of supervision — one that connects firm-wide controls with employee-level Code of Ethics obligations through contemporaneous evidence, consistent workflows, and clear supervisory accountability.
A modern program must show:
- policies mapped directly to operational tasks,
- real-time oversight of personal trading and conflicts-driven activities,
- documented exceptions and remediation, and
- one unified evidentiary trail spanning both firm and employee activity.
Most advisers struggle not because any one element is missing, but because these components live in disconnected systems, or even a single system with distinct modules that operate in siloes. Fragmentation creates timing gaps, inconsistent narratives, and documentation that cannot withstand examiner scrutiny.
The firms that will be best positioned in 2026 are those that replace siloed processes with an integrated compliance architecture — one that aligns policies, compliance activities, employee engagement, supervisory reviews, and audit trails into a single operational framework.
Skematic is purpose-built around this philosophy, unifying firm-level oversight and Code of Ethics compliance so the program functions — and can be evidenced — as examiners increasingly expect. Not as a collection of tools, but as a connected ecosystem that reinforces supervisory effectiveness.
In an environment where regulators measure implementation rather than intent, a unified framework is no longer an enhancement. It is the foundation of an audit-ready compliance program.
