What an examiner asks to see in the book

A request letter rarely asks for anything exotic. It asks for records your firm is already supposed to keep, delivered in a short window, in a form that matches what clients actually received. The difficulty is not the request. It is assembling the answer from files that were never meant to be read together.

This is a working guide to the book-of-record items an examiner typically asks about, what a clean answer looks like, and where firms with several custodians and a private book tend to get caught. It is general information, not legal advice. Your CCO and counsel decide what goes into your file.

Before the letter arrives

The best exam preparation happens in an ordinary quarter. If the pack you send clients is built from the same records you reconcile, the exam file is mostly a matter of pulling copies. If the pack is assembled by hand each quarter, the exam turns into a reconstruction project.

• Keep every quarterly pack exactly as it was delivered, with its as-of date.
• Keep the custodian files each pack was built from.
• Keep a record of every private valuation, its date, and its source.
• Keep your reconciliation exceptions and how each one was resolved.

The first two weeks after a request

1. Day 1: Read the letter with your CCO and list every item that touches holdings, valuations, or client reporting.
2. Days 2 to 3: Name one owner per item and agree on the file format you will deliver.
3. Days 3 to 7: Pull the records. Compare each household pack with the underlying custodian files for the same dates.
4. Days 7 to 10: Resolve or document every difference you find. Never edit a delivered pack. Explain it instead.
5. Days 10 to 14: Assemble the response, have a second person check the index against the letter, and deliver.

The deadline in your letter may be different. The order of work usually is not.

What examiners ask to see, and what good looks like

Holdings and positions

What they ask for: positions by account as of specific dates, often quarter ends, sometimes a date that has nothing to do with your reporting calendar.

• Each position ties to a custodian file for that exact date.
• Accounts at different custodians appear in one consistent format.
• Late or failed files are visible, not silently replaced with an earlier day.

Private and hard-to-value holdings

What they ask for: how private values were determined, who supplied them, and how old they were when they appeared in client reports.

• Every value has a valuation date and a named source on the same line.
• Values older than the firm's threshold were flagged in the reports that used them.
• Nothing was rolled forward without its original date.

Client reporting

What they ask for: copies of reports sent to specific clients, and an explanation of how the figures in them were produced.

• The copy you provide is identical to what the client received.
• The figures trace back to the book for the same as-of date.
• Disclosures about stale marks or missing data appear in the report itself, not in a separate memo.

Reconciliation and exceptions

What they ask for: evidence that your records were checked against custodian data, and what happened when they did not match.

• Breaks are logged with the date found, the amount, and the resolution.
• Open breaks at a report date are disclosed, not hidden.
• The same person does not both create and approve every resolution.

The strongest exam file is a boring one: the same records, the same dates, and no surprises between what you kept and what you sent.

Where multi-custodian firms get caught

Different dates on the same page

A household pack combines a Schwab file from the last business day, a Fidelity file that arrived late, and a private value from last year, all under one "as of" heading. Each input is defensible. The page as a whole is not, because it claims a single date it does not have.

Rebuilt reports

When a firm cannot reproduce a pack from its records, it rebuilds one for the exam. The rebuilt version rarely matches the original exactly, and the differences invite more questions than the original gaps would have.

Spreadsheet bridges

Consolidation often lives in a spreadsheet that one person maintains. When that person is out, or has left the firm, the logic behind the numbers leaves with them.

A pre-exam self-check

Run through these questions once a year, or whenever a key person on the operations team changes roles. If any answer is "not sure," that is where to start.

1. Can you produce last year's third-quarter pack for any household, exactly as it was sent?
2. Can you show which custodian files that pack was built from, and the date of each file?
3. For every private holding in that pack, can you show the valuation date and who supplied the value?
4. Were marks older than your threshold flagged in the pack itself?
5. Is there a written policy that sets that threshold, and does the pack follow it?
6. Can you list every reconciliation break open on that report date, and how each one was closed?
7. If the person who built the pack left tomorrow, could someone else reproduce it?
8. Does the copy in your archive match the copy in the client's inbox, page for page?

What to do when something is missing

Every firm finds a gap eventually. How you handle it matters more than the gap itself. The common thread in each case below is the same: document what happened, do not rewrite history, and fix the process going forward.

If a pack cannot be reproduced

Provide the copy the client received, explain which underlying records are no longer available, and describe the change you made so the same thing cannot happen again. A rebuilt report presented as the original creates a far bigger problem than an honest gap.

If a private value has no source

Say so, identify who most likely supplied it, and request a current statement from the manager or the client. From that point on, record the source every time a value is entered, even when it comes from a phone call.

If a break was never resolved

Show when it was found, what was investigated, and why it stayed open. Then close it properly, with the resolution dated today rather than backdated to when it should have been handled.

How Stonebook keeps the exam file and the working file the same

Stonebook stores each custodian file with its own date, keeps every private mark with its valuation date and source, and prints household packs from that same book. When an examiner asks for a report from two years ago, you pull the pack as it was delivered and the records it was built from. Nothing is reassembled.

If you are preparing for an exam, or want to test your current process against this list, the Quarterly Client Packs page shows what the archive looks like, and you can book a call to walk through your own custodian roster.