191—50.43 (502) Financial reporting requirements for investment advisers.
	 50.43(1) Every registered investment adviser that has custody of client funds or securities or requires payment of advisory fees six months or more in advance and in excess of $500 per client shall file with the administrator an audited balance sheet as of the end of the investment adviser’s fiscal year except:
	  a.   	 An investment adviser that has custody solely due to direct fee deduction and that is also in compliance with the applicable safekeeping requirements of paragraph 50.39(1)“d” and the record-keeping requirements of rule 191—50.42(502) is not required to comply with the financial reporting requirements of this rule;
	  b.   	 An investment adviser that has custody solely due to advising pooled investment vehicles and that is in compliance with the applicable safekeeping requirements of paragraph 50.39(1)“e” or 50.39(2)“c” and the record-keeping requirements of rule 191—50.42(502) is not required to comply with the financial reporting requirements of this rule; and
	  c.   	 An investment adviser that has custody solely due to serving as a trustee and that is in compliance with the applicable safekeeping requirements of paragraph 50.39(1)“f” and the record-keeping requirements of subrule 50.42(4) is not required to comply with the financial reporting requirements of this rule.
	 50.43(2) Every registered investment adviser that has discretionary authority over, but not custody of, client funds or securities shall file with the administrator a balance sheet, which need not be audited, but which must be prepared in accordance with generally accepted accounting principles and represented by the investment adviser or the person who prepared the statement as true and accurate, as of the end of the investment adviser’s fiscal year.
	 50.43(3) Each balance sheet filed pursuant to this rule must be:
	  a.   	 Examined in accordance with generally accepted auditing standards and prepared in conformity with generally accepted accounting principles;
	  b.   	 Audited by an independent certified public accountant; and
	  c.   	 Accompanied by an opinion of the accountant as to the report of financial position, and by a note stating the principles used to prepare the audit, the basis of included securities, and any other explanations required for clarity.
	 50.43(4) The financial statements required by this rule shall be filed with the administrator within 90 days following the end of the investment adviser’s fiscal year.
	 50.43(5) Every investment adviser that has its principal place of business in a state other than this state shall file only such reports as required by the state in which the investment adviser maintains its principal place of business, provided the investment adviser is licensed in such state and is in compliance with such state’s financial reporting requirements.
This rule is intended to implement Iowa Code section 502.411(2).