Urging Congress to keep oversight of investment advisers with the Securities and Exchange Commission, the American Institute of CPAs (AICPA) yesterday slammed the Investment Adviser Oversight Act of 2012. Introduced in the House of Representatives on April 25, the bill would transfer oversight of investment advisers from the SEC to a self-regulatory organization (SRO).

What interest do independent auditors have in killing such a bill? “Many of our members work for a firm that is registered as, or affiliated with, a registered investment adviser,” Barry Melancon, the AICPA’s chief executive, said in a statement. The AICPA’s stance is that the system proposed under the bill would cost auditors much more in fees than current SEC oversight would.

Section 914 of the Dodd-Frank Act directs the SEC to conduct a study of the need for more resources to examine investment advisers and enforce its standards on them. On January 19, 2011, the SEC issued a staff report that found the current SEC-registered investment-adviser examination program faces hefty capacity and funding challenges.

The regulator’s staff put three choices on the table, each one requiring congressional action. One would be to impose “user fees” on SEC-registered investment advisers to fund oversight. A second option would be to authorize one or more SROs to examine investment advisers, with oversight from the SEC. A third choice would be authorize the Financial Industry Regulatory Authority (FINRA), a leading broker-dealer SRO, to examine dual registrants for compliance with the Investment Advisers Act of 1940. (A dual registrant is registered with both FINRA as a broker dealer and the SEC as an investment adviser.)

A study by The Boston Consulting Group in December found that funding an enhanced SEC examination program would likely cost half that of creating an SRO for investment advisers. The report further found that funding an SRO would likely cost twice as much for each investment-advisory firm as paying user fees to the SEC and that, given the SEC would still have to oversee the SRO, any cost savings to the SEC through creation of an SRO would be minimal.

“We believe that the SEC’s core mission to protect investors requires adequate regulation of the investment advisory profession. The SEC remains the proper regulatory body to protect the public’s best interest.” Melancon continued, “Providing the SEC with resources to properly enforce their rules is the best solution for investors and the public.”