Political ContributionCompliance Testing Matrix

Project #______

Completed By: [NAME] [Date]

Compliance Risks / Current Controls / Audit Procedures Performed / Conclusions / Action Plan
1. Policy & Procedures
There is a risk that Adviserand its affiliatesmay not have policies and procedures in place reasonably designed to prevent the firm or its officers/employees from engaging in prohibited pay-to-play activities by making campaign contributions to politicians that may be able to make or influence decisions about which firms are chosen to manage retirement plan assets of public employees, with the intent of influencing the decision in Adviser’s favor. / 1. Adviser’s legal department is responsible for keeping abreast of regulatory matters and for drafting policies and procedures for Adviser and the Funds.
2. Adviserhas adopted policies and procedures relating to political activity and contributions, dated [_____]. / Reviewed Adviser’s PoliticalActivity and Contributions Policy and Procedures on Intranet.
2. Training
There is a risk that Adviserand its affiliates’ officers/employees may not be aware of the implications and/or restrictions/limitations on political contributions. / 1. On [DATE], the firm’s CCO sent an email to all associates that contained the policy and procedures, FAQ sheet, and a summary of the key elements of the procedures.
2. Key elements of the procedures were discussed during the 2011 Annual Compliance Meetings, a mandatory meeting for all associates. And the presentation contained several slides on the topic. / 1. Reviewed the [DATE] email from the CCO and the 2011 Annual Compliance Meeting power point presentation.
2. Inquired of the compliance associate (NAME) if she was familiar with the policy and procedures. / N/A
Compliance Risks / Current Controls / Audit Procedures Performed / Conclusions / Action Plan
3. Exceeding Contribution Limits
There is a risk that Adviser andits employees’ contributions may violatethe political contribution limits described in the policy and procedures. / Adviser’s procedures require the pre-approval of political contributions and certain political activity. / Reviewed Compliance 11 political contribution approval/denied reports in excel format (and granted waivers via CCO memos) obtained from the compliance associate
(NAME).
Compared sample of employees and, senior executives and senior PMs against OpenSecrets.org website to confirm contributions, if any, were pre-cleared.
4. Failure to Review Prospective Employees Activity
There is a risk that Adviser hires an employee who may have exceeded the contribution limits and therefore would jeopardize Adviser’s current or future investment advisory activities with certain types of clients. / Adviser’s procedures require that each prospective employee complete a form to disclose political contributions made since [DATE]. The form is to be reviewed and approved by Compliance and then an offer of employment can be made. / Obtained a list of all new employees hired in 2011 and audited the political contribution disclosure forms submitted by each new employee after [DATE]
(the date the policy/procedures went into effect.)
Compliance Risks / Current Controls / Audit Procedures Performed / Conclusions / Action Plan
5. Record Retention
There is a risk that Adviser fails to keep records of political contributions and records of all government entities to which Adviser provides, or has provided, investment advisory services, or which are or were investors in any Adviser Fund or other Covered Investment Pool to which Adviser provides or has provided investment advisory services, as applicable, in the past five years, but not prior to September 13, 2010. / 1. Political contributions and activity require pre-approval. The firm uses the Compliance 11 system to provide approval/denial and to keep records of that information. In addition, the firm requires written approval of waivers by the CCO and disclosure forms from prospective employees, which are maintained by the compliance department.
2. Adviser’s Director of Mutual Fund Operations receives quarterly reports from the Fund’s transfer agent listing shareholders that may potential be identified as government entities.
3. Adviser maintains records about current and former clients and is able to filter that information to identify government entities. / 1. Reviewed the reports and records maintained by the compliance department
2. Reviewed the transfer agent’s “pay to play accounts” reports dated September 2011 and December 2011.
3. Reviewed the “contribution history” report provided by the accounting department.
4. Inquired of [NAME] regarding keeping records of current and former clients and the ability to filter that information in order to identity government entities.