Many investment advisors are trying to determine whether they will be subject to new audits under custody rules that take effect from 12 March, PricewaterhouseCoopers says, according to Investment News.

The possibility of new audits is currently the biggest concern for advisors who are subject to new custody rules adopted in December 2009, PwC said.

The complex rules, which were created in reaction to the massive Ponzi scheme fraud of Bernard Madoff, require investment advisors to undergo surprise audits if they can withdraw client funds. The rules are also an example of how the financial crisis and some of the scandals that have come to light have fuelled a steady rise in regulatory activity and prospective legislation.

“They have to work through all these provisions to figure out if they're subject to it and, if they are, which pieces are they subject to?” Chris Thompson, an assurance partner at PwC, was quoted as saying.

“If the advisor and the custodian are two different parties, all the advisor has to do is worry about getting the count done and making sure that statements are being sent from the custodian to the client,” Mr Thompson said.