The SEC recently announced that it had issued an order against an accounting firm and two partners for willfully aiding and abetting violations of Rule 206(4)-2 (the so-called “custody rule”) of the Investment Advisers Act of 1940 relating to the audits of funds’ financial statements. The order bars the certified public accounting firm and two certified public accountants (CPAs) from appearing or practicing before the SEC as accountants for certain periods, and it requires payment of disgorgement, interest and civil penalties. The settlement of this enforcement action is relevant to registered investment advisers because it illustrates how critical errors by the accountants auditing a fund’s financial statements can result in custody rule violations by the adviser. This article examines the mistakes made by the accountants in the case; discusses the importance of exercising due diligence when engaging accounting firms and other vendors; and presents analysis from an attorney who is also a CPA. See “What Role Should the GC or CCO Play in the Audit of a Fund’s Financial Statements?” (Feb. 23, 2017).