Final Supporting Statement

OMB CONTROL NUMBER: 3235-0360
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-17f-2
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Rule 17f-2 (17 CFR 270.17f-2), entitled “Custody of Investments by Registered
Management Investment Company,” was adopted in 1940 under section 17(f) of the Investment
Company Act of 1940 (15 U.S.C. 80a-17(f)) (the “Act”), and was last amended materially in
1947. Rule 17f-2 establishes safeguards for arrangements in which a registered management
investment company (“fund”) is deemed to maintain custody of its own assets, such as when the
fund maintains its assets in a facility that provides safekeeping but not custodial services. 1 The
rule includes several recordkeeping or reporting requirements. The fund’s directors must prepare
a resolution designating not more than five fund officers or responsible employees who may have
access to the fund’s assets. The designated access persons (two or more of whom must act jointly
when handling fund assets) must prepare a written notation providing certain information about
each deposit or withdrawal of fund assets, and must transmit the notation to another officer or
director designated by the directors. Independent public accountants must verify the fund’s assets
three times each year, and two of those examinations must be unscheduled. 2
Form N-17f-2 (17 CFR 274.220) is entitled “Certificate of Accounting of Securities and
Similar Investments in the Custody of Management Investment Companies.” Form N-17f-2 is the
cover sheet for the accountant examination certificates prepared under rule 17f-2. Form N-17f-2
facilitates the filing process for accountant examination certificates. The form has a purely
1

The rule generally requires all assets to be deposited in the safekeeping of a “bank or other
company whose functions and physical facilities are supervised by Federal or State authority.”
The fund’s securities must be physically segregated at all times from the securities of any other
person.

2

The accountant must transmit to the Commission promptly after each examination a certificate
describing the examination on Form N-17f-2. The third (scheduled) examination may coincide
with the annual verification required for every fund by section 30(g) of the Act (15 U.S.C.
80a-29(g)).

administrative purpose and does not require any additional information (beyond that required by
rule 17f-2) to be collected.
2.

Purpose and Use of the Information Collection

Form N-17f-2 facilitates the filing of the accountant’s examination certificates prepared
under rule 17f-2. Form N-17f-2 increases the accessibility of the examination certificates to both
Commission staff and interested investors by ensuring that the certificates are filed under the
proper SEC file number and correct name of a fund.
3.

Consideration Given to Information Technology

The Commission’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”)
provides for the automated filing, processing, and dissemination of full disclosure filings. The
automation provides for speed, accuracy and public availability of information, generating benefits
to investors and financial markets. Currently, the accountant’s certificates are required to be filed
electronically on Form N-17f-2.
4.

Duplication

The Commission evaluates reporting requirements for duplication periodically, and
whenever a rule or a change in a rule is proposed. There is no duplication of the information
required by Form N-17f-2.
5.

Effect on Small Entities

Form N-17f-2 does not significantly increase the regulatory burden on any funds, including
small entities.
6.

Consequences of Not Conducting Collection

Less frequent collection on Form N-17f-2 could inhibit the dissemination of timely
information to the public and could impair the ability of the Commission’s examination staff to
ascertain compliance with the rule.
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7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

None.
8.

Consultation Outside the Agency

The Commission requested public comment on the collection of information requirements
for Form N-17f-2 before it submitted this request for extension and approval to the Office of
Management and Budget. This solicitation included requesting public comments on the burden
estimates for all information collections under this OMB control number. The Commission
received no comments in response to its request.
The Commission and staff of the Division of Investment Management participate in an
ongoing dialogue with representatives of the fund industry through public conferences, meetings,
and informal exchanges. These forums provide the Commission and the staff means of
ascertaining and acting upon paperwork burdens confronting the industry.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The information collection collects basic Personally
Identifiable Information (PII) that may include names, job titles, and work addresses. However,
the agency has determined that the information collection does not constitute a system of record
for purposes of the Privacy Act. Information is not retrieved by a personal identifier. In
accordance with Section 208 of the E-Government Act of 2002, the agency has conducted a
Privacy Impact Assessment (PIA) of the EDGAR system, in connection with this collection of
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information. The EDGAR PIA, published on 1/29/2016, is provided as a supplemental document
and is also available at https://www.sec.gov/privacy.
12.

Burden of Information Collection

The estimate of average burden hours is made solely for the purposes of the Paperwork
Reduction Act of 1995, 3 and is not derived from a comprehensive or even a representative survey
or study of the costs of Commission rules and forms. Under rule 17f-2, each fund is required to
file Form N-17f-2 at least three times a year with the Commission. Commission staff estimates
that 201 funds file Form N-17f-2 each year, 4 and that it takes approximately 2 hours per response
to prepare and file Form N-17f-2 with the Commission. Commission staff further estimates that
on average each fund files Form N-17f-2 approximately three times a year for a total annual
hourly burden per fund of approximately 6 hours. 5 Thus, the total annual burden for preparing
and filing Form N-17f-2 is approximately 1,206 hours. 6 Commission staff estimates that it takes
on average 1.25 hours of fund accounting personnel at a cost of $218 7 per hour to prepare each

3

44 U.S.C. 3501 et seq.

4

On average, each year approximately 201 funds filed Form N-17f-2 with the Commission during
calendar years 2017-2019.

5

In the aggregate, funds filed 633 Form N-17f-2s on average each year from 2017-2019. (633
filings per year / 201 funds filing each year = 3.15 filings per fund per year).

6

This estimate is based on the following calculation: 201 respondents (funds that file Form N-17f-2
each year) x 3 (responses per fund per year) x 2 (hours per response) =1,206 hours. Estimates of
the number of hours are based on conversations with individuals in the mutual fund industry. The
actual number of hours may vary significantly depending on individual fund assets.

7

The hourly wage figure for a senior accountant is from the Securities Industry and Financial
Markets Association’s Management & Professional Salaries in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work-year and inflation and multiplied
by 5.35 to account for bonuses, firm size, employee benefits and overhead.

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Form N-17f-2 and 0.75 hours of clerical time at a cost of $82 8 per hour to file the form with the
Commission for a total annual cost per fund of approximately $1,002. 9 Therefore we estimate the
total cost of the hour burden for filing Form N-17f-2’s collection of information requirements to
be approximately $201,402. 10
Summary of Revised Annual Responses, Burden Hours, and Cost Estimates
IC Title

Annual No. of Responses
Previously
Requested
approved

Form N-17f-2

194 New
Annual Funds

13.

201 New
Annual
Funds

Change

Annual Time Burden (Hrs.)
Previously
Requested
approved

Change

External Cost to Respondents ($)
Previously
Requested
approved

Change

7

1,164

42

$0

$0

1,206

$0

Cost to Respondents

Form N-17f-2 does not impose any paperwork related cost burden not discussed in item
12 above.
14.

Cost to the Federal Government

Because the form facilitates the electronic filing of the attached certificate, the amount of
staff time required to process the EDGAR filing of the Form N-17F-2 and the related costs to the
federal government are de minimis.

8

The hourly wage figure for an administrative assistant (clerical) is from the Securities Industry and
Financial Markets Association’s Office Salaries in the Securities Industry 2013, modified by
Commission staff to account for an 1800-hour work-year and multiplied by 2.93 to account for
bonuses, firm size, employee benefits and overhead.

9

We based this estimate on the following calculation 3.75 hours (1.25 hours per form x 3 forms
annually) x $218 (fund senior accountant hourly rate) + 2.25 hours (.75 hours per form x 3 forms
annually) x $82 (administrative assistant (clerical) hourly rate) = $1,002.

10

We based this estimate on the following calculation: 201 funds x $1,002 (total annual cost per
fund) = $201,402.

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15.

Change in Burden

The change in the estimated hour burden is due to the increased in the number of funds
reporting on Form N-17f-2 from 194 to 201. Based on a review of filings, the time to prepare the
form has not changed. Changes to the estimated cost to the hour burden are based upon inflation
adjustments to the relevant salary estimates. These changes in burden also reflect the
Commission’s revision and update of burden estimates for all information collections under this
OMB control number (whether or not associated with rulemaking changes), and the Commission
requested public comment on all information collection burden estimates for this OMB control
number.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.
18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

Not applicable.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable.

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