The Securities and Exchange Commission has proposed new rule amendments designed to better protect investors who place funds with investment advisors.

One proposed amendment would require all registered advisors with custody of client assets to undergo an annual “surprise exam” by an independent public accountant to verify that those assets actually exist. Another amendment would require investment advisors using a non-independent custodian to obtain a written report that describes the controls in place, the operating effectiveness of the controls, and the test results. An accounting firm registered with, and inspected by, the Public Company Accounting Oversight Board must prepare the report.

The proposed measures also include more stringent reporting requirements, including informing the SEC of the identity of the public accountant of any changes in accounting firm and of material discrepancies uncovered in the accountant’s exam.

Finally, the proposed amendments would require all custodians holding client assets to deliver custodial statements directly to clients rather than through an investment advisor, among other changes.

“These new safeguards are designed to decrease the likelihood that an investment advisor could misappropriate a client’s assets and go undetected,” said SEC Chairman Mary Schapiro. “That’s because an independent public accountant will be looking over their shoulder on at least an annual basis.”