The Examination-Grade Standard
What a compliance record must satisfy to be called examination-grade. Five criteria, each with the test that verifies it.
Why this standard exists
Compliance software describes itself in words with no definition. “Audit-ready” and “exam-ready” appear on nearly every vendor’s homepage, and none of them says what the record must satisfy to earn the label. A term that cannot be tested cannot be failed, and a term that cannot be failed means nothing.
The standard governs the quality of the record. It does not, and cannot, govern the outcome of an examination.
The two shapes of a compliance record
This standard applies at the level of the individual record. Every record it covers answers for one of two things:
A call was made — a marketing claim cleared, a vendor determination signed, a training exception granted.
The record must produce: the call, with its documented basis, dated to when the call was made.
A duty was met — a filing submitted, a training completed, a review conducted, a deadline hit.
The record must produce: the duty, met and dated, with the evidence of completion attached.
Some program elements produce records of both shapes — an annual review is an obligation met on time that also contains decisions, each with its own basis. The standard applies to each record on its own terms. It makes no claim that these two shapes exhaust everything a compliance program is; it claims that every record an examiner pulls will be asked to perform as one or the other.
The five criteria
The after-the-letter memo. Reasoning assembled from old email and memory once the examination request has arrived, however accurate, is a reconstruction — and it reads as one.
The record is created at the time the decision is made or the duty is met — not assembled afterward, and not reconstructed in response to a request.
The editable spreadsheet and the overwritable document. A timestamp that can be revised is an assertion, not evidence.
Once captured, the record’s content and timestamp cannot be back-dated or silently altered. Corrections are permitted; concealed corrections are not — any amendment produces its own dated record.
The anonymous approval and the vendor-authored rationale. A basis nobody owns is a basis nobody can defend.
The record identifies who made the call or met the duty, and for decision records, the documented basis is authored or adopted by that person — in their words, under their name.
The shared drive. A folder that contains the evidence somewhere is storage; a record that binds each item to its support is a defense.
Every piece of evidence in the record is tied to the specific decision or obligation it answers for. The connection between the item and its support is part of the record itself, not a relationship someone must rebuild later.
The database that holds everything and produces nothing. An examination request names items, not systems; the record must answer at the same granularity as the question.
Any single record can be retrieved and handed over on demand, item by item, in a form a third party can read and evaluate without narration, tooling, or access to the system that created it.
A record is examination-grade only if it satisfies all five criteria. A compliance program is examination-grade only to the extent that its records are.
What this standard does not claim
Standard, not verdict
This standard governs the quality of a record — that it exists, holds, and can be produced. It makes no representation about the outcome of any examination, and conformance is not a prediction that a firm will avoid deficiencies, comment letters, or enforcement. A record can be examination-grade and still document a decision an examiner disagrees with. The standard’s claim is narrower and testable: whatever the examiner points to, the record answers.
No regulatory endorsement
“Examination-grade” is defined by this specification and by nothing else. The SEC does not certify records, grade compliance programs, or endorse standards, and no conformance claim may state or imply otherwise. The term’s authority is the published definition above — open, testable, and applied the same way to every system.
Redan’s reading of SEC practice. No knowledge-base citation stands behind it.
Claims about conformance are themselves claims
A vendor’s statement that its records meet this standard is a factual assertion, and it should be held to the discipline compliance professionals apply to every other factual assertion: demonstrated on demand, item by item, against the tests in §3.
Terms used in this standard
| Term | Meaning in this specification |
|---|---|
| Record | The complete dated artifact answering for a single decision or obligation, including its basis or completion evidence and the links between them. |
| Basis | The documented reasoning behind a decision, authored or adopted by the responsible person at the time of the decision. The term is used in its ordinary sense throughout this specification and carries no imported regulatory definition. Note — non-normative. Rule 206(4)-1(a)(2) prohibits an adviser from including a material statement of fact that it does not have a reasonable basis for believing it will be able to substantiate upon demand by the Commission. This standard asks for more than the rule requires. EG-1 asks that the record already exist at the time of the decision, not merely that the adviser reasonably believed the statement could be substantiated if asked. The difference is deliberate: a reasonable belief formed three years ago is difficult to demonstrate once the person who formed it has left, and the demand arrives regardless. Nothing in this note states a regulatory requirement, and conformance with this standard is neither required by that rule nor evidence of compliance with it. |
| Contemporaneous | Created at the time of the event documented, such that the record’s existence predates any request to produce it. |
| Produce | To deliver the record as a standalone, readable artifact to a requesting party — at the granularity of the request. |
| Open | Published in full and applied the same way to every system. The term’s authority is the published definition rather than any endorsement, and anyone may apply the criteria to any system, including Redan’s. It does not denote a comment process or a published change procedure. |
| Examiner | Any third party with the standing to ask “show me” — a regulator, an acquirer’s diligence team, an auditor, a fund investor, or the firm’s own future self. |
September 22, 2026. Published. No clause of the specification changes from v0.3. Supersedes v0.3 of September 18, 2026.
September 18, 2026. Two changes. §5.3’s closing sentence is removed; §4 already provides that anyone may apply the criteria to any system, including Redan’s, and that a firm evaluating vendors should require a demonstration rather than a description. §6 gains a definition of open. Supersedes v0.2 of August 12, 2026.
August 12, 2026. The §6 definition of basis stopped importing Rule 206(4)-1(a)(2). The rule now appears beside it as a non-normative note.
A record that passes all five is a Blue Folder™.