Elizabeth’s note: RIAs may think of SEC and some state auditors as goons – at least, that’s a word I’ve heard used to describe these government workers with a lot of power and not much accountability. Indeed, you may be thinking the word “goon” behind the clenched teeth of your forced smile if you happen to be one of the 10-11% of SEC-registered RIAs subjected to an audit in a given year, or one of those singled out by state regulators. Think all you want. But whatever you do or think, just keep up the smile.

What’s the key objective for an RIA that’s subject to an audit? It’s not exactly to avoid deficiencies, according to two compliance consultants. Rather, the first goal of an RIA confronted by either a surprise or a (more common) scheduled audit is to remain in control of the situation.

Auditors want the people they are examining to get flustered. It’s their job to create a sense of panic that will cause an executive or employee to stumble into a revelation.

Hovig Melkonian of Manhattan-based Lexington Compliance and Ara Jabrayan of National Compliance Services of Delray Beach, Fla., offered these thoughts and tips for coping with the presence of an auditor in your office.

• Welcome the auditor with a smile. Offer coffee, a seat in the conference room and as much help as you can provide.

• Seat the auditor with his or her back to the door of the conference room. The comings and goings of your office don’t need to be part of the audit.

• Ask the auditor for a business card. SEC surprise audits are actually rare, both consultants said, but they do happen. State audits are more often surprise affairs. In either case, you might as well be sure that the person you’re dealing with is an actual representative of the state or SEC.

• Don’t offer food, lunch, sporting tickets or anything else. They days when some auditors accepted such goodies went out the window when Bernie Madoff hit the headlines.

• Ask if you can give a short presentation about who you are, how you make a profit and what your culture of compliance is. “A lot of it sounds like fluff,” Melkonian says. “But you’re trying to present the idea that [you have a culture of compliance].”

You might, for instance, talk about how you read online publications, conduct annual reviews of your compliance system, and take part in educational offerings from your custodian.

• Sit with an auditor, so you’re right there asking questions and can fetch anything he or she needs. The last thing you want is for the auditor to go searching through your office.

• If you’re not there for the whole audit – they can last three or four days — assign another staff member to be the point person.

• Along the same lines, show the auditor the restroom right away so he/she doesn’t have to search for it.

• When the auditor is ready to make a physical inspection of your office, checking for things like broken locks on file cabinets and passwords scrawled on post-its in plain sight, accompany him or her.

• Don’t disappear, or allow other executives to disappear. “I have had clients do this,” says Jabrayan. “It looks bad.”

• Rather than giving the auditor access to files, give him/her a list of clients and then pull the files yourself.

• Above all, stay calm and in control. It is acceptable to tell an auditor that you don’t know the answer to a question, or that you will find it later. If they throw a question at you that’s designed to knock you off balance, such as “What kind of technology controls do you have,” it’s OK to ask them to elaborate.

• If an auditor finds a deficiency and tells you about, tell him or her that you will come up with a plan to fix the situation. It’s not necessary to implement a solution on the spot.

• If you never hear from the auditor with a deficiency letter, do follow up. According to Melkonian, an audit that doesn’t result in a deficiency sometimes gets lost in the shuffle. But you deserve to know what the auditors did or didn’t find – that way, you’ll be prepared for the next time around.

Have you been through an audit? Any advice for fellow advisors?