For newly registered fund managers, one of the many challenges of registered status is the obligation imposed by Rule 206(4)‑7 under the Investment Advisers Act of 1940 to conduct an annual compliance review. There is no clear and authoritative guidance available to fund managers, however, on how to prepare for, conduct and document the annual compliance review. This two-part article series aims to alleviate that difficulty by detailing the best practices for annual compliance reviews. This second article discusses why and how fund managers should approach, execute and follow up on the annual compliance review, including when to conduct the review, the typical scope, challenges that arise and mistakes to be avoided. The first article provided an overview of what an annual compliance review entails, how to prepare for the process and who should conduct the review (e.g., outside counsel, CCO, etc.). See “Lax Annual Compliance Review Procedures May Draw SEC Enforcement Action” (Nov. 17, 2016).