Rule 206(4)‑7 under the Investment Advisers Act of 1940 requires each registered investment adviser to evaluate, at least annually, the adequacy of its compliance policies and procedures and the effectiveness of its compliance program’s implementation. Compliance with the annual review requirement is an area of focus for the SEC. Although Rule 206(4)‑7 does not mandate a specific deadline, investment advisers often perform their annual compliance reviews to coincide with other year-end-review processes, such as their annual financial audits. This two-part series is structured as a checklist that investment advisers can adapt and use to streamline and organize their annual reviews. This first article analyzes Rule 206(4)‑7 and guidance on complying with the rule; spells out who should be involved in conducting an investment adviser’s annual compliance program review and how it should be conducted; and identifies questions SEC examiners are likely to ask about an adviser’s annual review during an examination. The second article will provide a non‑exhaustive list of the questions advisers should answer for each substantive area covered in the review. For more on conducting an annual review, see “ACA 2016 Compliance Survey Covers SEC Exams; Compliance Staffing and Budgeting; Annual and Ongoing Compliance Reviews; and AML/Sanctions Compliance (Part One of Two)” (Jan. 19, 2017); and “Survey Reveals Compliance Weaknesses of Fund Managers Relative to Other Financial Services Firms, Including CCO Qualifications and Frequency of Annual Compliance Reviews” (Sep. 15, 2016).