Hedge Fund Audits Explained By Joyce CPA, LLC
Innumerable Hedge Fund Audits are concluded every year and in all these years too much of unnecessary stress has been devoted to this practice. Regardless of the intricate procedures involved, Hedge Fund Audit doesn’t engage stress if the planning among several parties is executed aptly and is handled by a distinctively employed individual.
Why do you require a Hedge Fund Audit?
The funds where the capital is governed by third party should effectively have a Regulated or either Unregulated Audit done so as to have a check and control thereby. For completing, signing off and filing the audit, 6 months’ time period is accustomed. This time span which abstractly seems more than enough for the audit is practically quite tedious to meet owing to multiple reasons. Considering all the industries, Hedge Fund Industry is distinct as it demands several service providers in its lifetime. Thus, it seeks a Hedge Fund Auditor along with a fund administrator.
What does a Hedge Fund Auditor do?
Hedge Fund Auditor’s prime functionary involves the audit of hedge fund’s accounting. To analyse the hedge fund’s assessment technique and the compliance of the same; Hedge Fund Auditor works alongside Hedge Fund manager and Hedge Fund Administrator. Hedge Fund Administrator stands central for the Auditor, as he generates the financial statements of funds involved. This statement is essential for an Auditor; who is required to inspect all the funds, profits and losses which can be fetched from the account statements particularly. Once the Auditor learns about the valuation methodology of the funds, he performs tests on the information acquired. Along with the issuance of Audited Financial Statement; Hedge Fund Auditor also ensures curbed scope engagement and authentication of performance results. To minimize and detect the risks involved in audit, the Auditor doesn’t remain clung to the specific guidelines assigned and goes beyond them.
As per all the Hedge Fund Auditors there is no single size that serves all solutions to Hedge Fund Audits. Thus the Audit firms and the costs involved are categorized into three groups: Small Hedge Audit Firm, Medium Hedge Audit Firm and Large Hedge Audit Firm.
Whom does the Auditor report?
If the company that’s concerned is a public firm, the auditor is expected to report to the Board of Directors and Shareholders both. Hedge Fund on the other hand is not specific on providing the Audit Report to the shareholders; sometimes it does only to the Board of Directors and sometimes it does to the both of them. Some specific Audit Firms have purposely directed the audit towards the directors, reason being the lack of investor control.
Thus concluding, an Audited Financial statement is integral for an investor as it encompasses bountiful of knowledge regarding the financial status of a specific fund. A Hedge Fund Auditor is not only confined to providing this Audited Financial Statement and functions for a firm’s growth ultimately. An Ideal Hedge Fund Auditor thus not only caters to the same methodology of working and is curious to learn more about the audit and tax work and current accounting standards applicable to Hedge Fund Business. They pursue a focused approach towards the client involved and acknowledge themselves about the client involved; to strive for the success and growth of the firm per se.
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