Our Fund Accounting Process Audit Report offers an assessment of a fund company’s internal controls over financial reporting and vendor management, in line with the requirements of Rule 31a-1 of the Investment Company Act of 1940. The review focuses on evaluating how expenses are allocated to each fund, the reliability of reports used for decision-making and the effectiveness of procedures ensuring that third-party vendors provide accurate, dependable data. By interviewing key personnel and analyzing documentation practices, the audit uncovers opportunities for improvement that can help safeguard financial integrity and regulatory compliance.

Key findings reveal that, while the Fund Accounting department has implemented some safeguards within its spreadsheet-based processes, gaps remain in formalizing change-control procedures and documenting the steps involved in preparing financial statements. This report highlights instances where formula errors led to misallocated fees and notes the absence of a second-review process for critical updates, underscoring the need for robust policies and checklists. Additionally, the audit points out that annual reviews of external service-provider reports are not formally documented, which could expose the company to unnecessary risks. Management has responded proactively with action plans to address these issues, making this report an essential resource for anyone seeking to strengthen fund accounting oversight.  

Audit findings in this report include:

• The Fund Accounting department uses spreadsheets extensively to perform daily activities and prepare financial statements.  
• Internal Audit noted that formula updates/changes within the spreadsheets used in preparation of the financial statements were not consistently reviewed by a second individual.  
• The procedures for the preparation of the financial statements have not been documented.
• Management receives and reviews the SAS 70 reports provided by the company and bank; however, this review is not formally documented.