In all aspects of accounting and funds management, an independent valuation process is increasingly becoming a requirement. In light of recent fraud scandals, investors want to see that an independent third party is valuing and overseeing the monthly pricing process. As a result, some managers have segregated the administrator function from their prime broker and custodian and leverage their independent external expertise, systems and reporting capacity. This is even more critical when dealing with highly complex products, such as bank debt, since independent controls and oversight eliminate the question of the back-office verification.
Whether the investment manager internally accounts and tracks all the details required in processing and accounting for bank loans, their external administrator is ultimately the books and records for the fund and external auditors will be auditing their records. Therefore, managers need to ensure that their administrator’s staff and systems are capable of supporting this asset class.
Outsourcing the processing and accounting work to a capable third-party fund administrator is an approach that will provide the manager with the following key benefits:
•Mitigation of risk on processing and accounting errors by having third-party experts do the work.
• Better process and internal controls, which results in more timely and accurate data to portfolio managers, allowing them to focus on what they do best: making better investment decisions and taking advantage of opportunities.
• Leveraging specialized systems and software without building their own infrastructure.
Buying and implementing systems is very expensive and time-consuming.
• Improved investor confidence and superior service. You will provide investors superior reports that are accurate and complete from a reputable and independent third party. The importance of this cannot be discounted in a post-Madoff environment.
The third party fund administrator should be an established provider with a demonstrated expertise in these instrument types. Too often, administrators will claim to handle “everything” to get the business. Verification of capability should include system demonstrations with pertinent data, reports, interviews with key staff and references.
The third party fund administrator should be an established provider with a demonstrated expertise in these instrument types. Too often, administrators will claim to handle “everything” to get the business. Verification of capability should include system demonstrations with pertinent data, reports, interviews with key staff and references. Whether you are a hedge fund, private equity fund, fund of funds or a managed account, SS&C Fund Services can tailor a solution to meet your needs. We provide independent market valuations for all asset types, improved operational efficiency, compliance with regulatory requirements, cost reduction, and better investor services using our state-of-the art applications. We are one of the largest fund administrators in the industry, yet we provide a boutique level of service to our clients, large and small alike.
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