Fund Accounting Services FAQs
NAV to Compliance, All You Need to Know 

Fund accounting is a specialized form of financial accounting used by investment entities such as hedge funds, private equity firms, and mutual funds. Unlike traditional accounting that tracks business-wide profit and loss, fund accounting focuses on tracking individual investor contributions, calculating Net Asset Value (NAV), recording income by share class, and maintaining compliance with fund-specific regulations like AIFMD, Form PF, and SEC guidelines. It ensures transparency in investor-level reporting, profit allocation, and fund expenses.

NAV, or Net Asset Value, represents the per-share value of a fund. It is calculated by subtracting total liabilities from total assets and dividing the result by the number of outstanding fund units or shares. A reliable NAV calculation includes accrued income, unrealized gains/losses, pending expenses, and valuation of all securities as per the latest market prices. Daily, weekly, or monthly NAVs are used for investor redemptions, capital calls, and performance reporting.

Daily reconciliation ensures all positions, transactions, and cash flows are aligned between the fund’s internal ledger, custodians, and brokers. It helps flag discrepancies early, reduces audit risk, and keeps NAV calculations accurate. Daily reconciliations also support timely financial reporting and mitigate operational errors before they impact investor data or compliance filings.

Key financial reports include:

• Investor capital statements
• Income allocations and expense summaries
• Trial balances and general ledger reports
• Period-end financials (GAAP or IFRS compliant)
• Performance reports by strategy or asset class
• Waterfall allocation schedules

These reports are crucial for investor transparency, audit readiness, and compliance with regulatory mandates.

Compliance in fund accounting involves accurate data capture, jurisdiction-specific regulatory reporting, and audit-ready documentation. Services typically include:

• Form PF, CPO-PQR, and AIFMD Annex IV filing
• SEC, ESMA, and CFTC reporting frameworks
• Automated validations to prevent data inconsistencies
• Full audit trail and reporting logs

Compliance services reduce legal risks, enhance investor confidence, and ensure alignment with both US and global regulatory bodies.

Outsourcing fund accounting can significantly reduce operational overhead while improving scalability and accuracy. Benefits include:

• Access to skilled professionals familiar with hedge funds, PE, VC, and REITs
• Faster month-end close and reconciliation
• Cost reduction via offshore support models
• Reduced risk of compliance errors
• Technology-enabled automation and dashboard reporting

It also frees up internal teams to focus on core investment strategy.

Specialized fund accounting is crucial for:

• Hedge funds and fund of funds
• Private equity and venture capital firms
• Real estate investment funds
• Mutual funds and UCITS
• ESG and impact funds

Each fund type has its own structure, distribution model, fee arrangement, and reporting framework. Tailored accounting services ensure proper treatment of assets, expenses, and investor allocations.

Modern fund accounting is increasingly reliant on technology platforms that support automation, exception handling, and integration. Popular fund accounting platforms like Geneva, Allvue, Investran, and eFront allow for:

• Automated NAV calculation
• Real-time reconciliation
• Audit trail generation
• API integrations with custodian/broker feeds
• Secure investor portals

Technology streamlines operations and ensures faster, more accurate reporting.

A waterfall calculation is the process by which profits are distributed in private equity or venture capital funds. It involves calculating returns to investors based on tiers or hurdles (e.g., preferred return, catch-up, carried interest). Accurate fund accounting ensures the waterfall distribution aligns with fund agreements and legal compliance, minimizing the risk of disputes.

Investor onboarding involves setting up capital accounts, contribution schedules, AML/KYC documentation, and investor class allocation. Offboarding includes final NAV calculations, performance allocations, redemption processing, and final capital account closure. Fund accounting ensures all entries are accurate, traceable, and compliant throughout the investor lifecycle.

Fund accounting typically includes:

• Cash reconciliation: Matching bank balances and transactions
• Position reconciliation: Matching security holdings across custodians
• Trade reconciliation: Matching buy/sell orders with broker confirmations
• Expense reconciliation: Validating accruals and payments

These reconciliations are essential to validate fund activity and ensure no mismatches occur in valuation or reporting.

For funds with multi-currency investments or global investors, fund accounting teams apply foreign exchange (FX) adjustments, base currency conversion, and multi-entity ledger management. FX gain/loss calculations are critical for accurate NAV and investor-level allocations. Advanced systems also enable country-wise compliance and local tax calculations.

Capital calls are requests made by private equity or venture funds to investors for committed capital. Distributions are the returns paid back to investors. Fund accounting records:

• Timing and amount of calls/distributions
• Allocation by investor/share class
• Impact on NAV and performance reporting
• Audit-compliant entries on general ledger

This ensures capital flow transparency and investor trust.

Yes, fund accounting providers play a crucial role in audit support. They:

• Prepare general ledgers and trial balances
• Provide transaction logs and backup reports
• Assist in audit queries and walkthroughs
• Reconcile statements with custodian records
• Maintain an end-to-end audit trail for every NAV cycle

This reduces auditor effort and increases confidence in fund operations.

Fund administrators and asset managers typically track:

• NAV error rate and NAV delivery timelines
• Number of exceptions per reconciliation
• SLA adherence for reporting and compliance
• Time to complete audit queries
• Data accuracy and completeness rate

Dashboards with real-time KPI monitoring enable quick resolution and continuous improvement.

Yes, integration is a critical value add. Most services support:

• API-based integration with fund admin platforms
• Data warehouse or cloud database syncing
• Automated feeds from custodians, brokers, and market data sources
• Report formatting and delivery in client-preferred templates

This minimizes disruption and accelerates adoption for internal teams.

Hedge fund accounting involves frequent NAV calculations, daily reconciliation, and short-term performance reporting. Private equity fund accounting focuses on long-term capital calls, distributions, waterfall calculations, and periodic reporting. While both require compliance, the operational cadence and reporting complexity differ significantly, requiring customized processes.

Middle-office fund support bridges the gap between front-office trading and back-office reporting. Responsibilities include:

• Trade capture and booking
• Break management and resolution
• Performance attribution and risk reports
• Client reporting and data validations

This layer is crucial to ensure the accuracy of final fund accounting entries and timely communication with investors and regulators.

Key considerations include:

• Experience with your specific fund type
• Audit and compliance readiness
• Scalable delivery model and global presence
• Platform integration capabilities
• SLA-backed performance metrics
• Strong domain expertise in financial instruments, tax, and fund operations

A trusted fund accounting partner helps avoid costly errors and supports fund growth.

Having a dedicated payroll account manager ensures consistent communication, personalized support, and faster issue resolution. This single point of contact is well-versed in your company’s payroll structure, compliance needs, and workforce nuances. They help streamline escalations, monitor SLA adherence, and provide real-time guidance during audits, system updates, or tax season. For businesses with frequent headcount changes or complex payroll scenarios, an account manager reduces confusion and keeps payroll on track.

What is NAV restatement and when is it required?

When previously published NAVs contain errors or omitted data, a restatement is required for transparency and regulatory compliance.

Which software is best for hedge fund accounting?

Geneva and Eze Investment Suite are top choices due to real-time processing, reporting flexibility, and hedge fund-specific modules.

How is carried interest accounted for?

It’s recorded as a performance-based incentive allocation and calculated post-hurdle return, impacting GP and LP income shares.

Do you support real estate fund accounting?

Yes. We track property-level expenses, rental income, capital improvements, and asset revaluations tailored for real estate portfolios.

What is shadow NAV calculation?

A parallel NAV calculation done by fund managers to verify the administrator’s official NAV and detect discrepancies early.

Is IFRS 10 applicable in fund accounting?

Yes. Especially in consolidated reporting of controlled investment entities, IFRS 10 is applied based on fund structure.

Do you support feeder/master fund structures?

Absolutely. We ensure proper allocation, NAV share classes, and consolidated reporting across feeder-master arrangements.

How are late trades handled in NAV calculation?

Late trades are recorded with timestamp-based adjustments and cut-off validation, ensuring they don’t impact published NAVs incorrectly.

What is Form PF and who must file it?

Form PF is a regulatory requirement in the US for large private fund advisers. It captures systemic risk data for regulators.

Can your reports be white labeled for investors?

Yes. We offer branded investor statements, dashboards, and capital summaries customizable to your fund’s design and layout.

What are fund accounting software solutions commonly used today?

Leading fund accounting tools include Geneva, Investran, Allvue, Eze, and eFront, offering robust features for NAV reporting, reconciliation, and investor accounting.

How do hedge fund accounting services differ from traditional asset management?

Hedge fund accounting involves high-frequency trades, complex derivatives, and daily NAVs, requiring faster reconciliation and real-time data processing.

What does fund administration services include?

They cover general ledger management, NAV calculations, investor services, compliance filings, and capital accounting—all tailored to fund structure.

Are back-office fund services essential for small fund managers?

Yes. Even small funds benefit from outsourced back-office services to maintain compliance, reduce costs, and ensure timely reporting.

What is middle-office fund operations and how does it support accounting?

Middle-office operations handle trade lifecycle, data validation, and risk reporting—ensuring accurate downstream processing in fund accounting systems.

What is the difference between fund valuation and NAV calculation?

Fund valuation is the overall appraisal of all assets and liabilities, while NAV reflects the per-unit/share price based on that valuation.

How do fund accounting teams handle side pockets and illiquid assets?

Side pockets isolate illiquid assets to ensure accurate valuation and protect regular investors. Accounting includes custom reporting and periodic revaluation.