The choice of a firm's auditor is another important decision. The audit firm provides a crucial validation function and attest function for investors and counterparties of any fund. In addition to traditional audit and tax services, audit firms can be a valuable source of advice and information for a fund manager.
“Hedge funds want counsel that goes beyond the traditional. Counterparty risk, fraud, governance and oversight, risk management, regulatory and compliance are no longer back office concerns—they now rank alongside performance for both hedge funds and their investors as a significant differentiator in evaluating management of a fund,” said Cary Stier, U.S. leader of Deloitte's asset management services practice.
The scope of services provided by an auditor includes audit and attest functions, tax services, governance and risk management services, and operations and technology services.
The audit function provides an independent external review of the fund's books and records. It also includes a review of the fund's performance calculations and assessment of the appropriateness of the valuation methods and models in place at a hedge fund.
Tax services include work done prior to formation related to the optimal choices of onshore and offshore jurisdictions to launch a fund, methods to minimize withholding taxes on coupons and dividend payments, compensation planning, partnership accounting, and other tax-related planning or implementation issues. ...