{"id":972,"date":"2024-11-26T09:58:44","date_gmt":"2024-11-26T09:58:44","guid":{"rendered":"https:\/\/iqeq.com\/mu\/?p=972"},"modified":"2024-11-26T09:58:45","modified_gmt":"2024-11-26T09:58:45","slug":"why-outsourcing-your-financial-statements-preparation-is-becoming-a-must-rather-than-an-option","status":"publish","type":"post","link":"https:\/\/iqeq.com\/mu\/insights\/why-outsourcing-your-financial-statements-preparation-is-becoming-a-must-rather-than-an-option\/","title":{"rendered":"Why outsourcing your financial statements preparation is becoming a must rather than an option"},"content":{"rendered":"
\n

By Adriaan Loubser, Executive Director, South Africa<\/em><\/p>\n

Before the global pandemic, a trend among investment managers toward outsourcing was already on the rise, driven by increasing investor and regulatory demands. Finding (and retaining) talent is a nearly unprecedented challenge, and even large firms are struggling to keep pace with the rapid advances in technology. In today\u2019s fast-paced business environment, investment managers are constantly seeking ways to optimise their operations and focus on their core competencies. We\u2019re all familiar with alternative funds outsourcing their fund accounting and administration, but this article focuses on the outsourcing of financial statements preparation to a third-party firm that is not the fund administrator.<\/strong><\/p>\n

As it has been the case across the alternative funds industry for several years, it\u2019s most common to outsource the preparation of the annual financial statements. This typically is performed by the fund administrator that oversees the books and records of the fund, but investment managers may also consider other third-party firms that focus solely on preparation of financial statements. The benefit of outsourcing to a specialised firm is that the team members focus on financial statements all year round, and not only during their clients\u2019 audits.<\/p>\n

This strategic decision offers numerous benefits to investment managers, ranging from access to specialised expertise, but most importantly, to a smoother audit process. Audits are an integral part of financial reporting, and we all know how tough, and sometimes frustrating, an audit can be. These specialised firms work collaboratively with their clients\u2019 auditors, facilitating open communication and providing the necessary documentation and support. By leveraging the expertise of specialised firms, investment managers can streamline the audit process, reduce errors, and ultimately expedite the issuance of financial statements.<\/p>\n

Usually, financial statements preparation specialised firms build their teams from prior auditors, or accountants that have at least performed an auditor\u2019s training contract (usually three years). These team members are better qualified and equipped to handle the most complex and daunting audit process while successfully navigating their clients through timely sign off of their financial statements.<\/p>\n

Risk management issues and true impact on the users of the financial statements come to mind when thinking about receiving auditor\u2019s review comments. The team members must be able to assess the auditor\u2019s comments and advise the client on the best suitable outcome that adds value to the fund\u2019s financial statements, but also be acceptable for the auditor to avoid a modified audit opinion.<\/p>\n

It is important that the preparers of financial statements (either internally or externally) stay on top of new accounting standards and amendments. Since a specialised firm focuses solely on preparing financial statements, its principal revenue-driving activities, much time is allocated towards ensuring they\u2019re fully comfortable with new accounting standards and amendments.<\/p>\n

Presenting high quality financial statements is extremely important. Financial statements are distributed to current and prospective investors, including regulators. When it comes to financial reporting, errors or inconsistencies in financial statements can have serious implications, ranging from regulatory penalties to loss of investor confidence.<\/p>\n

Investment managers should consider their outsourced team as an extension of their management team. They should all work closely together to ensure the end-goal is met. Even if preparation of the financial statements is outsourced, ultimate responsibility for the financial statement rests with management.<\/p>\n

How IQ-EQ can help<\/h2>\n

Cognisant of the growing need for a dedicated and hands-on approach, at IQ-EQ in South Africa, we\u2019ve built a team that focuses solely on preparing investment fund financial statements. This team currently prepares financial statements for close to 2,300 investment funds, which consists of circa 70% of the South African regulated funds market and funds domiciled in the Cayman Islands, United States, United Kingdom, Ireland, Mauritius, Namibia and Luxembourg, prepared in accordance with various accounting frameworks such as IFRS and US GAAP.<\/p>\n

We\u2019ve supported our clients through changing accounting reporting frameworks, auditors and even fund administrators. Challenging projects are those clients with more than a 100 funds on their platform, and all the funds are required to be audited and released within 90 days from their financial year end. The pressure is real, but with a dedicated, focused and a dynamic team (and of course clever automation initiatives), we\u2019re able to support our clients through this period… much to the delight and satisfaction of general partners, limited partners, directors, trustees, and even the auditors!<\/p>\n

Click here<\/a> to find out more and get in touch today.<\/strong><\/h4>\n

 <\/p>\n

This article was originally published in\u00a0<\/em><\/strong>Africa Global Funds\u2019 October 2024<\/a> magazine<\/em><\/strong>.\u00a0<\/em><\/strong><\/p>\n

\n

About the author<\/strong><\/p>\n

Adriaan is the executive director and leads the operations for IQ-EQ in South Africa. He has more than 20 years of experience in the funds industry. He qualified as Chartered Accountant (SA) in 2008 and relocated to the Cayman Islands until 2015. Adriaan is a specialist in financial reporting across multiple accounting frameworks and has managed financial statements reviews for some of the world’s largest asset managers.<\/p>\n <\/div>\n<\/section>\n\n

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Meet the author<\/h2>\n
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\n \"\" <\/div>\n
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Adriaan Loubser<\/h3>\n

Managing Director – South Africa<\/p>\n

<\/div>\n

South Africa<\/p>\n \n Send email <\/a>\n \n +27 21 137 6972 <\/a>\n

\n \n LinkedIn<\/span>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n
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