Description
ALPS’ Monthly Review Package continued
the accruals, fees and intangible assets that are not included at the broker level. The first section of the report shows broker level
market value figures, both on a cash basis excluding accruals and on a cash basis including accruals. The remaining sections
of the report provide a breakdown of the remaining balance sheet items. Details of these items can be found by examining the
General Ledger (a description of this report follows below).
The last line of the report, “Total Partners’ Capital” will tie to both the Flash Report as well as the previous report, Gross to Net Global Return Recalculation. §§ Income Details (“Income Details” tab) - This report is similar to an income statement, however, with much more detail. It breaks performance down based on the dollar change as well as percentage change based on each income item. The last line of the report, “Gross Income/Gross Loss”, ties back to the previous report, Gross to Net Global Return Recalculation.
Note that the percentage figures on the Income Details report really are “back-of-the-envelope.” Because fees and incentives are calculated separately for each participant – including the “tracking account” – there can be small differences between a global fund-level estimate and the actual net return. §§ General Ledger (“General Ledger” tab) - This report gives the detailed double-entry accounting figures for the month. The column headers state the account name while the row headers give the transaction type. By calculating the change in any income/expense account (ending capital minus beginning capital) the figures can all be tied back to the previous report, Income Details. §§ Investor Fee Rates, ERISA & Restriction Status (“Inv Fee Rates” tab) - This last report displays the way we have coded each investor’s unique fee arrangements, ERISA status, and restriction status. It is important for fund management to review these items for accuracy in the event information is incorrect or investor status has changed. Through the use of these reports, fund management should be able to get a sound understanding of the accruals, income items, balance sheet items, and individual investor standings.
It is important to understand that several of these reports are “backing” into returns or dollar figures as a check to the official fund valuation methodology. Small dollar and basis point variances between reports are expected and should be disregarded. Documenting the Review Process and File Retention In order to expedite and simplify the annual audit process, ALPS suggest fund management maintain electronic copies of the Month End Reports. The financial controls process would be further perfected if fund management devises a system to document a contemporaneous monthly review of the package and other ALPS-provided reports. If an investor or fund manager goes though a reasonable due diligence process that requires third-party administration and a reputable independent broker and auditor, assuring that there are reasonable financial controls, and follows a documented review process, risks for fraud and unexpected loss are minimized. This material has been prepared by ALPS for general informational purposes only.
It does not constitute tax, legal or investment advice, and is presented without any warranty as to its accuracy or completeness or whether it reflects the most current developments. ALPS does not provide tax, legal or investment advice. You are urged to consult your own tax, legal and investment advisors. 2 © 1994 - Present ALPS e-mail e l e m e n t s @ a l p s i n c .
c o m web w w w. a l p s i n c . c o m .
The last line of the report, “Total Partners’ Capital” will tie to both the Flash Report as well as the previous report, Gross to Net Global Return Recalculation. §§ Income Details (“Income Details” tab) - This report is similar to an income statement, however, with much more detail. It breaks performance down based on the dollar change as well as percentage change based on each income item. The last line of the report, “Gross Income/Gross Loss”, ties back to the previous report, Gross to Net Global Return Recalculation.
Note that the percentage figures on the Income Details report really are “back-of-the-envelope.” Because fees and incentives are calculated separately for each participant – including the “tracking account” – there can be small differences between a global fund-level estimate and the actual net return. §§ General Ledger (“General Ledger” tab) - This report gives the detailed double-entry accounting figures for the month. The column headers state the account name while the row headers give the transaction type. By calculating the change in any income/expense account (ending capital minus beginning capital) the figures can all be tied back to the previous report, Income Details. §§ Investor Fee Rates, ERISA & Restriction Status (“Inv Fee Rates” tab) - This last report displays the way we have coded each investor’s unique fee arrangements, ERISA status, and restriction status. It is important for fund management to review these items for accuracy in the event information is incorrect or investor status has changed. Through the use of these reports, fund management should be able to get a sound understanding of the accruals, income items, balance sheet items, and individual investor standings.
It is important to understand that several of these reports are “backing” into returns or dollar figures as a check to the official fund valuation methodology. Small dollar and basis point variances between reports are expected and should be disregarded. Documenting the Review Process and File Retention In order to expedite and simplify the annual audit process, ALPS suggest fund management maintain electronic copies of the Month End Reports. The financial controls process would be further perfected if fund management devises a system to document a contemporaneous monthly review of the package and other ALPS-provided reports. If an investor or fund manager goes though a reasonable due diligence process that requires third-party administration and a reputable independent broker and auditor, assuring that there are reasonable financial controls, and follows a documented review process, risks for fraud and unexpected loss are minimized. This material has been prepared by ALPS for general informational purposes only.
It does not constitute tax, legal or investment advice, and is presented without any warranty as to its accuracy or completeness or whether it reflects the most current developments. ALPS does not provide tax, legal or investment advice. You are urged to consult your own tax, legal and investment advisors. 2 © 1994 - Present ALPS e-mail e l e m e n t s @ a l p s i n c .
c o m web w w w. a l p s i n c . c o m .
