Hedge Funds

Hedge fund audit and tax services are the dual pillars of a fund’s operational integrity. While audit services provide independent verification of financial health, tax services ensure the fund remains compliant and tax-efficient across complex global jurisdictions. At our Firm, these functions are integrated to provide a seamless "institutional-grade" experience for fund managers.

Our integrated audit approach focuses on the high-complexity areas that institutional investors scrutinize most:

• Valuation Verification: Independent price testing of securities and in-depth valuation testing of management models of Level 3 illiquid assets and complex derivatives
• Existence Testing: Independent verification of assets held at prime brokers and custodians
• Operational Controls: Assessing the robustness of the fund's internal accounting and reporting processes 

We manage the intricate tax requirements unique to the alternative investment space through comprehensive tax services, including:

• Schedule K-1s, K-2s and K-3s and Important Filings: Form 1065 filing (Partnership tax return), Form 1042 for foreign investors, and timely delivery of Schedule K-1s to your investors
• Structural Tax Optimization: Designing tax efficiency for domestic, offshore and master-feeder structures 

Regulatory compliance services help ensure that hedge fund managers meet the complex, ongoing reporting requirements mandated by financial regulatory bodies, including the Securities and Exchange Commission (SEC), Commodity Futures Trading Association (CFTA) and National Futures Association (NFA). As the alternative investment landscape is increasingly transparent, hedge fund compliance services are dedicated to "compliance office" functions that allow managers to focus more of their efforts on alpha generation while we help with the firm's compliance calendar.

Hedge fund compliance services also cover regulatory oversight relating to global transparency (FATCA and CRS). For funds with offshore domiciled entities or non-U.S. investors, we can handle the specialized "automatic exchange of information" protocols:

• FATCA: Identifying U.S. reportable accounts to avoid the 30% IRS withholding penalty
• CRS: Establishing compliance with the Common Reporting Standard for investors across 100+ jurisdictions.

As hedge funds have increasingly become more sophisticated, so have the ways in which the industry's key players identify themselves. Our team of professionals serve hedge fund operators and their investors through audit, tax, advisory, accounting and compliance services, including:

• Fund Managers
• Portfolio Managers
• Registered Investment Advisors (RIAs)
• General Partner (GPs)
• Investment Managers
• CCOs
• COOs
• CFOs
• General Principal
• Industry Traders

Cherry Bekaert has served securities industry and alternative investment clients for over three decades, including:

• Investment Banks/Brokerages
• Trading Houses (including Proprietary Trading Firms)
• Investment Mangers
• Trust Companies
• Wealth Management Firms
• Asset Management Firms
• Other Alternative Investment Vehicles

Annual audit fees are tailored to the complexity of your fund’s structure and investment strategy. While every engagement is unique, fees generally scale based on the operational footprint of the fund and number of investors.

Key variables that influence your quote include:

• Asset Class and Valuation: High volumes of Level 3 (illiquid) assets require more intensive valuation testing than liquid equities
• Fund Structure and Domicile: Master-feeder, side-pockets and multi-series structures increase the number of entities and reporting requirements
• Investor Base: The volume of Schedule K-1s and the complexity of capital account activity (subscriptions/redemptions) impact both audit and tax workloads
• Regulatory Scope: Requirements for offshore jurisdictions or specific regulatory filings can add technical layers to the engagement

Obtaining an accurate hedge fund audit cost estimate is easiest by contacting a reputable service provider to discuss a service engagement and fee quote. 

Choosing to engage the Cherry Bekaert audit, tax and advisory service professionals provides you and your fund numerous benefits in terms of financial operations and compliance, investment execution and improved investor transparency. Our hedge fund clients benefit from:

• Institutional scalability — we grow with you and your funds
• Timely delivery of critical fund documents and tax filings
• Compliance with federal or state-level custody rule requirements
• Cost-effective engagement with a top-ranked industry leader
• Visible operational readiness to investors from day one
• Experience and knowledge across our audit and tax teams
• Boosted investor confidence with top-ranked, industry- recognized providers
• Increased fund marketability for new capital
• Opportunity to focus more on strategy execution
• Experienced guidance through the nuances of the alternatives industry
• Referral relationships across industry service providers