Property Management Case Study 9

Nature of Services

• Tracking Net Asset Values of portfolio
• Establishing and maintaining internal accounting systems to track investments, fund flows, and asset acquisitions/dispositions
• Handling US FATCHA and UK FATCHA compliance paperwork for funds
• Coordinating with fund administrators for redemptions and investment queries

Challenges

The client invests in multiple types of asset classes such as real estate and REITs, equity, mutual funds, debt instruments, options among others. These investments are across the globe and through brokerage accounts or direct subscriptions to fund offers. There is constant need to maintain proper documentation and paperwork, respond to fund administrator queries, and account for fund portfolio flows. The process had significant issues when we started working with the client. These included a lack of proper paperwork such as fund statements, incomplete and delayed communications with fund managers, pending redemptions and subscription requests and no accounting of fund flows. Specific to compliances, FATCHA and AML compliances for mutual fund investments were incomplete and pending. There was also no follow-up on past redemption or information requests.

Additionally, a lack of detailed and properly maintained set of books for various fund transactions made it difficult for the client to resolve the year end queries from CPAs and fund administrators. Hence there was always a delay in preparing the final financials for compliances. In addition, due to the above issues, the client did not have adequate time to find and analyze new investment opportunities.

Solution

Given the complexity of tasks and the learning curve involved, we allocated a senior accountant to this assignment. He had prior experience in handling clients in the investment portfolio.

Our first task was to streamline the documents such as fund statements, fund manager emails and other important business communications. Some of the steps taken towards this end were:

• Set-up of an organized nested folder management structure and categorization of the existing data per subsidiaries, further drilled down to funds and finally to month
• All communications were organized in relevant folders and pending tasks were prioritized
• Regular tracking and follow up on redemption requests with fund managers

The next task was to get compliance related work organized. The compliances were in US/UK FATCHA and AML Compliance work. There was some learning curve for us in the compliance activities as we had limited prior experience in these activities. The senior accountant researched the various compliance related terms, reviewed past compliance documents and had knowledge sharing conference calls with client. We also prepared customized tracking schedules for FATCHA/AML compliances and other information needed for compliance.

Finally, an-in-house accounting system was set-up with a well laid out chart of accounts to capture the different asset classes. Accounts were set-up for related party transactions and intercompany transactions. Proper description capturing key investment details were captured while entering the transactions. Monthly reconciliation schedules for reconciling bank and brokerage accounts were set-up. Similarly, capital and distributions accounts were set-up to properly account for capital infusions and dividend payments. We also established mark-to-market accounting practices to capture the fluctuating values of the different asset classes.