How we helped a Private Equity client in preparing a Fund Administration platform

The Context

The client, a Private Equity firm, asked the TresVista team to assist on all fund admin-related requests starting from the fund setup on QuickBooks to the preparation of financial statements, preparation of individual partner’s capital accounts and statement of positions and resolving audit queries. For this, the client provided the supporting documents and a template which were required for preparing the tax workbooks and financials in an orderly way.

The Objective

To timely file tax returns by preparing the financial statements for different fund families and assist the client in end-to-end admin support against multiple requests

The Approach

The TresVista team followed the following process:

• Fund Formation: Assisted the client with the generation of EINs (IRS.gov) and formation of New Funds (Legal Inc)
• Fund Setup: Passed journal entries or categorized transactions into different accounts by using the charts of accounts
• Updating transactions into QBO: Updated the accounts by recording monthly journal entries and reconciling the contribution amount for investors on the client’s online platform
• Rechecking for Discrepancies: Rechecked side letters on the client’s website to ensure the management fee and carry terms were accurate
• Preparation of FS: Prepared the three financial statements, calculated management fees, carried interest, IRR, and financial highlights for the year
• Preparation of Allocation Table: Prepared the individual partner’s capital accounts and reports for each individual investor
• Statement of Position: Reports were made for individual investors with respect to their share of the fund total
• Audit: Audit reports were prepared, and the financials were sent to the auditors for the mandatory screening and filing of tax returns

The Challenges We Overcame

The major hurdle faced by the team was the issue of discrepancies in the values of investors’ management fees and carried interest rates. While preparing the WB for tax returns, the team observed that carried interest and management fees were not correctly reflected. No amends to the terms of the contract for LPs (Limited Partner) were updated on the website, leading to incorrect reports being exported. These reports were taken as a base for the accounting WB, hence causing hindrances in the process.

Additionally, the template that the client provided was a little complex and unable to pull the accurate values for change in contributed capital, and distributions, and was not suitable for funds with a period of more than 3-year figures.

The team overcame these hurdles by deeply analyzing the whole situation, handling the inaccuracy, and giving back-end support to the client’s portal. For this, the team gathered individual investors’ Tax IDs, made sure the amounts for contributed capital and the committed capital were correct, searched side letters, and scrolled through the operating agreement to pull out all the discrepancies. The team prepared allocation tables to reflect the accurate expense allocations and LP ending balances.

Final Product (Sanitized)

The Value Add – Catalyzing the Client’s Impact

The team prepared the primary financial statements that the client needed for filing tax returns across multiple funds within the stated timelines and navigated through operating agreements and side letters to identify different fee rates against investors. Additionally, the team learned about the whole life cycle of the fund from its inception on online platforms till its liquidation in the accounts. Further, to manage the multiple requests from different requestors, the team streamlined the whole process into smaller and simpler tasks by working alongside the FPS team and completed the project effectively and efficiently.