An audit is an investigation that verifies a business’ financial records, business dealings, and other procedures. An audit can be performed internally (by someone who already works for the company) or externally (by an independent party for hire.)
Contrary to popular belief, audits don’t happen solely for suspicious activity. In fact, audited financial statements build trust and allow potential investors of a hedge fund to better understand the fund’s operations.
Many hedge funds seek audits to attract new investors, prove their worth, and establish transparency. An investment fund auditor is a qualified professional who performs these audits and helps the fund establish and review a suitable methodology. Think of them as the “checks and balances” department that establishes a layer of legal protection.
In accordance with generally accepted accounting principles, the statements and reports provided by an investment fund auditor will include the following important information: