Audit
An audit is an independent review of a fund’s financial statements and controls, typically performed annually by an external audit firm.
Definition
Fund audits provide third-party verification of financial statements, valuation processes, and certain controls. Audited financials improve transparency, support LP reporting requirements, and reduce operational risk perceptions. Allocator Context Institutional allocators often require audited financial statements and evaluate the auditor’s credibility and independence. Audit timing and quality affect LP reporting schedules and internal compliance. Decision Authority Audit expectations are typically embedded in fund documents and diligence requirements. Absence of credible audit arrangements can block allocations, especially for regulated allocators. Why It Matters for Fundraising Audits are not a marketing point; they are a baseline operational requirement for many LPs. Managers that can provide timely audited statements, consistent reporting, and clean controls reduce ODD friction and accelerate closes. Key Takeaways Provides third-party verification Often required by institutions Timing affects LP reporting Credible audits reduce operational objections