{"concept_id":"ALTSS-OPS-001","slug":"fund-administrator","canonical_name":"Fund Administrator","aliases":["fund administration","third-party administrator"],"kind":"entity_type","authority":"industry","facets":["INT","OPS"],"domains":["FUND-OPERATIONS"],"display_title":"Fund Administrator","search_aliases":["what does a fund administrator do","fund administrator vs custodian","private equity fund administration","shadow administration","fund administrator soc 1 report"],"one_sentence_definition":"A fund administrator is a service provider, usually independent of the manager, that keeps a fund's books and investor records: fund accounting, NAV and capital accounts, capital calls, distributions and investor reporting, while valuation stays the manager's responsibility.","plain_english":"The manager decides what to buy and what it is worth; the administrator keeps the accounts. It records every transaction, calculates each investor's share of the fund, prepares capital call and distribution notices, onboards investors and produces their statements. Because it sits outside the manager, it is an independent check on the numbers investors receive, though only as independent as its scope and access allow.","parent_concepts":[],"child_concepts":[],"related_concepts":["net-asset-value","capital-account-statement","custody","depositary","audit","operational-due-diligence","ilpa-reporting-template","kyc-aml","fund-expenses","waterfall"],"comparison_concepts":[],"not_the_same_as":[{"slug":"custody","distinction":"A custodian holds and safeguards assets and cash. The administrator keeps the books and investor records but does not normally hold assets."},{"slug":"depositary","distinction":"An AIFMD depositary is a regulated role with custody, cash-flow monitoring and oversight duties and its own liability. Administration is a separate function that the AIFM performs or delegates."},{"slug":"audit","distinction":"The auditor examines the fund's annual financial statements and gives an opinion; the administrator prepares the books and supports the audit."}],"formula_ids":[],"worked_examples":[],"sections":[{"heading":"Core services","paragraphs":["| Service | What it involves |\n|---|---|\n| Fund accounting | General ledger, reconciliations of cash and positions, accruals, support for the year-end audit |\n| NAV and capital accounts | Calculation of [net asset value](/glossary/net-asset-value); allocation of income, gains, fees and expenses to each partner; the [capital account statement](/glossary/capital-account-statement) |\n| Fees and carry | Management fee and offset calculations; [carried interest](/glossary/carried-interest-carry) accruals and waterfall calculations under the limited partnership agreement (LPA) |\n| Capital activity | [Capital call](/glossary/capital-call) and distribution notices; equalisation for later closings; transfers of interests |\n| Investor services | Processing subscription documents, investor [KYC/AML](/glossary/kyc-aml) checks under delegation, maintaining the investor register (a transfer agent function in open-end funds) |\n| Reporting | Quarterly investor statements, the [ILPA Reporting Template](/glossary/ilpa-reporting-template), data for regulatory filings such as Form PF, and [FATCA](/glossary/fatca) and Common Reporting Standard (CRS) reporting |\n| Treasury support | Preparing payments for the manager's approval and monitoring cash |\n| Loan administration | For credit funds: loan servicing records, interest and fee calculations, covenant data |","The EU's [Alternative Investment Fund Managers Directive](/glossary/aifmd) (AIFMD) lists comparable functions under \"administration\": fund accounting and legal services, customer inquiries, valuation and pricing including tax returns, regulatory compliance monitoring, maintaining the investor register, distributing income, issuing and redeeming units, contract settlements and record keeping (Annex I, point 2(a)), as functions that an alternative investment fund manager (AIFM) may additionally perform in managing a fund. The 2024 amending Directive (EU) 2024/927 added loan origination and the servicing of securitisation special purpose entities to that list without changing the administration functions."]},{"heading":"Operating models","paragraphs":["- **Full outsourcing**: the administrator keeps the official books and produces investor reporting.\n- **Self-administration**: the manager keeps the books in-house. Common among large managers with their own fund-accounting teams; investors then look for an independent controls report or other external checks.\n- **Shadow administration**: the manager keeps a parallel set of books and reconciles them with the administrator's, so differences surface quickly.\n- **Co-sourcing**: the administrator provides staff or technology while the manager keeps responsibility for the books.","The choice is visible to investors. Form ADV Part 1A asks, for each private fund, whether it uses an administrator other than the adviser, whether that administrator is a related person, and whether it sends account statements to investors (Schedule D Section 7.B.(1), Q26). It also asks what percentage of the fund's assets were valued by a person that is not a related person (Q27). ILPA's due diligence questionnaire (DDQ 2.0) asks whether the fund uses an independent, unaffiliated administrator (Q15.14)."]},{"heading":"Who is responsible for what","paragraphs":["An administrator calculates; it does not own the valuation. For private assets it normally applies the manager's marks for Level 3 investments, checks them against supporting files and records them.","- **EU.** Under AIFMD the valuation function is performed either by an independent external valuer or by the AIFM with the task functionally independent from portfolio management (Article 19(4)). The AIFM remains responsible for proper valuation and for calculating and publishing the NAV, even if it appoints an external valuer (Article 19(10)).\n- **US registered funds and business development companies (BDCs).** Rule 2a-5 places fair value determinations with the fund's board or a valuation designee such as the adviser, with oversight of any pricing services. It does not apply to private funds.\n- **Safekeeping is a different role.** A [custodian](/glossary/custody) holds assets; under the US Custody Rule an SEC-registered adviser that has custody of client funds or securities must have a qualified custodian maintain them, subject to exceptions such as certain privately offered securities. In the EU, a [depositary](/glossary/depositary) holds or verifies assets, monitors the fund's cash flows and ensures that unit values are calculated in accordance with the applicable law, the fund's rules and its valuation procedures (AIFMD Article 21(7), 21(8) and 21(9)).\n- **The auditor** gives an opinion on the fund's annual financial statements; it is not part of the administration."]},{"heading":"Controls assurance: SOC 1 and ISAE 3402 reports","paragraphs":["Administrators commonly provide a service-organisation controls report so their clients and the clients' auditors can rely on their processes:","- **System and Organization Controls (SOC) 1** reports, issued under standards of the American Institute of Certified Public Accountants (AICPA), cover controls at a service organisation that are likely to be relevant to user entities' internal control over financial reporting.\n- **International Standard on Assurance Engagements (ISAE) 3402**, issued by the International Auditing and Assurance Standards Board (IAASB), is the international standard for the same type of report, effective for reports covering periods ending on or after 15 June 2011.","A **type 1** report covers the description of the system and whether controls are suitably designed at a point in time. A **type 2** report adds whether the controls operated effectively throughout a period, with the auditor's tests and results. When reviewing one, LPs and their [ODD](/glossary/operational-due-diligence) teams check that it is a type 2 report covering the relevant period and services, read any exceptions, note which complementary controls the manager must run itself, and see which subservice providers are carved out."]},{"heading":"How GPs choose an administrator and how LPs assess one","paragraphs":["Managers weigh experience in the asset class (closed-end private equity, credit, real estate and hedge funds need different systems), jurisdictions covered, investor-reporting technology, capacity to produce standard templates, anti-money-laundering (AML) and KYC capability, and cost. Administration fees are usually charged to the fund as a [fund expense](/glossary/fund-expenses) if the LPA permits.","LPs check independence (related person or not), scope (does the administrator see bank statements directly, does it release payments, does it calculate carry), controls reports, the strength of the manager's oversight, and whether the administrator will confirm its role directly to investors. For US advisers, the effective date of the Financial Crimes Enforcement Network (FinCEN) rule requiring registered and exempt reporting investment advisers to run AML programmes and file suspicious activity reports has been delayed to 1 January 2028; until then that rule does not apply, and investor AML checks performed by administrators follow the manager's own policies and the procedures it delegates."]}],"classification_rules":["Classify a firm as a fund administrator for a given fund when it maintains the fund's official books, capital accounts or investor register under a service agreement. A firm that only holds assets is a custodian or depositary; one that only audits is the auditor.","A transfer agent, which maintains the investor register and processes subscriptions and redemptions, is a function the administrator usually performs in private funds, not a separate firm type to record."],"calculation_rules":[],"common_mistakes":["Assuming the administrator values the fund's private investments. It usually records and checks the manager's valuations; the manager remains responsible.","Reading the administrator's SOC 1 or ISAE 3402 report as evidence about the manager's own controls.","Equating \"uses a third-party administrator\" with independent control of cash. If the manager's staff can still release payments alone, the key risk remains.","Ignoring subservice organisations carved out of the controls report.","Confusing the administrator with the EU depositary."],"edge_cases":["An administrator that is a related person of the manager appears as \"yes\" to Form ADV Q26(d); investors treat it as self-administration for independence purposes.","Continuation vehicles, co-investment special purpose vehicles (SPVs) and feeder funds are often administered separately from the main fund, which can split one investor's reporting across providers.","Credit funds need loan administration and sometimes agency services that general fund administrators may subcontract."],"external_standard_mappings":[{"standard":"AIFMD (Directive 2011/61/EU)","reference":"Annex I, point 2(a) (administration functions); Art. 19(4), 19(10) (valuation); Art. 21(7)-(9) (depositary)","relation":"related","source_id":"SRC-EU-AIFMD-2011-61"},{"standard":"ISAE 3402","reference":"Type 1 and type 2 service-organisation controls reports","relation":"related","source_id":"SRC-IAASB-ISAE-3402"}],"source_ids":["SRC-EU-AIFMD-2011-61","SRC-EU-AIFMD2-2024-927","SRC-IAASB-ISAE-3402","SRC-ILPA-DDQ-2","SRC-US-AICPA-SOC1","SRC-US-ECFR-270-2A-5","SRC-US-ECFR-275-206-4-2","SRC-US-FR-2025-24184","SRC-US-SEC-FORM-ADV-PART-1A"],"citations":[{"source_id":"SRC-EU-AIFMD-2011-61","pinpoint":"Annex I point 2 introductory words and (a); Art. 19(4), 19(10); Art. 21(7), 21(8)(a)-(b), 21(9)(b)","supports":"Administration functions an AIFM may additionally perform; external valuer or functionally independent internal valuation; AIFM responsible for proper valuation and for calculating and publishing NAV; depositary cash-flow monitoring, safekeeping (custody or ownership verification) and oversight of unit value calculation","source":{"source_id":"SRC-EU-AIFMD-2011-61","title":"Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD)","authors":"European Parliament and Council","publisher":"Official Journal of the EU, L 174, 1.7.2011","document_type":"directive","url":"https://eur-lex.europa.eu/eli/dir/2011/61/oj/eng","year":2011,"publication_date":"Adopted 8 June 2011; transposition by 22 July 2013","jurisdiction":"EU","status":"In force; amended by Directive (EU) 2024/927 (AIFMD II)","last_verified":"2026-10-01"}},{"source_id":"SRC-US-SEC-FORM-ADV-PART-1A","pinpoint":"Schedule D, Sec. 7.B.(1), Questions 26-27","supports":"Disclosure of each private fund's administrator, related-person status, account statements and independently valued share of assets","source":{"source_id":"SRC-US-SEC-FORM-ADV-PART-1A","title":"Form ADV Part 1A (paper version) - Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Advisers","publisher":"U.S. Securities and Exchange Commission","document_type":"form","url":"https://www.sec.gov/about/forms/formadv-part1a.pdf","publication_date":"SEC 1707 (07-24)","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-ILPA-DDQ-2","pinpoint":"Q15.14","supports":"LPs ask whether the fund uses an independent, unaffiliated administrator","source":{"source_id":"SRC-ILPA-DDQ-2","title":"ILPA Due Diligence Questionnaire 2.0 (and Diversity Metrics Template)","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"template","url":"https://ilpa.org/wp-content/uploads/2021/11/ILPA-DDQ-2.0.pdf","year":2021,"publication_date":"Version 2.0, November 2021 (v1.1 dated October 2013)","jurisdiction":"intl","status":"Current","last_verified":"2026-10-01"}},{"source_id":"SRC-US-ECFR-270-2A-5","pinpoint":"17 CFR 270.2a-5(a)(4), (b), (c) (definition of fund: registered investment company or BDC)","supports":"Fair value determinations by the board or a valuation designee; registered funds and BDCs only","source":{"source_id":"SRC-US-ECFR-270-2A-5","title":"17 CFR 270.2a-5 - Fair value determination and readily available market quotations (Rule 2a-5)","publisher":"U.S. Securities and Exchange Commission (CFR text via eCFR; LII mirror)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/270.2a-5","publication_date":"eCFR current as of 2026-09-29; last amended 2021-03-08 (effective date of adoption)","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-US-ECFR-275-206-4-2","pinpoint":"17 CFR 275.206(4)-2(a) introductory text and (a)(1); (b)(2) (certain privately offered securities)","supports":"Registered (or required to be registered) adviser with custody of client funds or securities must have a qualified custodian maintain them; exception for certain privately offered securities","source":{"source_id":"SRC-US-ECFR-275-206-4-2","title":"17 CFR 275.206(4)-2 - Custody of funds or securities of clients by investment advisers (Custody Rule)","publisher":"U.S. Securities and Exchange Commission (CFR text via LII mirror)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/275.206(4)-2","publication_date":"Current text as served by LII on 2026-10-01; source line 75 FR 1484, Jan. 11, 2010","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-IAASB-ISAE-3402","pinpoint":"Para 1 (scope), 7 (effective date), 9(a) (carve-out method), 9(b) (complementary user entity controls), 9(j)-(k) (type 1 and type 2 reports)","supports":"Scope, effective date, carve-out method, complementary user entity controls, type 1 and type 2 reports","source":{"source_id":"SRC-IAASB-ISAE-3402","title":"International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Service Organization","publisher":"International Auditing and Assurance Standards Board (IAASB), via IFAC","document_type":"standard","url":"https://www.ifac.org/_flysystem/azure-private/publications/files/B007%202013%20IAASB%20Handbook%20ISAE%203402_0.pdf","publication_date":"Issued December 2009; extract from the 2013 IAASB Handbook; effective for service auditors' reports covering periods ending on or after 15 June 2011 (para 7)","jurisdiction":"intl","status":"Current","last_verified":"2026-10-01"}},{"source_id":"SRC-US-AICPA-SOC1","pinpoint":"SOC 1 page","supports":"SOC 1 covers controls relevant to user entities' internal control over financial reporting, for user entities and user auditors","source":{"source_id":"SRC-US-AICPA-SOC1","title":"SOC 1 - SOC for Service Organizations: ICFR","publisher":"AICPA & CIMA","document_type":"guidance","url":"https://www.aicpa-cima.com/topic/audit-assurance/audit-and-assurance-greater-than-soc-1","publication_date":"Web page accessed 2026-10-01","jurisdiction":"US","status":"Current","last_verified":"2026-10-01"}},{"source_id":"SRC-US-FR-2025-24184","pinpoint":"91 FR 36, SUMMARY and DATES (effective date of the IA AML Rule, 89 FR 72156, delayed to 2028-01-01)","supports":"FinCEN AML/CFT program and SAR filing rule for registered and exempt reporting advisers delayed to 1 January 2028","source":{"source_id":"SRC-US-FR-2025-24184","title":"Delaying the Effective Date of the AML/CFT Program and SAR Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (final rule), 91 FR 36","publisher":"Financial Crimes Enforcement Network (Federal Register via govinfo)","document_type":"release","url":"https://www.govinfo.gov/content/pkg/FR-2026-01-02/pdf/2025-24184.pdf","publication_date":"Effective as of 2025-12-31; published 2026-01-02","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-EU-AIFMD2-2024-927","pinpoint":"Art. 1(10) (Art. 21 amendments: new 21(5a), 21(6), 21(11), 21(16), 21(17); paragraphs 7-9 not amended); Annex I (adds Annex I point 2(d)-(e)); Art. 19 and Annex I point 2(a) not amended","supports":"AIFMD II adds loan origination and servicing of securitisation SPEs to Annex I point 2 and leaves Art. 19, Art. 21(7)-(9) and Annex I point 2(a) unchanged","source":{"source_id":"SRC-EU-AIFMD2-2024-927","title":"Directive (EU) 2024/927 amending Directives 2011/61/EU and 2009/65/EC (AIFMD II)","authors":"European Parliament and Council","publisher":"Official Journal of the EU, L series, 26.3.2024","document_type":"directive","url":"https://eur-lex.europa.eu/eli/dir/2024/927/oj/eng","year":2024,"publication_date":"Adopted 13 March 2024; Member States to adopt and apply measures by 16 April 2026 (some reporting provisions later)","jurisdiction":"EU","status":"In force; transposition deadline passed 16 April 2026; national transposition status varies by Member State","last_verified":"2026-10-01"}}],"faq":[{"q":"Does a fund administrator guarantee the NAV is correct?","a":"No. It calculates NAV from the fund's records and the manager's valuations. Errors in valuation inputs, or controls the administrator does not operate, are outside its reach; the manager stays responsible."},{"q":"What is shadow administration?","a":"The manager keeps its own parallel books and reconciles them with the administrator's each period, so either side's errors surface quickly."}],"seo":{},"first_published":"2025-12-31","last_reviewed":"2026-10-02","last_modified":"2026-10-02","content_version":"2.0.0","url":"https://altss.com/glossary/fund-administrator","json_url":"https://altss.com/reference/concepts/fund-administrator.json","title":"Fund Administrator","formulas":[],"sources":[{"source_id":"SRC-EU-AIFMD-2011-61","title":"Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD)","authors":"European Parliament and Council","publisher":"Official Journal of the EU, L 174, 1.7.2011","document_type":"directive","url":"https://eur-lex.europa.eu/eli/dir/2011/61/oj/eng","year":2011,"publication_date":"Adopted 8 June 2011; transposition by 22 July 2013","jurisdiction":"EU","status":"In force; amended by Directive (EU) 2024/927 (AIFMD II)","last_verified":"2026-10-01"},{"source_id":"SRC-EU-AIFMD2-2024-927","title":"Directive (EU) 2024/927 amending Directives 2011/61/EU and 2009/65/EC (AIFMD II)","authors":"European Parliament and Council","publisher":"Official Journal of the EU, L series, 26.3.2024","document_type":"directive","url":"https://eur-lex.europa.eu/eli/dir/2024/927/oj/eng","year":2024,"publication_date":"Adopted 13 March 2024; Member States to adopt and apply measures by 16 April 2026 (some reporting provisions later)","jurisdiction":"EU","status":"In force; transposition deadline passed 16 April 2026; national transposition status varies by Member State","last_verified":"2026-10-01"},{"source_id":"SRC-IAASB-ISAE-3402","title":"International Standard on Assurance Engagements (ISAE) 3402, Assurance Reports on Controls at a Service Organization","publisher":"International Auditing and Assurance Standards Board (IAASB), via IFAC","document_type":"standard","url":"https://www.ifac.org/_flysystem/azure-private/publications/files/B007%202013%20IAASB%20Handbook%20ISAE%203402_0.pdf","publication_date":"Issued December 2009; extract from the 2013 IAASB Handbook; effective for service auditors' reports covering periods ending on or after 15 June 2011 (para 7)","jurisdiction":"intl","status":"Current","last_verified":"2026-10-01"},{"source_id":"SRC-ILPA-DDQ-2","title":"ILPA Due Diligence Questionnaire 2.0 (and Diversity Metrics Template)","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"template","url":"https://ilpa.org/wp-content/uploads/2021/11/ILPA-DDQ-2.0.pdf","year":2021,"publication_date":"Version 2.0, November 2021 (v1.1 dated October 2013)","jurisdiction":"intl","status":"Current","last_verified":"2026-10-01"},{"source_id":"SRC-US-AICPA-SOC1","title":"SOC 1 - SOC for Service Organizations: ICFR","publisher":"AICPA & CIMA","document_type":"guidance","url":"https://www.aicpa-cima.com/topic/audit-assurance/audit-and-assurance-greater-than-soc-1","publication_date":"Web page accessed 2026-10-01","jurisdiction":"US","status":"Current","last_verified":"2026-10-01"},{"source_id":"SRC-US-ECFR-270-2A-5","title":"17 CFR 270.2a-5 - Fair value determination and readily available market quotations (Rule 2a-5)","publisher":"U.S. Securities and Exchange Commission (CFR text via eCFR; LII mirror)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/270.2a-5","publication_date":"eCFR current as of 2026-09-29; last amended 2021-03-08 (effective date of adoption)","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"},{"source_id":"SRC-US-ECFR-275-206-4-2","title":"17 CFR 275.206(4)-2 - Custody of funds or securities of clients by investment advisers (Custody Rule)","publisher":"U.S. Securities and Exchange Commission (CFR text via LII mirror)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/275.206(4)-2","publication_date":"Current text as served by LII on 2026-10-01; source line 75 FR 1484, Jan. 11, 2010","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"},{"source_id":"SRC-US-FR-2025-24184","title":"Delaying the Effective Date of the AML/CFT Program and SAR Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (final rule), 91 FR 36","publisher":"Financial Crimes Enforcement Network (Federal Register via govinfo)","document_type":"release","url":"https://www.govinfo.gov/content/pkg/FR-2026-01-02/pdf/2025-24184.pdf","publication_date":"Effective as of 2025-12-31; published 2026-01-02","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"},{"source_id":"SRC-US-SEC-FORM-ADV-PART-1A","title":"Form ADV Part 1A (paper version) - Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Advisers","publisher":"U.S. Securities and Exchange Commission","document_type":"form","url":"https://www.sec.gov/about/forms/formadv-part1a.pdf","publication_date":"SEC 1707 (07-24)","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}]}