Regulatory Compliance Association Reviews

The Evolution of Shadow Accounting for Fund Managers

Practice Edge 02

It is common for fund managers to engage third-party administrators to maintain their books and perform a host of back- and middle-office services. But many also elect to maintain in-house operations and technology to oversee or “shadow” their outside administrators. Shadowing enables a manager to validate an administrator’s output. A full shadowing model can become very duplicative and costly, resulting in limiting the firm’s ability to grow, offer new products, implement new strategies and enter new markets. Some fund managers are now redefining their shadow accounting models, moving from full shadowing toward a more targeted approach, or a “partial shadowing” model. What is the optimal level of shadowing a fund manager should perform to maintain adequate level of operational oversight and meet investor demands, while controlling cost, has become a hot topic in the asset management industry.

This Practice Readiness Series will cover the latest shadow accounting trends in the asset management industry, the drivers of partial shadowing, what functions must be shadowed in-house and what don’t require shadowing, and how managers and administrators should approach the transition from a full to a partial shadowing model including:

  • Overview of current industry trends in shadow accounting (full shadowing vs partial vs outsource model) ;
  • Drivers of partial shadowing;
  • Potential benefits/pitfalls of reduced shadowing ;
  • Determining an optimal shadowing model ;
  • Key functions that must be shadowed/kept in house vs those that don’t need shadowing Key functions that must be shadowed/kept in house vs those that don’t need shadowing;
  • Different methods of shadowing – In-house shadow vs outsourcing shadowing; and
  • Appropriate governance and oversight model.

Session Chairman:
Walter Zebrowski, JD, CPA, Principal, Hedgemony Partners
Chairman, Regulatory Compliance Association

Senior Fellow From Practice:
Jonathan Ansbacher,  CPA, Partner, Ernst & Young

Guest Lecturers:
Samer Ojjeh,  CPA, Principal, Ernst & Young
Joseph Tylicki,  CPA, CFO, Stark Investments
Larry Statsky,  CPA, CAO, Millenium
Christine Waldron,  SVP of ALT. Investments, US Bancorp
Roderick Hardamon, Managing Director, North America Head of Hedge Fund Services, Citi

To Access This Title and the Host of Courses Contained Within the PracticeEdge Elite Course Catalog, Click Here to Subscribe to PracticeEdge Elite.