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Successfully Addressing Key Valuation Issues for Hedge Funds - Renee Ford & Sean Hafezizadeh

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Successfully Addressing Key Valuation Issues for Hedge Funds by Renee Ford & Sean Hafezizadeh

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Successfully Addressing Key Valuation Issues for Hedge Funds - Renee Ford & Sean Hafezizadeh

  1. 1. Sean Hafezizadeh, CPA Manager, Investment Operations tel +1 949 261 4900 shafezizadeh@paamco.com Successfully Addressing Key Valuation Issue for Hedge Funds Renee Ford, CPA Assurance Principal, Decosimo 423-756-7100 reneeford@decosimo.com
  2. 2. Results of exams Revisit requirements Valuation - what is the SEC looking for?
  3. 3. Examples Using common sense Sensitivity approach Effectively handling and reducing risk of valuation errors
  4. 4. Revisit the definitions Examples of where significant judgment is necessary Redemption restrictions Level 3 disclosure requirements Level 2 vs. Level 3 Evaluating the differences
  5. 5. Level 2 Level 3 Extent of reliance on administrators Extent of reliance on appraisers and investment managers How are auditors testing valuation?
  6. 6. Support needed Justify valuation Managing nuances between auditor and third party administrator
  7. 7. “Trust but verify.” Examples of models that deviate materially from the market Scope of independent appraisers IM’s interest in fund Reliance on independent appraisers and investment managers
  8. 8. The “rubber stamp” approach Recalculating the valuation Using third party valuation services
  9. 9. Diffusion of responsibility Collecting fees on material Level 3 assets Controls over valuation of Private Equity positions Lessons learned – GLG case
  10. 10. Questions?

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