A fund audit is the annual independent review of a fund’s financial statements—confirming that reported asset values, LP balances, and GP fees match reality and accounting standards.

How it works

Auditors test capital account records, investment cost and fair value marks, management fee calculations, and expense allocations. For venture funds, illiquid portfolio valuations are a focal point: auditors assess whether GP marks follow consistent policies and support from recent financings or transactions. The process runs after fiscal year-end, often coordinated with the fund administrator and tax preparers. Results appear in audited financial statements and an auditor’s opinion—unqualified opinions are the norm for clean files. First-time fund audits may take longer as policies and evidence trails are established.

Why it matters

• Founders: Indirect impact—funds with audit delays may slow follow-on wiring or new fund commitments.
• Investors: LPs use audits for compliance and allocation decisions. GPs marketing Fund II need Fund I audit history to pass institutional diligence.

Common mistake

Deferring audit setup until an LP demands it mid-fundraise—scrambling for documents adds weeks and signals weak operations.

Related ideas

Fair value accounting, fund administration, K-1 distribution, and ILPA reporting templates.