---
title: "What Is Fund Audit?"
term: "Fund Audit"
description: "A fund audit is an independent examination of a venture or private equity fund's financial statements, verifying that LP capital, investments, and fees are recorded accurately."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/fund-audit
---

# What Is Fund Audit?

> A fund audit is an independent examination of a venture or private equity fund's financial statements, verifying that LP capital, investments, and fees are recorded accurately.

**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](/glossary/fund-administration), K-1 distribution, and ILPA reporting templates.

## FAQ

### What is a fund audit in simple terms?

An outside accounting firm reviews the fund's books and issues an opinion on whether the financial statements are fair and follow accounting rules. It is a credibility check for LPs.

### Why does a fund audit matter?

Many pensions and endowments require audited fund financials. Clean audits reduce LP friction in fundraising; findings on valuation or expenses can slow closes.


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Source: https://venturecapitaltracker.com/glossary/fund-audit