Specialized Audit & Tax Expertise for Your Alternative Investment Fund

With more than 20 years of experience in the industry, including being among the finalists for best tax and/or audit firm by the HFM U.S. Services Awards for the past two years, our Alternative Investment Funds Group is a leader in this space. We have a broad background in advanced fund structures — particularly international funds and complex investment types such as private equity holdings, derivative instruments and other alternative investments. We understand the demands placed on today’s Commodity Trading Advisor (CTA), as we have evolved in parallel with the CTA community. We also regularly work with more than 30 fund administrators nationwide, as well as private investment funds who internally manage fund accounting and administrative services.

Whether you are raising capital, managing the investor due diligence process, navigating the complex regulatory environment, institutionalizing your operational infrastructure or keeping up with performance expectations, there is no question that alternative fund managers’ responsibilities have significantly evolved over the years. We offer a full-service solution. Our specialized audit team uses innovative testing techniques, the latest technology and a tailored approach to provide you with timely communications and value-added recommendations. Our tax professionals look at all aspects of your fund to determine whether opportunities exist to offer favorable tax solutions to the general partner/managing members and investors. And beyond our audit, tax and consulting services, we continue to aid in your success by engaging with you and offering industry-education forums throughout the year.

Our Alternative Investment Fund Client Profiles

We provide our services to private investment funds, including a variety of fund types, operational structures and investment compositions. Our representative client types include:

• 3c1 and 3c7 funds

• Long-short funds

• Series funds

• Fund-of-funds structures

• Private equity funds

• Offshore and international funds

• Master-feeder funds

• Venture capital funds

• Multi-managed funds (use of multiple investment managers/sub-advisers)

• Multi-class funds

• Complex investment types and strategies:    

  • Muni, corporate, asset-backed, mortgage-backed, high-yield and illiquid bonds (etc.)

  • Derivatives, including futures, options, commodity-linked securities and swaps (etc.)

  • Pass-through investments such as partnerships, QPTPs and REITs

  • Fair-valued securities, including private equity investments and operating companies

  • Investments in other investment companies, including investment partnerships, limited liability companies and fund-of-funds

  • International, global equities, and emerging market funds

  • Arbitrage funds

  • Commodity Trading Advisors (CTAs)

Our Alternative Investment Fund Industry Services

We offer a range of services to hedge funds, private equity funds, CTAs and other alternative investments:

Audit & Assurance

• Audits, reviews and compilations of financial statements

• Examinations of internal controls under SAS 70 and SSAE 16

• Examinations of historical performance records

• Internal audits

• Reviews of Forms 10-Q filed quarterly by SEC registrants and other SEC filings

• Surprise custody verifications

• Assistance with respect to audit preparation and consultation, along with NFA audit and compliance matters

Tax Compliance

• Consult on tax fee structures for proper tax planning and compliance, including effectively connected income, ERISA and UBTI

• File U.S. and state tax returns, including composite filings for funds and other investment vehicles

• Maintain tax allocation schedules by investor

• Prepare and distribute 1099s, Schedules K-1, Passive Foreign Investment Company (PFIC) statements and related shareholder allocations

• Advise on and prepare foreign tax filings

• Comply with FATCA requirements

• Update clients on upcoming and pending tax regulations

• Provide tax services for management company, principals and investors

Investor Support

• Conduct performance record examinations to support investor due diligence requirements

• Provide monthly reporting in an investor-friendly format that supports your marketing efforts

• Consult on how to report your managed accounts to investors

• Respond to due diligence inquiries from investors

• Review offering documents of new funds and make recommendations from a tax and audit perspective to benefit you and your investors

Performance Reporting

• Analyze performance from broker statements and client schedules

• Monitor statements for cash activity and non-recurring transactions

• Calculate advisory fees and prepare invoices to investors

• Prepare individual and composite performance tables and capsule performance records

Offshore & International Fund Services

Cayman Islands’ Auditor Information – The Mutual Funds Law (2020 Revision) and Private Funds Law (2020) govern the regulations and requirements for certain funds that are established or incorporated within the Cayman Islands and registered with the Cayman Islands Monetary Authority (CIMA). CIMA requires all regulated mutual funds (which includes hedge funds) to have their accounts audited annually by an auditor approved by CIMA. Cohen & Company (Cayman) is an approved auditor by CIMA.

British Virgin Islands Information — Regulated Entities, which are governed by the BVI Financial Services Commission (FSC), includes hedge funds, which may be licensed as either public funds, private funds or professional funds with BVI FSC. All private and professional funds (unless the fund meets certain FSC exemptions) are required to appoint an auditor and complete an annual audit of their financial statements which shall be filed with the FSC within six months of the funds year-end. In addition, an auditor of a private and/or professional fund is not required to be approved by the FSC. In the case of licensees and public funds, the proposed auditor must be an auditor approved by FSC. Accordingly, most hedge funds licensed with the FSC are typically private or professional funds, which may be audited by Cohen & Company.

In addition to the resources noted above, Cohen & Company can provide audit, tax and advisory services for fund structures in Ireland, most of Europe, Singapore and Hong Kong. Services include advising clients on structuring issues, IFRS reporting, offshore audits, tax planning and compliance, cash flow management, outsourced accounting/CFO needs, succession planning, financial forecasting, internal controls and much more.