Financial Statements

For investment funds reporting under US GAAP (ASC 946), the core statements are the statement of assets and liabilities, schedule of investments, statement of operations, statement of changes in net assets (or partners’ capital), and a statement of cash flows unless an exemption applies. Notes cover accounting policies, fair value hierarchy disclosures, derivatives, related parties, fees, financial highlights (returns and expense ratios) and subsequent events. IFRS statements use different titles and some different requirements.

Offshore funds usually must file audited financial statements with their regulator within a set period after year-end — for example six months in many Caribbean jurisdictions — and deliver them to investors. Private equity and real estate funds often add capital account statements and performance metrics such as IRR.

Preparing statements draws on the trial balance, valuation support, investor records and legal documents. Common pitfalls include incomplete fair value disclosures, financial highlights calculated on the wrong investor class, and late identification of subsequent events. Starting the year-end timetable early with the auditor reduces late adjustments.