MGO CPA | Tax, Audit, and Consulting Services

Topic: Venture Capital

Why You Need Comprehensive Investment Fund Administration Services

Key Takeaways:

  • Comprehensive fund administration services can support investment funds and auxiliary entities like management companies and general partners.
  • Combining advanced technology with personalized human oversight helps provide accurate financial reporting and compliance.
  • The right partner offers services beyond fund administration — including tax compliance, audit support, and operational assistance — all under one roof.

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Navigating the world of fund administration today can be complex. You need a sophisticated and reliable support system — especially with the rigorous regulatory requirements investment funds face. Fortunately, by partnering with the right provider, you can access comprehensive fund administration services tailored to meet the needs of investment managers, private equity firms, family offices handling venture capital funds, and those managing special purpose vehicles (SPVs).

Here is a look at the benefits of combining fund administration with integrated tax compliance and audit support services so you can focus on growing your investment fund with confidence.

How a Full-Service Approach to Fund Administration Benefits You

A modern approach to fund administration goes beyond traditional, standalone services. A comprehensive approach supports the core fund as well as management companies and general partner entities — areas where conventional fund administrators often fall short.

Whether you need assistance with cash management, payroll, or other operational tasks, the right service provider can offer a full range of services under one roof. This integration streamlines operations, eliminates the need for multiple vendors, and facilitates a consistent, high-quality service experience.

Merging Technology with Human Insight

Fund administration is more than having software for net asset value (NAV) calculations. Many large firm administrators rely heavily on technology and artificial intelligence to handle these tasks. While this tech-first approach can offer efficiency, it often results in a disconnect between the financial reports generated by software and the actual economic realities of the fund.

Incorrect data (such as unexplained accruals or NAV calculations that do not reflect actual financial activity) reverberates down the line, leading to inefficiencies and unnecessary rework during the audit process. The right fund administration service provider brings a human touch to the process by reviewing financials before they reach you and your investors, catching discrepancies or potential errors that software alone might overlook. Your advisors should also regularly meet with your fund managers to review financial details and verify accuracy rather than simply relying on software outputs.

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Specialized Services for Funds, Management Companies, and General Partners

Another common pain point in fund administration is a lack of support for auxiliary entities like management companies and general partner entities. Traditional fund administrators often focus solely on the fund — leaving investment managers to juggle separate vendors for operational needs like payroll, cash management, and audit support.

Your service provider should be able to fill this gap by offering a full suite of services for the fund and its auxiliary entities. Whether you need services for the entire group or just the management company while the general partner entity supports fund operations, finding tailored solutions to fit your needs is possible.

Sample Case Study

An investment fund, a company based in London with one domestic and two offshore funds, switched administrators three times because they struggled to find a provider to competently handle both the fund administration and operational needs of the management company.

Once they finally found comprehensive fund administrative support, their advisor stepped in as an outsourced CFO — streamlining financial operations and providing audit support (including drafting financial statements and communicating with auditors). The team remained a constant presence, guiding the company through key transitions.

Seamless Tax and Audit Support

Beyond fund administration, tax compliance and audit support are essential for reducing operational disruptions.

The right service provider can act as a liaison between your fund and external audit teams — drafting financial statements, communicating with auditors, and preparing allocation schedules. This audit support minimizes the disruption that typically occurs during audit fieldwork to create a smooth audit process for the fund and auxiliary entities.

In addition to audit support, a full-service provider can prepare tax filings — including K-1s for investors, pushing them out sooner and more efficiently than most fund administrators. With a tax consulting arm that specializes in complex transactions, your provider can also offer valuable tax advice on fund operations, acquisitions, and other critical financial activities for investment managers.

Tailored Services for SPVs

SPVs are mini-funds that, while less complex than traditional funds, still require specialized knowledge and experience.

If you are happy with your existing fund administrator but need a cost-effective solution for an SPV, a fund administration service provider can handle these smaller entities — providing just the right level of service to supplement your needs.

Building Lasting Relationships

Investment fund administration can feel like a revolving door. However, building long-term, stable relationships can foster deeper understanding and continuity, ultimately benefiting fund operations and growth.

Once you have worked with a consistent team for many years, you will usually experience better-aligned services that evolve to meet your needs over time.

How MGO Can Help

At MGO, we provide comprehensive fund administration services that go beyond the traditional scope. Combining technology with a human touch and deep experience and insight, we offer integrated support across your funds, management companies, and general partner entities.

Our dedicated team can help you maintain accuracy, verify compliance, and gain greater peace of mind. If you are looking for a fund administrator that offers a full spectrum of services, reach out to MGO’s Private Equity and Venture Capital team today to learn how we can support your investment fund needs.

Five Reasons Private Companies Should Adopt Public Controls

Often viewed as a “public company problem,” private organizations may want to consider implementing internal controls similar to Sarbanes-Oxley (SOX) Section 404 requirements. The inherent benefits of a strong control environment may be of significant value to a private company by providing: enhanced accountability throughout the organization, reduced risk of fraud, improved processes and financial reporting, and more effective inclusion of the Board of Directors.

Private organizations, while not always smaller, often have limited resources in specialty areas, including accounting for income tax. This resource constraint —the work being done outside the core accounting team — combined with the complexity of the issues, means private companies are ideal candidates for, and can achieve significant benefit from, internal controls enhancements. Thinking beyond the present, the following are five reasons private companies may want to adopt public-company-level controls:

1. Future Initial Public Offering (IPO) – Walk before you run! If the company believes an IPO may be in its future, it’s better to “practice” before the company is required to be SOX compliant. A phased approach to implementation can drive important changes in company culture as it prepares to become a public organization. Recently published reports analyzing IPO activity reveal that material weaknesses reported by public companies were disproportionately attributable to recent IPO companies. Making a rapid change to SOX compliance can place a heavy burden on a newly public company.


2. Merger and Acquisition Deals – If the possibility of the company being sold to an M&A deal exists, enhanced financial reporting controls can provide the potential buyer with an added layer of security or comfort regarding the financial position of the company. Further, if the acquiring firm has an exit strategy that involves an IPO, the requirement for strong internal controls may be on the horizon.


3. Rapid Growth – Private companies that are growing rapidly, either organically or through acquisition, are susceptible to errors and fraud. The sophistication of these organizations often outpaces the skills and capacity of their support functions, including accounting, finance, and tax. Standard processes with preventive and detective controls can mitigate the risk that comes with rapid growth.


4. Assurance for Private Investors and Banks – Many users other than public shareholders may rely on financial information. The added security and accountability of having controls in place is a benefit to these users, as the enhanced credibility may impact the cost of borrowing for the organization.


5. Peer-Focused Industries – While not all industries are peer-focused, some place significant weight on the leading practices of their peers. Further, some industries require enhanced levels of security and control. For example, cannabis companies with a heavy regulatory burden, industries with sensitive customer data like lifesciences, and tech companies that handle customer data, often look to their peer group for leading practices, including their control environment. When the peer group is a mix of public and private companies, the private company can benefit from keeping pace with the leading practices of their public peers.

Private companies are not immune from the intense scrutiny of numerous stakeholders over accountability and risk. Companies with a clear understanding of the inherent risks that come from negligible accounting practices demonstrate their ability to think beyond the present, and to be better prepared for future growth or change in ownership.

Growing Opportunities for China-Based Companies in the US

The explosion of China-based companies making their debut on US exchanges continues. Companies are finding the availability of capital and opportunity too attractive to pass up. Though the process is complicated, MGO has deep experience taking foreign entities public on various US-based exchanges, including the NASDAQ. In addition, MGO understands the Asia-based investment portfolio, distinct investment processes, and the varied business models for companies operating in Asia.

Alternative paths to US exchanges

There are a variety of reasons companies would prefer to avoid a traditional IPO. For those entities we provide tailored solutions during the entire go public process – or portions of it – including the pursuit of alternatives such as a Regulation A+ offering and reverse mergers. We help each client find the path that’s right for their unique needs.

Bridging cultures

Our China practice has the language skills and cultural understanding to navigate market complexities. Call or contact us online to find out how we can help you.