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Private Equity Fund Compliance and Governance Audit Checklist

A comprehensive checklist for auditing compliance and governance practices in private equity funds, focusing on regulatory adherence, investor protection, and ethical conduct in fund management.

Private Equity Fund Compliance and Governance Audit Checklist

by: audit-now
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About This Checklist

In the complex landscape of private equity, maintaining robust compliance and governance practices is crucial for protecting investor interests and ensuring regulatory adherence. This Private Equity Fund Compliance and Governance Audit Checklist is designed to help fund managers and administrators evaluate and enhance their compliance frameworks and governance structures. By systematically assessing key areas of fund operations, regulatory obligations, and investor relations, organizations can identify potential vulnerabilities, ensure alignment with industry best practices, and implement effective governance mechanisms. This comprehensive checklist serves as a vital tool for mitigating regulatory risks, enhancing investor confidence, and maintaining the highest standards of professional conduct in the private equity sector.

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Industry

Financial Services

Standard

Investment Fund Regulations

Workspaces

Trading floors

Occupations

Compliance Officer
Legal Counsel
Fund Manager
Investor Relations Professional
Operations Manager
1
Is the fund compliant with the ILPA Principles?

Select compliance status.

To ensure adherence to industry standards for private equity funds.
2
Describe the current conflicts of interest policy.

Provide a detailed description.

To assess the adequacy of measures taken to manage conflicts of interest.
3
What percentage of fees is allocated to management versus performance?

Enter percentages for management and performance fees.

To evaluate fairness in fee allocation among investors.
Min: 0
Target: 100
Max: 100
4
Is all necessary fund documentation complete and accessible?

Select availability status.

To ensure that all regulatory requirements are met.
5
Provide a summary of the fund's ESG policies.

Summarize the ESG policies in detail.

To assess the fund's commitment to environmental, social, and governance standards.
6
How effective is the communication strategy with investors?

Select the effectiveness rating.

To evaluate how well the fund informs investors about important changes and updates.
7
Is there a mechanism in place for handling investor complaints?

Is there a complaints handling mechanism?

To ensure that investor grievances are addressed properly.
8
What date was the investor protection policy last reviewed?

Select the review date.

To track the frequency of policy reviews and updates.
9
How adequate is the risk disclosure provided to investors?

Provide a detailed assessment of risk disclosure.

To evaluate whether investors are being adequately informed about potential risks.
10
What is the current investor satisfaction score (out of 10)?

Enter the satisfaction score.

To measure overall investor satisfaction with the fund's performance.
Min: 0
Target: 10
Max: 10
11
Is the fund in compliance with SEC regulations?

Select compliance status.

To ensure adherence to federal regulatory requirements.
12
When was the last regulatory filing submitted?

Select the date of the last filing.

To monitor the timeliness of regulatory filings.
13
Summarize the compliance training provided to staff.

Provide a detailed summary of compliance training.

To evaluate the effectiveness of compliance training programs.
14
How many compliance breaches have occurred in the last year?

Enter the number of breaches.

To assess the frequency of compliance issues.
Min: 0
Target: 0
Max: 100
15
What is the status of resolving previous audit findings?

Select the resolution status.

To track the progress of addressing issues identified in prior audits.
16
Does the fund's board have a diversity policy in place?

Is there a board diversity policy?

To ensure that diversity considerations are incorporated into governance practices.
17
How often does the board meet per year?

Enter the number of meetings per year.

To evaluate the engagement level of board members in governance.
Min: 1
Target: 12
Max: 52
18
Provide an overview of the fund's governance policies.

Summarize the governance policies in detail.

To assess the clarity and comprehensiveness of governance frameworks.
19
Is there a clear accountability structure for fund management?

Select accountability status.

To ensure that roles and responsibilities are well-defined within the organization.
20
When was the last governance structure review conducted?

Select the review date.

To track the frequency of governance evaluations.
21
Is there a formal process for assessing operational risks?

Select status of risk assessment process.

To ensure that operational risks are identified and managed effectively.
22
How many operational risks have been identified in the last year?

Enter the number of identified risks.

To measure the effectiveness of the risk identification process.
Min: 0
Target: 0
Max: 100
23
Summarize the strategies in place to mitigate identified risks.

Provide a detailed summary of mitigation strategies.

To evaluate the effectiveness of risk mitigation efforts.
24
Are operational risks reviewed on a regular basis?

Is there a schedule for regular risk reviews?

To ensure that the risk management process is proactive and responsive.
25
When was the last training session for staff on risk management conducted?

Select the date of the last training session.

To ensure that staff are adequately trained in risk management practices.

FAQs

Private equity fund compliance and governance audits should be conducted at least annually. However, more frequent reviews may be necessary in response to significant regulatory changes, new fund launches, or changes in the firm's operational structure.

Key areas typically include fund structure and documentation, regulatory filings and disclosures, conflicts of interest management, fee and expense allocation, valuation practices, investor communications, ESG policies, anti-money laundering procedures, and cybersecurity measures.

The audit should involve compliance officers, legal counsel, fund managers, investor relations professionals, operations personnel, and potentially external auditors or consultants specializing in private equity compliance and governance.

Firms should develop a detailed remediation plan for each identified issue, assigning responsibilities and deadlines for resolution. This may include updating policies and procedures, enhancing governance structures, or implementing new compliance monitoring systems. Regular progress reviews should be conducted to ensure timely implementation of improvements.

Technology plays a crucial role in modern compliance and governance audits, including automated compliance monitoring systems, data analytics for fee and expense allocation, secure investor portals for transparent communications, and integrated platforms for managing regulatory filings and disclosures.

Benefits of Private Equity Fund Compliance and Governance Audit Checklist

Ensures compliance with private equity regulations and industry standards

Identifies potential gaps in governance structures and compliance procedures

Reduces the risk of regulatory violations and associated penalties

Enhances investor trust through demonstrated commitment to robust governance

Provides a structured approach to continuous improvement of compliance and governance practices