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VC Fund Performance Metrics Audit Checklist

A comprehensive checklist for auditing and validating venture capital and private equity fund performance metrics, ensuring accurate, consistent, and transparent reporting of key performance indicators and valuation methodologies.

VC Fund Performance Metrics Audit Checklist

by: audit-now
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About This Checklist

The VC Fund Performance Metrics Audit Checklist is an essential tool for venture capital and private equity firms to ensure accurate, consistent, and transparent reporting of fund performance. This comprehensive checklist guides professionals through the process of auditing key performance indicators, valuation methodologies, and reporting practices. By systematically reviewing and validating performance metrics, VC firms can enhance their credibility with limited partners, comply with industry standards, and make more informed investment decisions. This rigorous approach to performance measurement not only supports better fund management but also fosters trust and accountability in the VC ecosystem.

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Industry

Financial Services

Standard

GIPS - Global Investment Performance Standards

Workspaces

Investment Firm Offices

Occupations

Fund Controller
Chief Financial Officer
Performance Analyst
Fund Administrator
Auditor
1
Has the Internal Rate of Return (IRR) calculation been reviewed for accuracy and compliance with GIPS standards?
2
Is the valuation methodology for portfolio companies consistent and in line with industry best practices?
3
Has a comprehensive performance attribution analysis been conducted for the fund?
4
How transparent and comprehensive is the reporting to Limited Partners (LPs)?

FAQs

The checklist covers IRR calculation, multiple on invested capital (MOIC), distribution to paid-in (DPI) ratio, valuation methodologies, cash flow tracking, and performance attribution analysis.

VC firms should conduct a comprehensive performance metrics audit at least annually, with more frequent reviews of key metrics on a quarterly basis.

While primarily designed for fund-level metrics, aspects of the checklist can be adapted to audit performance metrics of individual portfolio companies, especially for later-stage investments.

The audit is usually performed by the fund's finance team, often in collaboration with external auditors or specialized VC fund administrators to ensure objectivity and compliance with industry standards.

A rigorous audit process enhances transparency and builds trust with LPs, providing them with reliable data for their own performance assessments and potentially facilitating easier future fundraising efforts.

Benefits of VC Fund Performance Metrics Audit Checklist

Ensures accuracy and consistency in fund performance reporting

Enhances transparency and credibility with limited partners

Facilitates compliance with industry standards and best practices

Improves decision-making through validated performance data

Strengthens the firm's reputation for rigorous financial management