Fund Audit Preparation Checklist Template
Four documents and four sheets that scope the positions by how far each mark moved, then add up every difference nobody booked.
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Audit Preparation Plan
[Fund], L.P. — Audit Preparation, Year Ended [date]
Scoped before the auditor’s request list arrives. Valuation work is scoped by the movement in a mark rather than by the size of the balance.
1. The three numbers everything is scoped against
| Number | Amount | Basis |
|---|---|---|
| Overall materiality | — | — |
| Performance materiality | — | — |
| Clearly trivial threshold | — | — |
2. Valuation scope, by movement rather than by balance
| Position | Mark | Movement in year | Against performance materiality | In scope |
|---|---|---|---|---|
| — | — | — | — | — |
| — | — | — | — | — |
| — | — | — | — | — |
A large mark that did not move is a smaller question than a small mark that doubled. Scoping by balance gets that the wrong way round every year.
3. Differences already known, and not yet corrected
Uncorrected differences carried forward from prior years, totalled against this year’s thresholds before the auditor totals them for you.
4. The request list
What the auditor is going to ask for, mapped to the document that answers it, so the same file is produced once rather than three times.
Kilmorack Partners III closes its year at 391,972,900.00 of net assets. Its auditor sets performance materiality at 2,939,796.75. The fund knows about eight differences it decided not to correct, and the largest is 1,184,000.00, which is 40.3 percent of that. Netted, the eight come to 25.5 percent of performance materiality. Grossed up and added to the three prior-year items that never reversed, they reach 117.6 percent of it and 88.2 percent of overall materiality. Nothing was hidden. Nobody added it up.
Page one for this query is checklists. A request list from an accounting firm, a few administrator posts, and pages naming the same twelve headings in the same order. Each is organised by caption rather than by exposure, so a 41,000,000 position whose mark has not moved in eighteen months gets the same line as the one carrying the year's largest write-up. Five of Kilmorack's seventeen positions moved by more than performance materiality, and those five carry 82.7 percent of the change in unrealised value that the quarterly package reported.
Then the request list arrives with 214 lines on it, and those 214 lines resolve to 96 distinct documents. Produced against the list rather than against the documents, the same file goes out 2.23 times on average, and twelve documents answer 78 of the lines. All of it is due inside 120 days, because audited statements have to reach investors in that window. SEC staff have been explicit that misstatements are not immaterial simply because they fall beneath a numerical threshold.
What is in the pack
Audit Preparation Plan
Overall materiality, performance materiality and the clearly trivial threshold recorded first, then the seventeen positions tiered by how far each mark moved against them. Closes on the same net asset value the thresholds were struck from.
Valuation Memo, one per tested position
The approach, every input with its value, its date and its source, the comparable set member by member, and a one-turn sensitivity measured against performance materiality. Written before the request arrives, not in answer to it.
Accumulated Differences Memo
The eight differences the fund decided not to correct, reported gross and net, with the prior-year items that never reversed added in and each netting pair justified or left standing on its own.
Management Representation Support
Every assertion in the representation letter traced to the document or the calculation that supports it, including the completeness of side letters and of the obligations they created.
Valuation Support Register
One row per position carrying approach, input, input value, input date, source and age in days. The age column is what finds a mark carried off a comp set 457 days old before an auditor does, and it is the same register the valuation methodology space keeps on the measurement date.
Accumulated Differences
One row per known difference with amount, direction, caption, percentage of performance materiality and whether it sits below the clearly trivial threshold. Four running totals rather than one.
Request to Document Map
Each request line joined to the document that answers it, so 214 lines resolve to 96 documents and the production order is ranked by lines closed. Draws on the portfolio's own reporting.
Nothing is immaterial until it has been added up
The space rule. No difference is closed on its own size, no netting happens without the pairing being named, and the gross figure is reported next to the net one every time.
How it works
- 1
Record the thresholds first
Overall materiality, performance materiality and the clearly trivial threshold out of the auditor's planning memo, with the benchmark each was struck against. Every number after this is measured against those three.
- 2
Scope by movement, not by balance
Each position's change in fair value set against performance materiality. In the worked example five of seventeen positions clear it and carry 82.7 percent of the year's movement between them.
- 3
Write the memos while there is time
One memo per tested position, every input dated and sourced, with a one-turn sensitivity. This is where a stale comp set becomes a task in January rather than a finding in March.
- 4
Add up what you already know
Every difference the fund decided not to correct, gross and net, with last year's uncorrected items included. Then the request list mapped onto documents so nothing is produced twice.
Frequently asked questions
Is the request list not what the auditor gives you anyway?
It is, and it arrives after planning is done. In the worked example it lands on 3 February with 214 lines, which leaves 86 days. The 63 valuation lines want memos that take weeks to build properly, so the fund that starts them in February is answering with whatever it already had.
Why scope by movement rather than by position size?
Because size drives the wrong tier. Dunragit is the largest position at 41,000,000 of cost and its mark has not moved since June 2024, so it raises an existence question. Bellandine is smaller and carries the year's largest write-up on a comp set 457 days old, which is the valuation question.
Are eight differences below the threshold not immaterial by definition?
No, and the standards are direct about it. Clearly trivial is not another expression for not material, and once the accumulated total approaches the planning threshold the audit strategy gets reopened. Here the gross total is 117.6 percent of performance materiality with no single item above 41 percent of it.
Why report the gross figure when the net one is smaller?
Because the netting has to survive an objection. The largest overstatement is a valuation estimate and the largest understatement is a carried interest accrual struck arithmetically off net asset value. Netting an estimate against something precisely measurable is the pairing that needs justifying, so both figures get reported.
What happens to last year's uncorrected differences?
They stay on the schedule until they reverse. Three items totalling 611,300.00 did not reverse in the worked example, and adding them is what takes the accumulation from 96.8 percent of performance materiality to 117.6. A fund that reopens the schedule each year rather than starting a new one already knows this.
Does this replace the auditor or the administrator?
Neither. The administrator keeps the books and the auditor forms the opinion. This assembles what will be asked for and computes what the fund can compute for itself, reconciling to the same net asset value that the quarterly capital accounts roll forward to.
When should preparation actually start?
Before the year end, because the valuation inputs are dated. A comp set pulled on 31 December is current and one pulled in March is not, so the refresh has to happen while the reporting date is still ahead. The delivery deadline then runs 120 days from the year end, stated on an operations calendar as a trigger rather than a fixed date.
Find out what your accumulated differences add up to
Send the auditor's planning memo, the administrator's year-end pack and your valuation files. The first pass scopes the positions and adds up what you already know.
Prepare my audit file