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Given the economic turbulence of the last year, hedge funds are under greater scrutiny than ever. Higher operating costs, litigation from investors and competition for a dwindling pool of assets will no doubt continue to negatively impact performance. In addition, new legislation and accounting measures are on the horizon, and most recently, the Obama Administration issued a line item related to taxing carried interest as ordinary income. Carried interest legislation at the federal, state and local level, is raising significant local and international tax issues.
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For hedge funds to survive this critical juncture, a return to operating basics and a greater emphasis on risk management and transparency can help restore their tarnished image.
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Rothstein Kass is highly regarded in the hedge fund world for our experience and business acumen. We are not only a major accounting firm serving hedge funds, but also a thought leader in analyzing the economic and industry trends and issues impacting our clients which enable us to offer insight into all the latest strategies and financial instruments.
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Our financial services group has over 20 years of experience serving domestic and offshore hedge funds, fund-of-funds, and private equity funds and commodity pools. Our diverse client base includes both start-ups and large institutional funds.
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| How We Can Help with Hedge Funds Accounting: |
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| Our Firm has the experience and technical resources committed to helping clients accomplish their objectives. Our resources enable us to minimize the general partners’ involvement in accounting and tax matters, so that they can concentrate on investment performance. |
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| Start Up Services and Partnership Organization |
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| For start-ups, having a knowledgeable advisor is critical to their success. Rothstein Kass has worked with thousands of well-known funds in their earliest stages to their most established current stages. We understand all the operational and performance issues that must be considered and can advise you along every step of the start-up process. |
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| At the inception of the partnership, we work as a team with the general partners and their counsel to review and assist in the formation of the partnership agreement and private placement memorandum, and determination of the following: |
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Organizational structuring (legal / accounting) |
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Management fee and incentive allocation structure |
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Investor liquidity requirements |
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Management company’s operating cash requirements |
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Management company’s staff requirements and back office structuring |
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Risk management |
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| Audit and Accounting |
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Advice regarding obtaining operational efficiencies and techniques |
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Year-end audit of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) or International Financial Reporting Standards (IFRS) |
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Examination report of investment performance statistics to assist investment managers in marketing and packaging their track record |
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Consultation regarding regulatory issues |
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| We also offer these specialized and in-demand services to provide greater assurances to your stakeholders: |
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Financial Services Advisory |
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SAS 70 Reports |
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Internal Control reviews |
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Monthly / Quarterly Agreed Upon Procedure Reports (AUPs) for the verification of Assets |
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Semi-Annual Audited Balance Sheet to provide additional assurance regarding valuation of existing assets |
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Fee structure reviews |
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| Tax Services |
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Responsive and creative tax planning with respect to securities transactions to ensure optimum tax benefit |
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Preparation of Federal, state and local fund income tax returns |
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Provide estimates of taxable income to the General Partner or Investment Manager to manage the expectations of their investors |
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Preparation of tax returns for the management company and general partner |
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Preparation of federal, state and personal tax returns of the owners of the general partner and management company entities |
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Representation before the Internal Revenue Service and any other agencies |
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Assisting in the implementation of procedures to evaluate and monitor uncertain tax positions required by Fin 48, Accounting for Uncertain Tax Positions (UTP’s), including assistance in the evaluation of UTP’s on their technical merits |
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