Implications of the Investment Fund Manager Directive

February 15th, 2010, BPSRadmin

Since the release of the EU’s draft Alternative Investment Fund Manager Directive earlier this year, many Hedge Funds have been speaking out about the new legislation and the potential effects on the industry.

At present, the Alternative Investment Fund Manager (AIFM), of which Hedge Funds come under, are regulated predominantly by a number of national financial and company legal regulations. The global financial crisis has highlighted much stronger hazards than initially thought, especially in reflecting cross-border risk.

Hedge Funds have been directly linked to the growth of structured credit markets and asset price inflation resulting in market turbulence throughout the credit crunch. Many have been struggling to withdraw cash for their investors, as they are unable to liquidate assets promptly.

One of the key requirements from the directive is that an AIFM cannot provide services to a Fund unless they have been registered and authorised by ‘a competent authority in the Member State’. In the UK this means the Hedge Fund Manager must be authorised by the FSA (Financial Services Authority) and comply to all Directive requirements in order to continue to provide the service.

There are also stricter requirements for AIFMs to prove that they have risk procedures in place and that they carry out regular ‘stress tests’ and annual reviews on all portfolios and risk management. An annual report for each Fund will be required within four months of the end of the financial year and include a full financial breakdown with all activities to be disclosed. An independent valuator will also be appointed to review each fund on a minimum of an annual basis.

Some of the most controversial changes involve Fund Managers (AIFM) making ‘pre-investment disclosures’ to investors and will also be required to disclose details of any leverage on which they use, which could be restricted by the FSA if it is seen as being high on a regular basis. The requirement for Hedge Fund Managers to disclose all their positions has been met with great resistance by the industry and it remains unclear as to when and how it will be enforced if the Directive is approved.

Where matters get murky is whether or not the Directive applies to the Fund Manager. There are a number of exemptions, for example an AIFM who is managing a Fund portfolio of less than 100 million euro (or 500 million euro with a five year lock in) is not applicable.

The increased level of reporting expected by the new Directive will raise the amount and thoroughness of administrative time required at the very least, although at this point it is unclear how much of the Directive will go through as it stands currently in draft form. If approved later in 2009, it is expected to be enforced by 2011 with a third of countries joining in by 2014; but there is clearly a lot of work to be done in assisting Hedge Fund Managers in complying with the new Directive, if the new compliance regulations do indeed apply to them.


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Audit Management Software: The What, the Why and the Where?

February 10th, 2010, BPSRadmin

What?

Audits are an important and essential part of managing risk and control effectiveness within an organization. Audit Management Software simplifies the entire auditing process, from planning and scheduling to performing the audit. What Audit Management Software offers you is an easy way to perform the most challenging and complex audits simply and more efficiently.

Why?

Audit Management Software is vital in letting you do more with less. In addition to the existing internal audit requirements, Auditors are now being asked to be proactive with risk management and provide insights into government regulations. It is no wonder that companies are looking for solutions to make these tasks easier and more time efficient. Being able to execute the audit process quickly and effectively to a high standard reduces the risk of non-compliance and provides insights into any potential problems or issues much quicker than conventional approaches to auditing.

Audit Management Software provides you with a system to support all types of audits in your company and seamlessly customize how you would like that information delivered to and viewed by key staff, management and any other authorized users.

All aspects of auditing can become automated to save time and improve productivity and efficiency. As you create them, audit checklists can be saved and used for any future audits. Saved audit checklists can be modified and updated or saved under new titles to prevent you from wasting time by having to start from scratch each time. Checklists can easily be printed off to ensure that your off-line record keeping meets regulations.

Audit Management Software can run audits at any time of the day or night and with any desired frequency. Audits can be scheduled across different departments simultaneously that use the same audit checklist across the entire company without conflict.

Audit Management Software reminds the auditors and their auditees a few days before the audit is due. On the first day of the new audit, the software flags the audit to the auditor and remains on their system until the audit is completed. This helps auditors stay on top of their audit commitments. The software allows auditors to make amendments even when the program is running, which means that alterations can be made as matters arise when the audit is in progress.

The Audit Management software will ‘remember’ previous audits and authorized staff members can have access to this information when and wherever necessary. Since previous audits are stored, the final results of a current audit can easily be compared to past audits.

Once the Audit Management software has completed its cycle, a list of issues and problems will be reported back to the auditor, clearly stating the necessary actions required to remain compliant. The software can track and acknowledge when these tasks have been completed.

It is easy to see why using Audit Management Software can enhance your auditing. With the software at hand you can easily audit any specific area over the whole of your organization.

Where?

To find out more about the latest in professional Audit Management Software, please contact us. We have implemented software solutions across a number of industries including Finance, Utilities and Health. We would love to discuss your auditing processes and how we might be able to help you utilize our Audit Management Software product BPS Audit.


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