A
Accruals
Revenues earned or expenses incurred for which cash has not yet been received or paid. Under accrual accounting, these items are recorded in the period in which they occur to accurately reflect a fund’s financial position.
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Activity-Based Pricing
Assigning expenses to specific outsourcing activities or tasks rather than using monthly fees or retainers. Activity-based pricing ensures firms only pay for actual work performed.
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Audit Support
Services that help firms prepare for and complete financial audits efficiently by providing documentation, data validation, and coordination with auditors.
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Audit Trails
Chronological records of financial data that capture who made any change, what data was changed, and when the change occurred. Audit trails give firms the ability to trace a transaction back to its original source, which can be critical for verifying accuracy.
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C
Capital Activity
Transactions related to investor capital in a fund, such as capital contributions, subscriptions, redemptions, capital calls, and distributions.
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Cash Balances
The total amount of cash available in a firm’s bank or custody accounts at a specific point in time, representing the liquid funds available for operations, investments, or redemptions.
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Corporate Actions
Events initiated by a company that affect its securities and shareholders, often resulting in changes to share value, ownership structure, or investor entitlements.
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F
Fund Administrator
A third-party service provider responsible for fund accounting, NAV calculation, financial reporting, and recordkeeping for investment funds. Fund administrators help ensure accurate reporting of trades, cash movements, and portfolio valuations.
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G
GAV (Gross Asset Value)
The total market value of all assets held in a fund or investment portfolio before deducting liabilities, such as debt, fees, or operating expenses. GAV is often used to measure the overall size of a fund’s assets.
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Golden Copy Data
The authoritative, verified, and reconciled single source of truth for critical financial data, typically created by consolidating information from multiple sources. The golden copy ensures consistency, accuracy, and reliability for trading, reporting, and compliance, among other functions.
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I
Independent Validation
An objective review of financial data, processes, or calculations performed by an independent party to confirm their accuracy, completeness, and reliability.
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Intra-Month Visibility
The ability to monitor portfolio positions, cash balances, expenses, and other fund activity during the month, rather than waiting for month-end reports from administrators.
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L
Line of Credit Maintenance
The ongoing management and monitoring of a revolving line of credit, including maintaining compliance with lending terms, tracking borrowings, and managing associated fees and interest payments.
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N
NAV (Net Asset Value)
The value of a fund’s assets minus its liabilities, typically expressed on a per-share basis. NAV represents the value of each investor’s share in the fund and is usually calculated periodically by fund administrators.
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P
Performance Fees
A compensation structure in which investment managers earn a percentage of the profits generated for investors, commonly used in hedge funds and private equity funds.
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Prime Broker
A financial institution that provides hedge funds and asset managers with services such as financing, custody, securities lending, margin, and trade settlement to support trading and investment activities.
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R
Reconciliation
The foundational accounting and operational process of comparing two or more sets of records to ensure they agree. It is the primary control mechanism used by financial institutions to verify data integrity, identify errors or omissions, and ensure that internal books accurately reflect the reality of external bank or custodian statements.
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S
Security Data
Reference information about financial instruments—such as equities, bonds, and derivatives—used by financial firms to ensure consistent and accurate data across trading, risk, and accounting systems.
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Shadow Accounts
Internal records maintained by a fund to independently track positions, transactions, valuations, and balances alongside the official records maintained by a fund administrator or custodian. Shadow accounts help firms verify accuracy and maintain greater control over financial reporting.
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Shadow Accounting
The practice of maintaining shadow accounts in order to verify a third-party fund administrator’s calculations as well as generate views of the firm’s finances that are available earlier than the fund admin’s month-end report.
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T
Trade Capture
The process of recording the details of an executed trade—such as price, quantity, instrument, and counterparty—into a trading or order management system, creating the official record used for risk management, P&L calculation, and downstream processing.
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V
Valuation
The process of determining the fair value of an asset or security, typically using market prices, pricing models, or other financial data. Valuation is essential for calculating fund performance and determining net asset value (NAV).
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