How the Private Funds Quarterly Statements Rule Impacts the Record-to-Report Process 

The Private Fund Adviser Rules, issued by the SEC on August 23, 2023, will significantly impact the operations of registered private fund advisers (“advisers”) in the near future. One of the rules in particular, the Quarterly Statements Rule, will require finance leaders to assess and, in many cases, improve their Record-to-Report process.  

Such an effort should not be taken lightly. Adoption of better close and reporting practices takes time, including months of planning upfront and months of reinforcement after new processes are established. 

Learn more about the implications for registered adviser finance and accounting teams below. 

Background 

The Quarterly Statements Rule mandates that advisers distribute quarterly statements to investors that disclose fund-related information such as performance, investment costs, and fees and expenses paid by the private fund. Investor statements must be delivered within the following time frame:  

• 45 and 90 days of quarter and year end, respectively, if a fund is not a fund of a funds. 
• 75 and 120 days of quarter and year end, respectively, if a fund is a fund of funds. 

Advisers must comply with this rule within 18 months of its publication – currently by March 2025, regardless of total Assets Under Management. 

Impacts to Advisers  

The Quarterly Statements Rule impacts financial close, investor reporting, and data strategy for advisers in varying ways.  

Publicly Traded Advisers 

Advisers designated as non-accelerated filers already perform their Record-to-Report process within the SEC required timeline (45 and 90 days for 10-Qs and 10-Ks, respectively), which is the same period required by the Quarterly Statements Rule. Accelerated and Large Accelerated filers must complete their filings within an even shorter timeline (40 days for 10-Qs, 60 and 75 days for 10-Ks, respectively) putting them in a much better position than their non-public counterparts.  

As such, publicly traded advisers may need to focus on their data strategy – ensuring the appropriate data mandated by the Quarterly Statements rule is captured and presented in their investor statements. Additionally, abiding by the SEC 10-Q and 10-K reporting timelines does not necessarily mean that publicly traded advisers provide investor statements within that timeline, which they will need to do to ensure compliance. 

Non-Publicly Traded Advisers 

On the other hand, non-publicly traded advisers may need a more comprehensive approach to achieve compliance with the Quarterly Statements Rule. Many can take up to 60 days or more to complete the quarter-end close and up to 90 days or more for year end.  

Additionally, these advisers may not have an appropriate data strategy and corresponding technology to capture the data required by the Quarterly Statements Rule in their investor statements. This means they will need to accelerate both their Record-to-Report process and ensure they accurately capture and present the required data in investor statements.  

Depending on the adviser, compliance with the Quarterly Statements Rule will hinge on the ability to:   

• Timely close the books; 
• Capture the required data for investor statements; and 
• Efficiently develop and distribute investor statements within the required timeline. 

Achieving these capabilities will likely require experienced support or external resources. 

Seek Experienced Asset Management Support 

Biovell is a leader in helping private fund advisers improve their financial close, investor reporting, and data strategy. With an integrated approach to finance and data transformation, our methodology has enabled advisers to accelerate their Record-to-Report process by several weeks.  

Biovell

Understand Readiness With a Rapid Diagnostic 

• One of the biggest challenges to optimizing the Record-to-Report process is knowing where to start. Our rapid diagnostic assessment enables advisers to understand their compliance with the Private Fund rules, including the Quarterly Statements Rule, within one to two weeks. This tool provides the “Big Picture” on compliance, identifies specific gaps, and delivers targeted recommendations.  

Optimize the Financial Close 

• By partnering with clients’ finance organizations, we apply a proven approach that looks across people, process, data, and technology to realize a faster close. We help design an operating model that drives organizational alignment, reduces duplicative work, and maximizes the use of technology. This includes streamlining roles and responsibilities and exploring the use of close workflow management tools. An efficient close will not only help achieve compliance with the Quarterly Statements Rule but will also provide more timely transparency into financial results.  

Improve Data Strategy  

• Leading Record-to-Report processes are supported by a data and technology infrastructure designed to maximize efficiency. We help clients implement the right data strategy and integrations within their technology infrastructure to make it easier to capture the required data for investor statements and beyond. 

Automate Investor Statements  

• Developing investor statements and other reporting is often a manual process unsupported by technology. Additionally, many accounting systems with custom report functionality often require specialized coding knowledge and a dedicated resource. We help clients standardize and build investor statements using tools such as Alteryx, PowerBI, and Tableau. Combined with the appropriate data strategy and integration, this can save dozens of hours.  

Manage Change 

• Adopting a new process can be a significant change for any team, especially if accompanied by new technology and mandatory regulatory requirements. We support clients by coaching teams through new processes and workflows, and observing their teams independently complete a full Record-to-Report cycle. We make observations, recommend tweaks to the process, and support retrospectives to help teams going forward. 

The Quarterly Statements Rule represents a paradigm shift, and registered advisers should prepare early. Though there are still roughly 18 months until full compliance is required, finance and accounting leaders should strive to have their processes in place one to two quarters in advance of the deadline to ensure they are ready. 

For expert support acting on the private fund rules, contact Biovell .