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Audit
Definition
This is a careful review of a firm or fund's performance and accounting record by a third party accounting firm to ensure investors that they are receiving the correct return and that the accounting affairs of the business are being managed appropriately.
Using the term Audit :
Every year after the close of the calendar year, the firm has an annual audit conducted which reviews both the fund returns and the overall firm's reported profitability.
Pay Special Attention To :
Audit information is very important. Make sure you check to see if the auditing firm has issued a "qualified opinion" which is a huge red flag. Also, make sure you review more than just the numbers. You want to read the end notes and all assumptions utilized in the creation of the statement. When a company changes auditing firms midstream without a convincing answer, this is also a red flag for investors.
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Related terms
Compliance , Fund Administration
