Efficient Monthly Reporting Shouldn’t Be Risky Business

Steve O’Loughlin, Product Manager, Investment Accounting


Are you feeling the pressure to shorten monthly reporting timeframes? If you are like many fund companies, you are looking to improve operational efficiencies but face the task of producing timely information without introducing the operational risk of data inaccuracies. For US mutual funds, daily net asset values are calculated on trade date +1 (T+1) and the industry generally accepts that a fund’s portfolio data is not current on any given business day. However, this is not true for monthly, quarterly, semi-annual and annual reporting periods. In month-end reporting, trades that occur on month-end are required to be included in month-end reporting. We’ve seen a wide range of solutions aimed at addressing this issue—from manual workarounds to entire subsystems.

These proprietary solutions introduce a myriad of problems relating to operational risk. We’ve seen issues where funds risk missing NAV deadlines or risk incorrect data entry by manually re-opening closed periods. In other cases, firms create unnecessary overhead costs by using a separate month-end subsystem. There are better ways to get the job done. In systems where as-of month-end reporting is inherently supported, the month-end has its own distinct accounting periods and exceptions dashboard. This allows for separate and distinct period closes where the daily periods are closed business as usual and month-end periods are left open several days past month-end to systematically capture any as-of processing.

With data stored at the appropriate level, a separate month-end net asset value (NAV) can be used in validations verifying the as-of activity with tolerances defined by the business. It is also important to have the ability to monitor all of this activity via an exceptions dashboard, which provides end users a real-time snap shot of this activity. The final output to automated monthly processing is a report package that can now be generated on this new dimension of data. When accounting has the ability to run all reports as of any date, or the month-end date, true efficiencies can be realized.

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