Assess Current Facts and Circumstances
Internal Expense Allocation
Kroll experts will help you test, evaluate, benchmark and support your fee and expense policies and procedures and will provide you with robust and defensible practices to mitigate risk.
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Advisers to private funds are faced with growing scrutiny regarding internal allocations of fees and expenses. The SEC’s Office of Compliance Inspections and Examinations focuses its examinations on select areas, including advisors’ collection of fees, allocation of expenses, valuation and marketing practices. As a result, investors are now increasingly focused on fee and expense allocations and adequate disclosures.
Kroll's analysis can be applied to a range of fees, including costs for internally provided services, investment management fees, portfolio company fees, broken deal fees, monitoring fees, financing fees, fee offsets and similar arrangements. Our customizable solutions can assist you in remaining competitive, transparent and compliant with regulations.
Services Benchmarking
Review Fee and Expense Allocations
Documentation
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How We Can Help
- Evaluate the existing fee and expense allocation practices for:
- Compliance with investor agreements and disclosure of documents
- Consistency with robust and defensible best practices
- Potential risks and exposures
- Help advisers develop or enhance fee and expense policies, procedures and disclosures based on robust and defensible best practices
- Benchmark internally provided services that are charged to relevant funds to industry market rates
- Provide an assessment report on the private funds’ fee and expense allocation procedures and disclosures
- Review the required quarterly reports using both quantitative and qualitative lenses to ensure they are reasonable and meet the requirements
- Assist in drafting and reviewing the fund's fee calculation methodologies to ensure they are reasonable within the industry
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We can evaluate internal costs and perform benchmarking to establish market rates for internally provided services. While each engagement is bespoke, we apply the following steps:
For external expenses, Kroll ensures the costs are allocated appropriately across the relevant funds. Similarly, Kroll evaluates existing policies for external fees to ensure these procedures align with disclosures made to investors. Our projects can conclude with the deliverable of your choice, including formal documentation reports that can be provided to investors and/or regulators. |
Our Scope
We can evaluate internal costs and perform benchmarking to establish market rates for internally provided services. While each engagement is bespoke, we apply the following steps:
- Identify which internally provided services are being passed through to the funds.
- Ensure the fees for these services are allocated correctly.
- Perform a benchmarking analysis steps that uses a combination of market data and financial modeling to establish market rates for any type of internally provided service.
For external expenses, Kroll ensures the costs are allocated appropriately across the relevant funds. Similarly, Kroll evaluates existing policies for external fees to ensure these procedures align with disclosures made to investors.
Our projects can conclude with the deliverable of your choice, including formal documentation reports that can be provided to investors and/or regulators.
Our Team
As former auditors, regulators, compliance executives, finance professionals, lawyers, economists and valuation professionals, our dedicated team is composed of recognized experts with strong technical background in the asset management industry. Our deep experience has proven essential in helping our clients with comprehensive solutions.
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