Accounting and Audit
A fund must include financial statements in its semi-annual and annual reports to shareholders. The annual report’s financial statements must be audited by an independent public accountant, which must be approved by the fund’s board.
Fund boards have audit committees composed of independent directors. The audit committee is responsible for, among other things, overseeing the fund’s accounting and financial-reporting processes and its internal controls over financial reporting. The committee recommends to the full board the selection of an independent public accountant, meets periodically with the accountant, and oversees the independent accountant’s audit of the financial statements. Funds must disclose whether they have an “audit committee financial expert” serving on the committee. If they do not, they must disclose why.
The U.S. Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) set the standards for fund accounting.
The Public Company Accounting Oversight Board (PCAOB) establishes auditing standards and oversees audits of public companies.
IDC’s memos inform directors about important regulatory, legislative, and judicial developments. IDC also comments on proposals that could affect board responsibilities or shareholder interests. See below for recent comment letters and memos on selected topics.