Softagon derives insights from hedge fund operational and performance needs through close working relationships with funds, prime brokers, technology vendors and related parties.  Members of the Softagon team like to contribute these insights to the hedge fund community to jump-start a conversation about particular situations or requirements.  Please contact us for more information and insights into potential software solutions for your firm.

Complex Partnership Allocation Accounting

Mercury Schroeppel

Complex partnership allocation accounting is common among institutional hedge funds.  While vendor solutions typically streamline most straightforward partnership accounting process, the expansion of new investment pools (i.e., side pockets) introduces new complex accounting rules, periodic procedures, and data management needs.

In certain cases, the complexity of these accounting issues compels the creation of a standalone set of software applications that record and report data necessary to report on partnership allocations.  Typically built using Microsoft Excel, these software applications exhibit the common headaches involved in maintaining large, complex Excel models - versioning; typos; reporting; slow Excel performance; time-consuming, low-level model maintenance.

Softagon’s expertise in working with hedge funds and developing applications using Excel allows us to work with clients to achieve a better approach.  A standard Softagon practice – and clearly an industry best practice –- is to preserve the aspects of the user experience best supported by Excel while integrating institution-grade data management capabilities.  As related to side pocket accounting, Softagon’s recommendation approach to building a custom application provides for a synchronization engine that provides users with the best of both worlds: the ability to continue to work in the familiar, flexible Excel environment, with database connectivity to support consistency, power, and much greater reporting visibility.

Softagon’s insights into building custom software to address complex partnership accounting delivers improved time productivity, greater confidence in calculations, and automated integration to related systems and information users within the fund as well as investors, tax and audit professionals, and related parties.