Year-End Fund Audit Preparation Timeline: 12-Week Countdown to Audit Completion

The SEC has fined advisers for missing the 120-day deadline to distribute audited financial statements, even when the underlying audit was clean. Controllers at private funds generally start preparation in mid-October to stay ahead of the compressed Q1 audit window.

What Does the 12-Week Timeline Look Like?

For calendar year-end funds targeting late April distribution, the sequence runs roughly as follows:

Weeks 12-10 (Mid-October through October)

• Schedule planning call with auditors to discuss timing, scope, and any new accounting standards

• Request the PBC list (Prepared by Client) to identify documentation requirements early

• Confirm availability of fund administrator and internal staff through March

• Review prior year audit issues and confirm any recommendations have been addressed

Weeks 9-7 (November)

• Draft year-end financial statement shells with placeholder numbers

• Prepare preliminary valuation packages for Level 3 investments

• Identify new investment types or transactions requiring additional disclosures

• Coordinate with portfolio companies on financial data requests

Weeks 6-4 (December through Early January)

• Complete Q4 close and deliver approved fund accounting data to auditors

• Finalize fair value measurements with supporting documentation (EBITDA multiples, DCF models, comparable transactions)

• Submit bank, broker, and capital account confirmations within the first week of January

• Prepare schedule of management fees, organizational expenses, and related-party transactions

Weeks 3-1 (January through February)

• Support audit fieldwork with timely responses to follow-up requests

• Review first draft of financial statements for completeness

• Clear outstanding audit items and management letter comments

• Obtain required signatures and finalize distribution list

Where Do Funds Fall Behind?

Valuation documentation causes the most delays. A private equity fund with 15 portfolio companies can spend weeks compiling supporting materials, particularly for holdings without recent financing events where secondary valuation approaches become necessary.

New auditing standards (SAS 143-145) first applied to December 2023 year-end audits and have increased auditor scrutiny on accounting estimates. Controllers report fielding more questions about Level 3 inputs and the assumptions behind fair value measurements.

How Can Funds Build in Buffer Time?

Three practices show up repeatedly among funds that hit their deadlines:

1) designating a single point-of-contact for auditor communications

2) holding weekly status calls once fieldwork begins

3) drafting financial statement footnotes in Q4 rather than waiting for final numbers.

Fund-of-funds structures get 180 days, but the extra time usually gets absorbed waiting for underlying fund audits to close.