Understanding and Auditing Alternative Investments

Course Details:
Understanding and Auditing Alternative Investments

This one-day virtual seminar provides participants with an overview of the most common alternative investments in the global market including Private Equity, Private Credit and Hedge Funds. In addition, this class will have a sperate section that will focus specifically on the Private Credit Alternative Sector to address the current issues that are developing in the market as of late.

Understanding the Alternative Investment markets and all the critical characteristics of these investments as can be extremely challenging. However, given the concentration of these assets in today’s investment portfolios, Auditors have no choice but to “jump in”.  Herein lies the problem. How are we to conduct an effective risk-based audit of Alternatives when we don’t understand them? That is where ITCI is here to assist you. This one-day class will assist you not only to better understand this asset class --- but will also identify the key risk of these private investments. Then the class will focus on the effective internal controls that must be in place at your firm and help you to define audit objectives, audit scope and audit program steps to get you started.

Understanding and Auditing Alternative Investments Course Features and Discussion Topics:
(Course Content Subject to Change to Address Current Market Conditions)

Alternative Investments Overview:

  • Understanding the history of alternatives and interrelated importance of alternatives in today’s market.
  • Delineating the market structure and investing parameters of Alternative Investments:
  • Understanding the unique characteristics and structures associated with the different types of Alternative Investments including Private Equity, Private Credit, Hedge Funds, Co-Investment, etc.
  • Learning the legal structure of alternatives both from the investing and the portfolio management side.
    • Comingled and limited partnerships
    • Separate accounts and the fund of one
    • Understanding the critical roles in your company
    • Discussing the general partner’s role who is managing the investments.
  • The advantage and disadvantages of investing into the alternative market and discussing the critical success factors.
    • Correlations to other Asset Sectors
    • Performance
    • Incentive Structure and Management Fees
    • Oversight and Due Diligence
      • Transparency or the lack thereof
      • The long-term investment and liquidity terms
      • Regulatory and reporting requirements
      • Incentive and management fees
Discussing the Private Credit Alternatives and The Current Market
In this class, we will focus on the private credit sector that has grown exponentially in the last decade but currently is under the microscope. The recent decline in the sector reflects a convergence of pressures rather than a single catalyst. Sentiment has been weighed down by a series of negative headlines, while investors have grown increasingly focused on potential redemption pressure and the durability of underwriting standards across the private credit landscape. At the same time, the rapid emergence of AI has introduced a new layer of uncertainty, particularly given private credit’s meaningful exposure to the software sector

Auditing Alternative Investments – A Risk Based Approach:

  • Understanding the Risk of Alternative Investments.
    • Market Disruptions, Business, Strategy, Legal/Contract, Financial, Liquidity, Leverage,  Valuation & Performance, Accounting, Manager Fees, Administrative, Legal & Regulatory, Sourcing, Oversight, Reporting, Strategy Drift, Loss of Key Managers, Country, Reputational... etc.
  • Discuss Best Practices and Key Controls in Alternative Investments.
  • Discuss the critical Alternative Investments Audit Objectives and Audit Scope
    • Very important to “Ring Fence” the scope and objectives.
    • Alternative Investment considerations during Audit Planning.
    • Critical Audit Steps to Consider in developing the Audit Program.
Course Duration: 1 day(s)
CPE Hours Available: 8
Field of Study: Auditing (4),  Accounting (1), Specialized Knowledge (3)
Program Level: Intermediate
Prerequisites: ​General Knowledge of Audit & Investments
Advance Preparation:      None
Delivery Method:

Group Live and Group-Internet Based 
Investment Training and Consulting Institute, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credits. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
Attendance Requirements: In order to be awarded the full CPE hours, attendees must complete at least 3 attendance monitoring mechanisms (i.e. code words, polls, etc)  per CPE hour.
Complaint Resolution:

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