PRIVATE EQUITY ACCOUNTING AND REPORTING SYSTEM AND METHOD
A private equity accounting and reporting system and method are provided herein.
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This application is a continuation of U.S. application Ser. No. 12/330,414 (U.S. Pat. No. 8,117,096), filed Dec. 8, 2008, titled “PRIVATE EQUITY ACCOUNTING AND REPORTING SYSTEM AND METHOD,” naming inventor Jayne Thompson, and filed under Attorney Docket No. VCVI-2008003. The above-cited application is incorporated herein by reference in its entirety, for all purposes.
FIELDThe present disclosure relates to accounting and reporting specialized data for private equity funds, and more particularly for a method of configuring a general ledger to facilitate industry-specific reporting.
COPYRIGHT NOTICEA portion of the disclosure of this patent document may contain material that is subject to copyright protection. The copyright owner has no objection to the facsimile reproduction by anyone of the patent document or patent disclosure as it appears in the U.S. Patent and Trademark Office patent file or records, but otherwise reserves all copyright rights whatsoever.
BACKGROUNDPrivate equity (“PE”) firms typically raise capital in a series of limited-life, closed-end funds. Each fund may typically be a group of separate legal investment entities, each of which is often structured as a limited partnership and formed to address the specific tax structuring needs of significant investor groups (such as tax exempt and foreign investors), to provide special economic arrangements to distinct investor classes, or to segregate investors by the Investment Company Act of 1940 definitions (i.e., Qualified Purchasers vs. Accredited Investors). During fundraising, investor entities (who are often limited partners) typically enter into a subscription agreement committing them to contribute a certain amount over the life of the investment entity in exchange for an agreed-upon share of the investment proceeds realized by the investment entity. As investments are made, the PE firm (who often serves as the general partner or “GP” of the investment entity) typically calls capital from the investor entities, who often participate in each of the investment entity's investments prorata based on relative subscriptions. In a typical fund, investments may be made in 20 to 50 investment targets (which may be operating companies or other investment pools). As investments are realized, proceeds are typically distributed in accordance with the terms of the partnership agreement. The PE firm may be compensated for its services through both a periodic management fee and a share of the investment entity's profits, known as the “carried interest.”
Real estate investment partnerships are considered “PE” firms as the term is used herein.
The nature and structure of PE funds typically requires specialized managerial or internal reporting relative to other enterprises, including the following.
Fund-to-date reporting: Since private equity is a long-term asset class, PE funds may report information on both a fiscal year and life-to-date (“FTD”) basis.
Specialized metrics reporting: PE firms may be benchmarked by a number of industry specific metrics such as dollar-weighted returns (referred to as “internal rate of return” or “IRR”), distributions to paid-in ratios, and value to paid-in ratios. IRR is often measured over various dimensions, such as sector, region, initial stage of investment, and investment partner (e.g., the PE firm's employee who is responsible for the investment).
Multi-level reporting: Since a PE fund is comprised of parallel legal entities, results may be reported at both the investment entity and the fund level. Furthermore, since the PE firm may raise capital over a series of funds, existing and potential investor entities may demand firm-level results (i.e., an aggregation of fund level results) when analyzing PE firm performance. The challenge of multi-level reporting depends on the number of entities in each fund and the number of funds raised over time by the PE firm.
Capital account reporting: Unlike an incorporated entity that simply issues entity-level financial reports to its investors, PE funds may issue “capital account” reports to individual investor entities. These reports are typically issued quarterly, and may include the individual partner's capital contributions, distributions, and share of operating activity, including realized and unrealized investment gains and losses. This may require detailed allocations of the investment partnership's operating activity to individual partners based on complex provisions of the limited partnership agreement known as the “waterfall.” Since each limited partnership agreement may be negotiated based on prevailing market terms at the time of fundraising and the desired economic terms with each investor class, each of the PE firm's investment entities may have different waterfall allocations. Likewise, classes of investor entities in a single investment entity may have different waterfall allocations.
Ad hoc reporting: A single PE fund may have 300 or more investor entities, including private and governmental pension plans, insurance companies, family trusts, and high net worth individuals. These investor entities may employ portfolio managers who allocate the investor entity's investments across various asset classes and to individual investment firms within each asset class. As these portfolio managers perform their individual analysis, they may make a number of ad hoc information requests to the PE firm. Accordingly, the PE firm may be asked to report the same information in various formats as prescribed by each investor entity.
“Family” or “Cross-fund” capital account reporting: An investor may have multiple legal investor entities through which it invests in the investment partnership. For example, a wealthy family may have a separate trust for each child. Each trust may be treated as a separate investor entity and may receive its own capital account report from the investment partnership. Such investors frequently ask for a “family” level report (i.e., an aggregation of the individual capital accounts) for monitoring purposes. Similarly, a single investor entity frequently commits to a number of the PE firm's funds over time and may request a consolidated capital account report that aggregates its capital account activity across several of the PE firm's investment partnerships.
Period specific reporting: Although many investment entities operate on a December 31 fiscal year, investor entities may operate on either a June 30 or September 30 fiscal year. Investor entities may therefore request capital account information for their fiscal year rather than the investment partnership's fiscal year. Accordingly, the PE firm may wish to report information for user-defined periods, which may cross the fiscal year of the investment partnership.
Tax reporting: Limited partnerships are typically tax transparent entities—i.e., the partnership is not responsible for paying tax on its taxable income. Instead, the partnership may file an informational return (Form 1065) and may issue a Schedule K−1 to each partner (i.e., investor entity) that details the partner's share of taxable activity to be reported on the partner's tax return. The PE firm may therefore maintain tax as well as financial capital accounts that adhere to Generally Accepted Accounting Principles (“GAAP”) by individual investor entity. Tax and GAAP capital accounts may differ because of book and tax differences, which are reported on Schedule M−1 of the Form 1065 (“M−1 differences”).
Using the common approach, a PE firm bookkeeper may need to consult only one general ledger account for the balance of an investment or one general ledger account for the capital account balance of an investor entity. However, using the common approach, it may be relatively difficult to produce many of the specialized reports described above. Accordingly, it is common for PE firms to keep at least one parallel set of books—one in general ledger software, and one in a set of spreadsheets. In such firms, the general ledger software is typically used for financial and regulatory reporting, while the spreadsheets are typically used for managerial and/or internal reporting.
Reference is now made in detail to the description of the embodiments as illustrated in the drawings. While embodiments are described in connection with the drawings and related descriptions, there is no intent to limit the scope to the embodiments disclosed herein. On the contrary, the intent is to cover all alternatives, modifications and equivalents. In alternate embodiments, additional devices, or combinations of illustrated devices, may be added to, or combined, without limiting the scope to the embodiments disclosed herein.
The PE accounting/reporting device 100 also includes a processing unit 110, an optional display 140, and a memory 150, all interconnected along with the optional network interface 130 via a bus 120. Those of ordinary skill in the art and others will appreciate that the display 140 may not be necessary in all forms of computing devices and, accordingly, is an optional component. The memory 150 generally comprises random access memory (“RAM”), a read only memory (“ROM”), and a permanent mass storage device, such as a disk drive, flash RAM, or the like. The memory 150 stores the program code and/or data storage necessary for implementing a general ledger accounting system 160, a list of segment identifiers 165, account creation and entry recording routines 700, reporting routines 900, account identification routines 800, and a supplemental information data source 185. Additionally, the memory 150 stores an operating system 155.
These and similar software components may be loaded from a computer readable medium into memory 150 of the PE accounting/reporting device 100 using a drive mechanism (not shown) or network mechanism (not shown) associated with the computer readable medium, such as a floppy, tape, DVD/CD-ROM drive, flash RAM, or network interface card.
Although a conventional general-purpose computing device may be transformed via software into a PE accounting/reporting device 100 as described, a PE accounting/reporting device 100 may also be embodied on a great number of devices capable of recording and reporting accounting entries. For example, in alternate embodiments, a PE accounting/reporting device 100 may be embodied on a mobile phone, personal digital assistant, personal computer, or the like.
Over the life of an investment, such as those illustrated in
Accordingly, various embodiments, described in more detail below, may enable a PE firm to use the same general ledger accounts that are used for financial reporting to generate some or all of the above-described industry-specific managerial reports, including investment tracking (both invested dollars and units); portfolio statistics and metrics (including gross and net IRR calculations, as applicable) for the firm, fund, entity, or any pre-determined dimension such as sector or geography; individual or family capital account reporting (including capital call calculations and income/loss allocations) by entity or across funds; M−1 difference and tax capital account reporting; and management company reporting. Data rich reports may be generated for pre-determined periods (i.e., quarterly, fiscal year, or FTD) or flexible reporting periods crossing fiscal years.
Some general ledger accounting software may benefit from certain functionality in various report writer solutions, including SAP's XL Reporter (“XLR”), as distributed domestically by Solver, Inc. of Los Angeles, Calif. Such report writers may enable definition of various reports that may be able to draw specifically defined accounting entries from a particularly configured general ledger. Reports may be further presented and manipulated in appropriate software packages, e.g., a spreadsheet software package.
In other embodiments, more or fewer parameter classes may be present. In particular, in other embodiments, further transaction parameter classes may include the sector of the target, the identity of a PE firm employee or associate responsible for the transaction, an investment duration or “active thru” parameter, a publicly-held/privately-held parameter, and an identity of a PE firm partner who is responsible for the transaction. In various embodiments, such additional parameters may be implemented as user-defined fields associated with each general ledger account.
As illustrated in
As illustrated in
In an exemplary embodiment, a transaction parameter class may have a list of unique identifiers to represent each member of the class.
Various transaction type classes may include species, sub-species, and members as listed in Tables 1-5, below. Since requirements of each installation may be different, the configuration details that follow are but one embodiment. They are representative of a typical installation, but users will modify the configuration to meet their specific needs.
In one embodiment, transaction type species may comprise the following:
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- Assets, see Table 1;
- Liabilities, see Table 2;
- Partners' Capital, see Table 3;
- Income, Including Portfolio Gains and Losses, see Table 4; and
- Expenses, see Table 5.
The list of transaction types and identifiers in Tables 1-5 is not exhaustive but is representative of the level of detail required for capturing the portfolio activity. Along with lists of representative transaction types, Tables 1-5 also list a set of exemplary four-digit transaction type identifiers, in accordance with one embodiment. In the exemplary embodiment, the first digit of the transaction type identifiers acts as a species identifier 605, the second digit as a sub-species identifier 610 (where appropriate), and the third and fourth digits as a member identifier 615.
As illustrated in Table 3, below, Partners' Capital Species Identifiers may identify accounts used to capture partner capital account data, including subscriptions, contributions, distributions, transfers, and income/loss allocations, as well as remaining and fulfilled subscriptions. Design of the Partners' Capital species accounts and identifiers may be highly dependent on the terms of the PE firm's limited partnership agreements. If, for example, the partnership agreement provides for recycling of investment proceeds, a recallable distributions account may be required Likewise, distributions may be captured in the distributions sub-species (33xx), and the level of detail for capturing distribution information may depend on the PE firm's waterfall provisions.
Although an expansive exemplary set of transaction type members, species, and identifiers is disclosed in Tables 1-5, in a minimal embodiment, as few as four sub-species of transaction types, each having one or more members, may be identified, including those listed in Table 6. Transaction type identifiers in the Equity Invested, Equity Return, and Portfolio Gains/Losses sub-species (e.g., 13XX and 45XX exemplary identifiers) may be used in a four part portfolio series account parameter combination 400. Transaction type identifiers in the Partners' Capital Allocations sub-species (e.g., exemplary identifier 38XX) may be used in a three or four part partner series account identifier combination 500.
In another embodiment, the minimal set of transaction types of Table 6 may be expanded to include some or all of those listed in Table 7, which may be used in a four part portfolio series account parameter combination 400.
In still other embodiments, various other subsets of the transaction type identifiers listed in Tables 1-7 may be used.
Investment Entity Identifiers
In accordance with one embodiment, Investment Entity Identifiers 410 may be constructed using exemplary species (and exemplary species identifiers) listed in Table 8.
In an exemplary embodiment, sub-species identifiers 610 are not used in Investment Entity Identifiers 410, and member identifiers 615 may comprise two alphanumeric characters. In one embodiment, member identifiers 615 assigned based on each entity's legal structure. Thus, in an exemplary embodiment, an investment entity may have a unique identifier such as “A01,” “A02,” “F01,” and the like.
Investment Target Identifiers
In accordance with one embodiment, Investment Target Identifiers 415 may be constructed using exemplary species (and exemplary species identifiers) listed in Table 9.
In an exemplary embodiment, sub-species identifiers 610 are not used in Investment Target Identifiers 415, and member identifiers 615 may comprise three alphanumeric characters, unique to each target. In an exemplary embodiment, crossover investments (i.e., investments in a single portfolio company by multiple funds) use the same Investment Target Identifier 415 in both funds. Conversely, in the event of spin-outs, mergers and acquisitions, and other restructuring activities, a new Investment Target Identifier 415 may be assigned to the successor company.
In one embodiment, supplemental information may be used to provide a more descriptive name for some or all investment targets. For example, an investment target having an identifier such as “C001,” may be associated with supplemental information comprising a company name, e.g., A Big Deal, Inc. Such supplemental information may be used, for example, for printing on reports. As with other types of supplemental information, company name supplemental information may be maintained in a spreadsheet file, in an external database, in a text file, on a network accessible data store, or in another electronic data source.
Security Type Identifiers
In one embodiment, Security Type Identifiers 420 may be constructed using exemplary species (and exemplary species identifiers) listed in Table 10.
In an exemplary embodiment, Sub-Species Identifiers 610 are not used in Security Type Identifiers 420, and member identifiers 615 may comprise three alphanumeric characters. In one embodiment, member identifiers 615 assigned to ensure that securities for a target sort in the proper order on a schedule of investments. Thus, in an exemplary embodiment, a security may have a unique identifier such as “C0A0” (e.g., Series A Preferred Stock); “C0A1” (e.g., Series A-1 Preferred Stock); “C1A0” (e.g., Series 1-A Preferred Stock); and the like. In one embodiment, an identifier such as “RRRR” may be used to denote reserves if a PE firm elects to track reserves.
In one embodiment, supplemental information may be used to provide a more descriptive name for some or all security types of some or all investment targets. For example, an security type having an identifier such as “C0A0,” may be associated with supplemental information comprising a descriptive security name, e.g., “Series A redeemable participating preferred stock.” Such supplemental information may be used, for example, for printing on reports. As with other types of supplemental information, security name supplemental information may be maintained in a spreadsheet file, in an external database, in a text file, on a network accessible data store, in another electronic data source, or the like.
In some embodiments, descriptive security name supplemental information may be cross-indexed by investment target. For example when reporting on security identifier “C0A0” as issued by investment target identifier “C001,” the descriptive security name may be identified as “Series A redeemable participating preferred stock.” However, when reporting on security identifier “C0A0” as issued by investment target identifier “C002,” the descriptive security name may be identified as “8% Series A participating preferred stock.”
Partner Identifiers
In accordance with one embodiment, Partner Identifiers 515 may be constructed using the exemplary species (and exemplary species identifier) in Table 11.
In other embodiments, one or more sub-species identifiers 610 may be used to distinguish General Partner entities from limited partner entities. In an exemplary embodiment, member identifiers 615 may comprise two alphanumeric characters.
In one embodiment, the same field may be used for both Investment Target Identifiers 415 and Partner Identifiers 515, in which case, Investment Target Species Identifiers (such as those listed in Table 9) may be chosen to be distinct from Partner Species Identifiers (such as those listed in Table 11).
In one embodiment, supplemental information may be used to provide a more descriptive name (e.g., “ABC Pension Plan”) for some or all partners in a manner similar to that described above for other types of supplemental information.
Partner Transaction Type Identifier
In various embodiments, Partner Transaction Type Identifier 520 may optionally be used to capture information relevant to a particular investment entity's investment (or partnership) agreement. For example, if the limited partnership agreement provides for deemed distributions, Partner Transaction Type Identifier 520 may use species identifiers to distinguish between cash and deemed distributions. Likewise, a species identifier may be used when the investment agreement provides for “cashless” contributions by the GP. An exemplary list of Partner Transaction Type Identifiers 520 is provided in Table 12.
Other Transaction Parameter Classes
In various embodiments, additional transaction parameter classes may include some or all of the following:
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- Associate Identity: An Associate Identity transaction parameter class may enable a PE firm to filter certain investment reports for a subset of the portfolio assigned to a specific associate (i.e., PE firm employee responsible for the investment).
- Active Thru Date: An Active Thru Date transaction parameter class may be used to exclude information on inactive accounts. An exemplary identifier convention is YYYYMMDD.
- Status: A Status transaction parameter class may be used to segregate publicly-traded and privately-held investments.
- Partner: The Partner transaction parameter class may enable a PE firm to filter transactions by lead partner.
If in block 730, the uniquely identified account is determined to not exist (because, e.g., the indicated transaction is the first to have the particular combination of transaction parameters), then in block 735, the uniquely identified account is created using the indicated combination of transaction parameters. After the uniquely identified account is created, in block 740, an accounting entry for the indicated investment transaction is recorded in the uniquely identified account. The routine 700 ends at block 799.
In decision block 820, subroutine 800 determines whether the selected transaction type identifier 405 is within the Partners' Capital species, as discussed above in reference to Table 3. If the selected transaction type identifier 405 is within the Partners' Capital species, then the subroutine 800 needs to select identifiers for a Partners' Capital identifier combination 500, as illustrated in
If in decision block 820, the selected transaction type identifier 405 is determined to be outside the Partners' Capital species, then the subroutine 800 needs to select identifiers for a Portfolio Series identifier combination 400, as illustrated in
In decision block 845, subroutine 800 determines whether there are transaction parameters other than those discussed above. If so, subroutine 800 loops from beginning block 855 to ending block 865, selecting other identifiers in block 860 from other identifier lists, as appropriate.
In block 850, the selected identifiers 405-10 and 415-20 or 515-20 (and other identifiers, if other transaction parameters were determined in block 845) are combined into a unique account combination 400 or 500. The subroutine 800 ends in block 899, returning the combined unique account combination 400 or 500.
Typically, the various identifier lists discussed above in reference to
Reporting
In various embodiments, general ledgers may have a great number of accounts, and transactions related to a particular investment may be split up among several accounts. As such, it may be desirable to utilize a reporting tool capable of “rolling-up” accounting entries in various accounts to obtain data related to various reporting metrics.
Various reports utilize accounting entries from one or more accounts, selected according to various predetermined criteria. In step 910, reporting routine 900 determines one or more reporting components necessary to generate the indicated report. As used herein, the term “reporting component” refers to a numerical figure that may be derived from accounting entries in accounts identified by one or more unique combinations of transaction parameters. For example, in step 905, the reporting routine 900 may obtain an indication to generate an Internal Rate of Return (IRR) Report for a particular investment entity and a particular investment target, the indicated IRR Report having the following lines:
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- Cash investments (excluding blocker expense fundings), net of bridge loan proceeds;
- Cash proceeds received (excluding bridge loan proceeds);
- Proceeds receivable; and
- Remaining fair value.
Having received an IRR Report indication, in step 910, reporting routine 900 may determine that each line requires one or more reporting components. For example, the “Cash investments” line may require four reporting components, comprising accounts having the following transaction types: Equity investments (e.g., transaction type identifier 1310); Debt Investments (e.g. transaction type identifier 1210); Outside basis (e.g. transaction type identifier 1318); and Bridge loan proceeds (e.g. transaction type identifier 127X).
Continuing with the same example, the “Remaining fair value” line may require other reporting components, comprising accounts having the following transaction types: Debt Investments (12XX)+Equity Investments (13XX).
Various other reporting lines may similarly require various other predetermined reporting components. Once all required reporting components have been determined in block 910, reporting routine 900 iterates over all reporting components from beginning block 915 to ending block 935. In block 800, the account identification subroutine 800, illustrated in
Once all reporting components have been processed, reporting routine 900 proceeds to block 940, where the various accounting entries obtained and/or processed in iterative blocks 920 and/or 925 are further processed. For example, to generate a Cash investments line for an IRR Report, a sum of accounting entries from the Bridge loan proceeds component may be subtracted from a sum of accounting entries from the Equity investments component, from the Debt Investments component, and from the Outside basis component.
In block 945, the obtained and processed components are combined with supplemental information obtained (if any), and the report formatted for display on an output device, such as a display, monitor, printer, or electronic storage device. Reporting routine ends at block 999.
Exemplary Reports
Appendices
An exemplary listing of report definitions is included as Appendix A. Appendix B provides a set of illustrative accounting entries using Gain/Loss account identifier combinations. Appendix C provides a set of illustrative accounting entries using Entity (i.e., Partner) Capital account identifier combinations.
Although specific embodiments have been illustrated and described herein, it will be appreciated by those of ordinary skill in the art that a whole variety of alternate and/or equivalent implementations may be substituted for the specific embodiments shown and described without departing from the scope of the present invention. This application is intended to cover any adaptations or variations of the embodiments discussed herein.
APPENDIX A © 2006, Jayne ThompsonVC View Report Descriptions
Portfolio Analysis
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- Gross IRR—Details of calculation of portfolio-level (“gross”) IRR. Includes IRR calculations by individual investment and the ability to expand cash flow detail by investment. May be run using either an actual date or mid-month convention for cashflows.
- Net IRR—All Partners—Details of calculation of Net IRR to all Partners (including the GP). Includes the ability to expand contributions and distributions details by date. May be run using either an actual date or mid-month convention for cashflows. The results will not be valid for periods after the most recent quarterly closing.
- Net IRR—Limited Partners Only—Details of calculation of Net IRR to Limited Partners only. Includes the ability to expand contributions and distributions details by date. May be run using either an actual date or mid-month convention for cashflows. The results will not be valid for periods after the most recent quarterly closing.
- Weekly Dashboard—Snapshot of portfolio, including commitments, investments and reserves by sector; recent portfolio transactions; commitment and investment information on five largest fund commitments; and cash/LOC availability.
- Fund Total Value Rollforward—Displays by portfolio company the total value at beginning of quarter, amounts invested during the quarter, the net increase (decrease) from operating activities, and total value at the end of the quarter.
- Fund Fair Value Rollforward—Displays by portfolio company the unrealized value at the beginning of quarter, the categories of transactions affecting remaining fair value (e.g., investment purchases or realizations, unrealized adjustments, and other income related adjustments), and unrealized value at the end of the quarter.
- Lead Ptr IRR—Details of calculation of portfolio-level (“gross”) IRR for selected “lead” partner. Includes the ability to expand cash flow detail by investment. Also includes summary of amounts invested by sector and year.
- Ptr IRR—Details of calculation of portfolio-level (“gross”) IRR for selected “assigned” partner. Includes the ability to expand cash flow detail by investment. Also includes summary of amounts invested by sector and year.
- (Sector) IRR—Details of calculation of portfolio-level (“gross”) IRR for selected sector. Includes the ability to expand cash flow detail by investment. Also includes summary of amounts invested by year.
- IRR by Sector—Details of calculation of portfolio metrics by sector, including IRR.
- IRR by Partner—Details of calculation of portfolio metrics by lead partner, including IRR.
Financial Statements and Supporting Schedules
Allocations Worksheets
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- Allocations Worksheet—Provides the data for the quarterly allocations calculations and upload to Dynamics GL.
- 8/20% Pref Return—Calculates the 8 or 20 percent (as applicable) preferred return as required for quarter allocations.
Fund Entity Financial Statements Report Package**
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- Balance Sheet—Statement of Assets, Liabilities and Partners' Capital.
- Statement of Operations—Statement of Operations—Quarter and YTD.
- Statement of Partner Capital—Statement of Changes in Net Assets—Quarter and YTD.
- Statement of Cash Flows—Statement of Cash Flows—Quarter and YTD.
- Portfolio Investments—Schedule of Portfolio Investments.
- Capital Accounts—Individual Capital Accounts—Quarter, YTD and FTD.
Supplemental Financial Reports
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- Fund Capital Summary—Side-by-side Statement of Changes in Partners' Capital for fund entities.
- Condensed Port Sch—Summaries by a) Category, b) Sector, and c) Security Type for selected fund entity for inclusion in audited statements.
- Operations Detail QTR—Summarizes Investment Income, Unrealized Adjustments, and Realized Gain/Loss by portfolio company for user selected three month period.
- Operations Detail YTD—Summarizes Investment Income, Unrealized Adjustments, and Realized Gain/Loss by portfolio company through user selected month end for the current fiscal year.
Portfolio Monitoring
Activity by Associate—Detail of transactions (dollars and shares) by Portfolio Company for user-selected Columbia Associate and thru user-selected date. Includes capitalized interest but does not include blocker fundings.
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- Certificate Inventory—Detail of stock certificates expected (per the closing documents) and received as certificated shares. Use as a tickler report to identify certificates for follow-up.
- Deal Funding Activity—Detail of transactions (dollars and shares) by user-selected “deal” thru user-selected date. Includes capitalized interest but does not include blocker fundings. See Deal Trans Detail report for all activity. A “deal” may include multiple portfolio companies.
- Deal Trans Detail—Detail of all transactional activity for a “deal”, including amounts funded to related companies, blocker fundings, capitalized interest, OID amortization, basis returned, and basis written off. Does not include shares (see Deal Funding Activity report). A “deal” may include multiple portfolio companies.
- Fund Portfolio—Consolidated schedule of Portfolio Investments for Columbia IV as of user-selected date.
- FY Investment by Quarter—Details of amounts invested (funded only) by entity subtotaled by quarter for the current fiscal year.
- Investment by Quarter—Details of amounts invested (funded only) by entity for user-defined three month period.
- Investment by Sector—Amount invested (funded only) by company by sector and category (Technology v. Services) through user-selected period.
- Period Invested—Details of amounts invested (funded only) by portfolio company and security for user-defined period. Includes monthly subtotals.
- Period Invested by Co—Details of amounts invested (funded only) subtotaled by portfolio company for user-defined period.
- Period Realized—Details proceeds received, proceeds receivable, cost relieved and realized gain or loss by portfolio company for user-defined reporting period.
- Portfolio Co Trans Detail—Detail of remaining basis for user-selected portfolio company, including amounts funded to company, blocker fundings, capitalized interest, OID amortization, basis returned, and basis written off. Does not include shares (see Portfolio Company Detail report).
- Portfolio by Category—Summary of amount invested (funded only) by each fund entity in each portfolio company grouped by category (services v. technology) through user-selected period.
- Portfolio by Transaction—Amount invested (funded only) by security by transaction date through user-selected period end. Includes original investment amounts only; does not include exchanges.
- Portfolio Company Detail—Detail of transactions (dollars and shares) for a user-selected single portfolio company grouped by security. Includes funded amounts only excluding blocker fundings. Does not include other items affecting basis such as capitalized interest. See Portfolio Co Trans Detail report for all activity affecting basis.
- Valuation JE—Worksheet for calculation of valuation adjustments by security and fund entity. Includes journal entry for upload.
Commitments Reports (if applicable)
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- Entity Commitments—Detail of amounts funded and committed by portfolio company for selected fund entity. Used for footnote disclosure in annual audited statements.
- Fund Commitments—Detail of amounts funded, committed and reserved by sector and portfolio company.
Investment Transactions Report Package**
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- Portfolio Summary—Summary of amount invested (i.e., funded only) by portfolio company by fund entity. Includes both direct and indirect investments. Does not include blocker fundings.
- Portfolio Investments at Cost—Detail of securities purchased by fund entity (including capitalization investment income). Includes both direct and indirect investments. Includes original investments purchases only; does not reflect exchanges.
- Trans Detail—Detail of all transactions affecting remaining basis for all companies in the portfolio. Includes both direct and indirect investments by fund entity. A summary by type of transactional activity (i.e., funded amounts, capitalized interest, OID amortization, basis recovered, and basis written off) appears at the end of the report. Does not include shares; see Fund Detail report for this information.
- FTD Realizations—Detail of proceeds realized, proceeds receivable, basis relieved, and realized gain/loss by portfolio company by transaction date.
- Fund Detail—Detail of transactions (dollars and shares) for all companies in the portfolio. Includes both direct and indirect investments by fund entity. Includes funded cost and capitalized interest and reflects exchanges but does not include other basis adjustments. See Trans Detail for complete basis information.
- Direct Detail—Detail of transactions (dollars and shares) for all companies in the portfolio by direct investing entity. Includes funded cost and capitalized interest and reflects exchanges but does not include other basis adjustments.
- Employee Investment Entity Summary—Detail of amounts funded by portfolio company and security for each employee investor. Grand total ties to employee investment entity total on Portfolio Summary report.
- Blocker Funding—Detail of blocker fundings by blocker corporation (with notation of security to which the blocker funding is appended for financial reporting purposes).
Partners' Capital
Capital Account Reports
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- Capital AC—Individual—Individual capital account for user-selected partner and twelve month reporting period (must end on quarter).
- Capital Call AR—Unpaid capital calls by entity.
Capital Call Worksheets
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- GP Cont by Entity by Date—Summarizes total contributions (including cashless contributions but excluding the adjustment for no self-charged management fee) by the General Partner by entity by transaction date. Use this report to calculate the amount to call from the General Partner entity.
- Management Fees—Calculates quarterly management fees, net of deemed contribution offsets.
- Capital Call—Calculates individual capital call amounts for fund partnership (and the offshore feeder entity). User inputs are i) Investment amount, ii) number of days in quarter for management fee calculation, iii) Expense amount, iv) offshore feeder expense amount, v) call date and vi) due date.
Entity Level Partners' Capital Reports
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- Capital AC—Entity—Entity-level capital account for user-selected entity and 12-month reporting period (must end on quarter).
- Capital AC—Fund—Fund-level capital account for user-selected 12-month reporting period (must end on quarter).
- Cash Contributions by Entity by Date—Total cash contributions by entity by transaction date. Does not include interest equivalent contributions.
- Contributions by Entity by Date—“Contributions” as defined in limited partnership agreement by entity by transaction date. Includes cashless GP contribution and GP management fee contribution. Does not include interest equivalent contributions.
- Distributions by Entity by Date—Distributions by entity by transaction date.
Partners' Capital Report Package**
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- Entity Summary—Summary of capital account activity by entity, including offsets for no self-charged management fee and cashless contributions by the GP.
- Partner Capital Summary—Detail by partner of subscriptions, remaining subscriptions, and FTD contributions and distributions.
- Subs by Closing—Detail of Subscriptions by closing date.
- Contributions Detail—Detail of “Contributions” (as defined in limited partnership agreement) by partner and due date for each entity.
- Cash Contributions Detail—Detail of cash contributions by partner and due date for each entity. Does not include interest equivalent contributions.
- Interest Equivalent Contributions—Detail of interest equivalent contributions for LPs admitted after initial fund closing.
- GP Deemed Detail—Detail of GP's deemed (“cashless”) contribution by call date.
Treasury Reports
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- Debt Cov—Calculates financial ratio covenants for credit agreement.
- Treasury Status—Daily treasury status report including cash, LOC, receivables and payables balances.
** “Report packages” are generated as multiple spreadsheets in a single workbook. Any report definition may be grouped with any other report definition(s) to create a report package. The report packages designated above are recommended as a minimum.
APPENDIX B © 2006, Jayne ThompsonExample Accounting Entries
Example Accounting Entries
Claims
1. A computer-implemented accounting method for an investment partnership entity having a plurality of partners, the accounting method comprising:
- obtaining, via an electronic data input interface, a partnership allocation transaction indication comprising an investment entity, one of the plurality of partners, and a transaction type;
- selecting one of at least three transaction type identifiers from a first electronic data source in accordance with said obtained transaction type;
- selecting one of a plurality of unique investment entity identifiers from a second electronic data source in accordance with said obtained investment entity;
- selecting one of a plurality of partner identifiers from a third electronic data source in accordance with said obtained one of the plurality of partners;
- creating, by a processor of the computer, a particular general ledger account uniquely associated with a particular combination of identifiers comprising said selected one of said investment entity identifiers, said selected one of said at least three transaction type identifiers, and said selected one of said plurality of partner identifiers.
2. The method of claim 1, wherein said partnership allocation transaction indication further comprises a partner transaction type, the method further comprising:
- selecting one of a plurality of unique partner transaction identifiers from a fourth electronic data source in accordance with said obtained partner transaction type.
3. The method of claim 1, wherein said at least three unique transaction type identifiers comprise a subset comprising a plurality of identifiers distinguishably associated with a plurality of partners' capital allocations transaction types
4. The method of claim 3, wherein said plurality of partners' capital allocations transaction types comprises Net investment income/loss; Realized gains/losses; and Unrealized appreciation/depreciation.
5. The method of claim 1, wherein said first through fourth electronic data sources comprise a single electronic data source.
6. A tangible computer-readable medium containing instructions that when executed by a processor, perform the method of claim 1.
7. An apparatus comprising a processor and a memory containing instructions that when executed by the processor, perform the method of claim 1.
8. A computer-implemented method of reporting an investment sum for a selected investment entity, the method comprising:
- selecting, by the computer from among a multiplicity of accounts in the general ledger, a plurality of accounts comprising: a uniquely identifiable cash equity investment account substantially exclusively comprising a plurality of cash equity accounting entries associated with the selected investment entity and a particular equity security of a selected target; a uniquely identifiable second equity investment account substantially exclusively comprising a plurality of outside basis accounting entries associated with cash expenses, other than paid in capital of said selected target, incurred by the selected investment entity to acquire said particular equity security; a uniquely identifiable third equity investment account substantially exclusively comprising a plurality equity basis return accounting entries associated with cash return of basis to the selected investment entity from said particular equity security; a uniquely identifiable realized gain account substantially exclusively comprising a plurality realized gain accounting entries associated with cash gains of the selected investment entity from said particular equity security; and a uniquely identifiable proceeds receivable account substantially exclusively comprising a plurality proceeds receivable accounting entries associated with proceeds receivable by the selected investment entity from said equity security;
- calculating, by the computer, a plurality of net cash flow sums comprising; a cash equity sum comprising said plurality of cash equity accounting entries; an outside basis sum comprising said outside basis accounting entries; a equity basis return sum comprising said equity basis return accounting entries; a cash realized gain sum comprising said realized gain accounting entries; and a receivable for securities sold sum comprising said proceeds receivable accounting entries;
- calculating, by the computer, an investment sum comprising said equity basis return sum plus said cash realized gain sum less said cash equity sum, said outside basis sum, and said receivable for securities sold sum; and
- outputting to a display device said calculated investment sum.
9. The method of claim 8, further comprising subtotaling at least one of said plurality of net cash flow sums by transaction date.
10. The method of claim 9, wherein said investment sum comprises a rate of return.
11. The method of claim 8, wherein:
- said first equity investment account is uniquely identified by a plurality of account segments comprising a first selected transaction type segment unique to cash invested for equity, a selected entity segment unique to the selected investment entity, a selected investment target segment unique to the selected target, and a first security type segment unique to a type of said particular equity security;
- said second equity investment account is uniquely identified by a plurality of account segments comprising a second selected transaction type segment unique to cash expenses, other than paid in capital, incurred to purchase an equity security, said selected investment entity segment, said selected investment target segment, and said first security type segment;
- said third equity investment account is uniquely identified by a plurality of account segments comprising a third selected transaction type segment unique to cash return of equity investment basis, said selected investment entity segment, said selected investment target segment, and said first security type segment;
- said first cash realized gain account is uniquely identified by a plurality of account segments comprising a fourth selected transaction type segment unique to cash realized gains, said selected investment entity segment,
- said selected investment target segment, and said first security type segment; and
- said first receivable for securities sold account is uniquely identified by a plurality of account segments comprising a fifth selected transaction type segment unique to proceeds from securities sold, said selected investment entity segment, said selected investment target segment, and said first security type segment.
12. A tangible computer-readable medium containing instructions that when executed by a processor, perform the method of claim 8.
13. An apparatus comprising a processor and a memory containing instructions that when executed by the processor, perform the method of claim 8.
14. A computer-implemented method of creating investment reports, the method comprising:
- generating, by a segmentation processor, a plurality of account identifiers specific to an investment in an investment asset by an investment entity, wherein each account identifier comprises a plurality of identification segments, including at least a transaction type identification segment, an investment entity identification segment, an investment target identification segment, and a security type identification segment;
- creating, by an account-creation processor, a plurality of accounts in an electronic general ledger data repository, in accordance with said plurality of account identifiers;
- obtaining from said plurality of accounts, by a data-acquisition processor, account data related to said investment;
- automatically generating, by a reporting processor without manual data manipulation, an external investment report in accordance with said account data and said account identifiers; and
- automatically generating, by said reporting processor without manual data manipulation, an internal investment report in accordance with said account data and said account identifiers.
15. A tangible computer-readable medium containing instructions that when executed by a processor, perform the method of claim 14.
16. An apparatus comprising a processor and a memory containing instructions that when executed by the processor, perform the method of claim 14.
Type: Application
Filed: Feb 7, 2012
Publication Date: Feb 14, 2013
Applicant: Q-Biz Solutions, LLC (Holden, MA)
Inventor: Jayne C. Thompson (Raleigh, NC)
Application Number: 13/368,273
