How to Choose the Right CPA Firm for Your Hedge Fund

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We audit hedge funds for a living, and we’re about to tell you how to hire a firm that audits hedge funds. Barber, haircut, you know the joke.So we’ll make you a deal. Nothing below asks you to trust us, or any other hedge fund CPA on your list. Every step runs on public records and rule numbers you can pull up while you read, and at the end you can run all five on us. We’ll answer first.It comes down to five steps, worked in order, with the fee dead last on purpose.

Step 1: Can Any CPA Firm Sign Your Hedge Fund’s Audit?

No, and this is the rude question that eliminates people fastest, so ask it before you ask anything else.The custody rule is why. A fund with custody avoids the annual surprise exam by delivering an audit instead, and the rule takes that audit only from a firm registered with the PCAOB and inspected by them, with GAAP statements out to your investors 120 days after year-end. A fund of funds gets 180 under staff guidance.Trade futures alongside the securities book, and the tighter clock governs anyway. Regulation 4.22 gives a commodity pool 90 days, and NFA charges $200 for every business day past it, which works less like a penalty than a meter.So search the roster before the first call. A firm that isn’t on it, or is registered but has never been inspected, comes off your list no matter how long it’s handled your personal return. We’ve watched shortlists lose a name right there, and the manager is always a little surprised.

Step 2: What Should You Look For in a Hedge Fund CPA’s Inspection Report?

Part II, not Part I.A, and it’s worth 20 minutes of your life.Every registered firm gets inspected, and the findings get published, which your candidates know perfectly well, along with the fact that almost no client ever looks. Part I.A collects the engagements where a firm couldn’t support its own opinion, and that can be one bad year on one fund. Part II is about the shop itself, meaning how they hire, review, and supervise.Two caveats as you read. Small firms come up only every three years, so a clean file might be describing people who have since left. And averages mislead: the board reported in June that broker-dealer audit deficiencies were improving, but most of that gain sat with the biggest firms.

Step 3: Does It Matter Who Owns Your Hedge Fund CPA Firm?

Yes, and five years ago it wouldn’t have, which is the whole reason it belongs on your first call now.Private equity has been buying into accounting firms, and because audit work has to stay CPA-owned, the buyers split the firm in two, leaving partners with the audit side while the investors take tax and advisory. Nothing on your engagement letter tells you which kind you’ve hired.The rules haven’t caught up either. The AICPA proposed tightening them in an exposure draft that closed to comments in April, and several state boards wrote back that these structures have already grown too tangled for anyone to police.So ask on the first call, and time the pause as carefully as you weigh the answer:

Is there an outside investor?
When do they want out?
Who decides what the signing partner earns?

A good answer comes back in one breath, with percentages in it and a wall around the audit side, where a bad one needs to check and get back to you.

Step 4: Should One Hedge Fund CPA Do Your Audit and Your Taxes?

Yes, and gladly. Add your bookkeeping to the pile, though, and you’ve got a problem that isn’t a matter of preference.Regulation S-X calls it an independence impairment when a firm audits statements it prepared itself. Nobody flunks their own homework. So a shop pitching you all three has told you something about itself for free, and you can cross it off without mourning the invoice you’re not consolidating.Pairing the audit with the tax work buys you a calendar instead. Your GAAP-to-tax differences get argued in October, back when arguing is still cheap, and the incentive allocation gets one treatment rather than two firms landing on two numbers with your administrator caught in the middle.Then add up whatever else you’re handing over, because NFA filings hit the same desks in the same weeks, and enough of them stacked together is where a generalist starts to wobble.

Step 5: Can This Hedge Fund CPA Actually Meet Your Deadline?

Ask two questions: How many December 31 funds do you sign, and which partner signs mine? Our rough test is 15 funds per signing partner, and past that you’re waiting.Every fund in America closes its books on the same day, so your auditor’s December is a fixed pie, and you’re entitled to know your slice. Forty funds across two signing partners predict your delivery date better than any promise made on an intro call.Press harder if you’re registered in more than one country, because the deadlines stack. Your U.S. investors want statements at 120 days. Your U.K. investors are owed theirs at six months. AIFMD II went live across the EU in April. A Cayman feeder owes CIMA audited accounts at six months with a local sign-off. Let one slide and the rest follow.Only now do the quotes matter. Most fund audits price between $20,000 and $100,000, and one landing far under the rest means somebody trimmed scope rather than sharpened a pencil. Read each against the document list you’ll owe them first.

Now Run the Five on Us

Do this in September, or whatever September looks like on your calendar, because changing auditors mid-cycle means notice filings and a real handoff. The hedge fund CPA you hire this fall is the one you’ll rehire by default for years.One more question is worth springing on your finalists while you have them talking. What are you doing about QC 1000? It lands December 15 after a year’s delay and makes every registered firm put its quality-control system in writing. Ask about the custody item on the SEC’s 2026 agenda too. You’ll find out quickly who reads.Our answers, as promised. Michael Coglianese CPA, P.C. has been PCAOB registered since 2009, and alternative funds are the entire practice, 30+ years of it. Our people came out of the NFA, the SEC, and the Big Four, so whatever’s keeping you up, somebody here has looked at it from the regulator’s side of the desk. Our roster entry and inspection file sit in public where everyone’s do, and the ownership question takes one breath: the partners own the firm.Send us the three names you’re weighing, or your structure and year-end if you haven’t started yet, and we’ll tell you which of these five bites for a fund shaped like yours. If the answer is that the firm you’ve got is fine, we’ll say so. We will never talk a manager out of a switch he doesn’t need.

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August 19 | News