NAV 2 - Creating New Funds, Investors, Investments, & Securities

Fund Navigation and Mandatory Setup Fields

• To access fund accounting, users must navigate to the Funds section on the left-hand side of the screen and select New in the top-left corner.

• Mandatory fields required for fund creation are identified by three asterisks ($***$). These fields must be completed for the fund to be accepted by the system.

• Code: This is a fund-specific, unique identifier used throughout fund accounting and the CRM. The system will trigger an error message if the code already exists for another fund.

• Fund Name: The specific name assigned to the fund.

• Currency Code: Defines the functional currency of the fund. While $USD$ is the typical default, other options include Canadian dollars, $EUR$, and Pounds. This setting is critical for subsequent foreign exchange ($FX$) currency translations.

• Company Posting Group: These groups define default accounts in the chart of accounts used as offsets.

  • For fund setup, the group should be set to Interfund.

  • For investments, the group should be set to Portfolio Company.

Advanced Fund Functionality and Reporting Fields

• Client Code: Assigns the fund to a specific client. This is necessary for grouped reporting and identifying funds when tagging them to the portal.

• Group Code: Used for consolidated reporting. All funds intended to be part of a consolidated trial balance or Statement of Yield and Surplus ($SOYS$) must be tagged with the same group code to ensure associated numbers are aggregated correctly.

• Accounting Periods:

  • Fiscal years are established during setup. For a standard calendar year, the starting date is $01/01$ through $12/31$.

  • When selecting Create Accounting Periods, the system defaults to a length of $1$ year, though other options like $6$ months are available.

  • Recommendation: It is advised to create at least $5$ fiscal years at once to avoid having to create new ones each time books are closed.

  • Constraint: Once a fiscal year is created, the starting date is locked and cannot be changed.

• Close Dates: Found under Fund Setup --> Closing Dates. Establishing these dates based on the Limited Partnership Agreement ($LPA$) or General Partner ($GP$) acceptance documents allows the dates to automatically populate when creating commitment entries later.

Assigning Holdings and Investors via the Fund Card

• Company Holdings: If securities are already established in the system, they can be assigned directly to a fund via the fund card under New. Users must select the security issuer code and security number. While this assigns the holding, a journal entry is still required to book the purchase.

• Investor Assignment: Existing investors in the system can be assigned to the fund card. This allows the Suggest Lines function to pre-populate data when booking commitment entries.

• Pool Warning: If a fund utilizes pools, the pools must be assigned to the fund first before assigning investors to the pools. Investors cannot be assigned directly to the fund if pools are to be used later.

Creating and Managing Investors

• Workflow Methodology: Investors should be created in Fund Accounting first and then allowed to sync to the CRM.

• Unique Identification: Each investor must have a unique name; the system will not allow multiple investors with the same name. Users should use the search filter to verify if an investor already exists before creating a new one.

• Investor Number: It is recommended to let the system auto-create this number by pressing Tab.

• Investor Type: Users must choose from types such as $GP$, $LP$, or $SLP$ (Special Limited Partner). This is critical as many allocation codes function based on this specific type.

• Investor Posting Groups: Similar to company posting groups, these set default accounts for capital calls, contributions, distributions, receivables, and payables.

• Investment Details: In the investment details section, the newly created investor can be assigned directly to a fund.

Investment Classification: Companies vs. Funds

• The system distinguishes between three types of investments in the side panel:

  • Investment Vehicle: Used for holding codes, aggregators, or blockers. This is infrequently used and requires consultation before setup.

  • Investee Company: Used for direct Private Equity ($PE$) or Venture Capital ($VC$) investments into entities like Apple or Microsoft.

  • Investee Fund: Used for a fund-of-funds strategy where the fund invests in another fund rather than a company. This enables the tracking of underlying commitments and unfunded amounts.

• Setup Fields: Includes Code (use auto-generation to avoid chronological errors), Name, and Currency Code (usually matching the fund currency).

• Company Posting Group: For investee companies/funds, this should be set to Portco or "Do From Affiliate."

• Underlying Investee Companies: Within the Investee Fund card, users can track the specific portfolio companies held by the underlying fund for custom reporting needs.

Security Creation and Costing Controls

• Securities define the specific type of investment (e.g., Equity, Note, Warrant).

• Security Type: Accessed through the Advanced View. The Description field is vital because it is used for reporting like the Schedule of Investments ($SOI$) and investment roll forwards.

• Default Unit of Measure and Costing:

  • Debt/Notes: These are generally not unitized and have no quantity or costing method (cost is simply the cost).

  • Stock/Equity: These have units and typically use an Average costing method.

• Valuation Basis: Setting this to Valuation allows for automated valuation entries via tiles rather than manual general journals.

• Advanced Costing Checkboxes:

  • Allow negative quantity/cost: Used to permit entries when timing issues occur (e.g., booking a sale before a conversion).

  • Allow non-proportional cost value sale: Relevant for stock with different tranches or liquidation terms.

  • Allow zero quantity with non-zero cost value: Appropriate for assets like warrants where a cost basis exists without a technical quantity.

Security Holdings and Lots

• Security Holding Section: Used to associate which fund code holds a specific security issued by an investee company.

• Lots: Allows tracking of different tranches or purchase dates individually. Each lot generates its own number and can store specific purchase dates, terms, and preferences.

• Navigation Tip: To view journal entries related specifically to a security without filtering the entire general ledger, users can use the Entries --> Ledger Entries drop-down on the security card.

Questions & Discussion

• Question (Robert Shaw): Can we cover setting up vendors and dimension tagging?

• Answer: This was not planned for today; a separate training session will be organized to cover vendors, dimensions, and their impact on reports.

• Question (Eileen): What is the difference between "Interfund" and "Portfolio Company" on the fund card?

• Answer: The primary difference is the offsetting account. Interfund defaults to "Due To/Due From GP," while Portfolio Company defaults to "Due From Portfolio Company."

• Question (Luisa): Can costing method items be changed after the fund starts operating?

• Answer: No. Once transactions have been booked to an investment, the costing method is locked. If an error is made, a security conversion or specialized fix must be coordinated.

• Discussion on System Bugs: A participant noted that Investee Company codes do not always auto-generate. The presenter (Cam) confirmed this is a known issue and will be fixed.

• Training Schedule: Future sessions are scheduled for Tuesday and Thursday at Noon Pacific Time for approximately the next $2$ months. Recording will be available on the Wiki.