32 Auditor Independence and Scope of the Fund Audit The auditor of a private equity fund should be independent and focused on the best interests of the partnership as a whole, rather than the interests of the GP. The client of the fund audit should be the partnership as a whole, rather than the GP alone. The GP should form an audit committee comprised of representatives from all LPs in the fund and not solely LPAC members. The mandate for such a committee could include the approval of the firm selected to perform the fund audit, the scope of agreed upon procedures as well as the performance of any services by the same firm beyond the fund audit. Auditors hired to conduct the fund audit should be requested to provide a statement to LPAC members detailing other work performed for the fund. LPAC members should be provided the opportunity to review the scope of work for the fund audit, with sufficient detail as to the agreed upon procedures that will be performed. The GP should notify the LPs of any changes to the appointed auditor. The scope of the audit should include the examination of a sampling of Capital Account Statements, fees and expenses captured through the ILPA Reporting Template (2016). Waterfall calculation formulas and the calculation’s constituent inputs should be examined by the fund auditor. In addition, the scope of agreed upon procedures could include: an examination of management’s assertion relating to its compliance with these key terms; certain procedures in connection with the financial statements as a whole on a supplemental schedule of changes in partners’ capital; an internal controls review covering control objectives related to capital. In cases where the LPAC of a fund or an individual LP has reason to engage a third party audit of LPA compliance, fund document language should allow for the access of this third party to any information necessary to the engagement as determined by the LP. The findings of an audit in summary form should be available to all investors in the fund. LPAC members should have access to the management letter provided by the fund auditor and the ability to pose questions to the auditor directly. A discussion of the annual audit findings should be a standing item on LPAC meeting agendas. FUND GOVERNANCE