34 Other Financial Information, Quarterly In addition to quarterly disclosures on fees and expenses, LPs should receive quarterly: • Unaudited quarterly profit and loss statements also showing year-to-date results; • Information on material changes in investments and expenses; • Summary of all capital calls and distribution notices including balances on uncalled capital commit- ments; • Management comments about changes during the quarter; • An explanation of any quarter-to-quarter valuation changes, including any changes in the valuations methodology applied. Financial Disclosures, Annual GP annual reporting should include portfolio com- pany and fund information on material risks and how they are managed. These should include: • Concentration risk at fund level; • Foreign exchange risk at fund level; • Leverage risk at the fund and portfolio company levels; • Realization risk (i.e. change in exit environment) at the fund and portfolio company levels; • Strategy risk (i.e. change in, or divergence from, investment strategy) at the portfolio company level; • Reputation risk at the portfolio company level; • Environmental, social and governance risks, at the fund and portfolio company levels; • Portfolio company information consistent with the ILPA Standardized Reporting for Portfolio Companies. Annual Reports—Funds should provide the following information at the end of each year (within 90 days of year-end) to investors: • Management letter describing the activities of the fund directed to the LPAC but distributed to all investors; • Audited financial statements (including a clean opinion letter from auditors and a statement from the auditor detailing other work performed for the fund); • Internal Rate of Return (“IRR”) calculations prepared by the fund manager that clearly set forth the methodology for determining the IRR. Best practice is to disclose the net IRR on both a levered and unlevered basis, taking into account any impact from capital call credit facilities. • Schedule of aggregate carried interest received; • Political contributions made by the manager or any associated individuals to trustees or elected officials on investor boards. More immediate reporting may be required for material events. GPs should also provide, during due diligence or on a pre-agreed cadence with LPs, information on salaries, bonuses and dividends paid, particularly the com- mitment and carry split by individual partner, and the same split between current and previous funds. LPs should have an understanding of the carry/ownership percentages in the management company held by the partners in the GP. FINANCIAL DISCLOSURES