The quarterly close checklist for a fund's books
The quarterly close has six steps: reconcile the bank, update the investment register, set fair value marks, calculate fees and carry, roll forward capital accounts, and confirm NAV. Under the ILPA framework as of January 2025, direct funds have 60 days after each quarter end to deliver reports; close the books within 15 days to give the administrator time. Fair value marks take the most time and must be final before the waterfall runs.
Before you start
Pull two documents before the quarter end, not after: the LPA reporting section and the administration agreement. The LPA tells you the reporting deadline and how contributions received on the last day of the quarter are treated for allocation purposes. The administration agreement tells you what the administrator delivers and by when, and what remains your responsibility. If the two documents are silent on the same question, the answer sits with you.
The quarterly close feeds three downstream obligations. Capital account statements go to LPs, usually through the portal. The ILPA Reporting Template, for funds that produce it, goes out at the same time. The year-end audit starts from the four quarterly closes; a sloppy third quarter is a long January. Keep the close package together as a file, not scattered across email threads.
The quarterly close calendar
Days after quarter end. The close sequence must finish by day fifteen; everything after that is statement preparation, review, and delivery inside the ILPA framework's 60-day window.
- 1Day 0Quarter endStart the bank reconciliation the next business day
- 2Day 3Bank reconciliation doneEvery account tied to the ledger
- 3Day 7Investment register closedAll transactions, dilution and new positions confirmed
- 4Day 12Fair value marks finalSigned off by the GP before the waterfall runs
- 5Day 15Books closedTrial balance reconciled; package sent to administrator
- 6Day 60ILPA reporting window closesDirect fund framework, quarterly reports
The GP LedgerStep 1. Reconcile the bank (Days 1 to 3)
Start with cash. Every bank account the fund touches needs a reconciliation to the general ledger: the main fund operating account, any capital call escrow account, and the management company account if partnership expenses flow through it.
Match every wire in the quarter to the document that authorised it: capital call notices for contributions, distribution notices for distributions, investment confirmations for deal wires. If a wire went out for a new investment and the confirmation is not in the file, hold the close until it is. Cross-border wires can take several business days for a SWIFT confirmation to arrive; request them before quarter end.
Step 2. Update the investment register (Days 3 to 7)
Work through every portfolio position that had activity in the quarter: new investments, follow-on rounds, partial realisations, write-downs, and complete exits. For each, confirm the cost basis, the security class (common stock, preferred series, convertible note), the post-transaction ownership percentage, and the closing date.
A new round from a portfolio company changes the ownership percentage of every existing shareholder, not only the new investor. Update the register for dilution even when the fund did not participate in the round. If the fund made a co-investment through a side vehicle for one or more LPs, update that sub-register separately.
Step 3. Mark investments to fair value (Days 5 to 12)
Under ASC 820, fair value is the exit price in an orderly transaction between market participants at the measurement date. For most venture positions, observable market inputs are limited, placing the positions in Level 3 of the fair value hierarchy and making the general partner responsible for the measurement under the fund's written valuation policy.
Start with the positions that have the clearest inputs: any holding that raised a new arm's-length round during the quarter, completed an exit at a known price, or has publicly available financial data. Work from there to positions that depend on comparable company multiples or a discounted cash flow, and document both the inputs and the calibration to the prior quarter mark.
The marks must be final before the waterfall runs. A carry accrual computed on preliminary marks that then shift requires a recalculation and reopens the capital accounts.
Step 4. Calculate fees, expenses, and carry (Days 8 to 14)
Management fees accrue each quarter at the rate and on the base the LPA specifies, usually on the first day of the quarter. The fee base commonly shifts from committed capital to invested capital at the end of the investment period; if the fund crossed that boundary in the quarter, confirm the new base and the effective date with counsel before posting the accrual.
Partnership expenses for the quarter include invoiced items (legal, audit, administration) and accruals for work where an invoice has not yet arrived. Accrue from the engagement letter or the vendor's estimate; a general reserve with no vendor behind it is not a reliable accrual.
Carried interest is a quarterly accrual against the partners' capital accounts, not a cash payment. Run the waterfall at fair values as of quarter end: if the LP accounts at fair value clear the preferred return threshold, accrue the carry and record it as a reallocation from the LP accounts to the GP's account. If the threshold is not met, no carry is recorded. Cash does not move until a distribution triggers the carried interest payment.
The four reconciliations the close depends on
Each pair must agree before the next step runs. The capital accounts summing to NAV is the final check; any difference is an error that must be found before statements go out.
The GP LedgerStep 5. Roll forward the capital accounts (Days 10 to 16)
Open each partner's capital account at the prior quarter closing balance. Add each contribution received in the quarter, subtract each distribution paid, and allocate income, gains, losses, and expenses in the percentage the LPA prescribes. Book the carried interest allocation last: it moves a share of the LP accounts' income and unrealised gain to the GP's account.
The sum of all capital accounts, limited and general partner combined, must equal NAV: total assets at fair value less total liabilities. Any difference is an error in either the allocation arithmetic or one of the reconciliations above, and it must be found and corrected before the close is declared final. A rounding error in the allocation percentages that is left in the books compounds quarter over quarter; fix it in the quarter it appears.
Step 6. Produce the trial balance and sign off (Day 15)
Run a closing trial balance from the general ledger. Confirm four things: debits equal credits; the investment schedule total ties to the investments line on the balance sheet; cash ties to the bank reconciliation; total partners' capital ties to the sum of all capital accounts.
If all four tie, close the books. The GP reviews the close package, confirms the valuations in writing, and approves the trial balance; the administrator then prepares the LP capital account statements for the period. The GP's sign-off is not a formality. The statements that go to LPs, and eventually the audited financial statements, are the GP's assertions.
What goes wrong
- Marks that move after the carry runs. Set a hard deadline for valuation inputs, tell the portfolio team what it is, and do not run the waterfall on preliminary figures.
- A capital call that crossed the quarter end. The call date and the wire receipt date can differ; use whichever the LPA specifies for determining which quarter the contribution belongs to.
- A missing expense accrual. Legal invoices often arrive weeks after the work. Accrue from the engagement letter, not from the invoice date.
- A management fee base that changed mid-period. Flag step-down dates to the administrator in writing, with the LPA language, before the quarter closes.
- Capital accounts that do not sum to NAV. Trace the difference to the allocation table. The most common cause is a rounding error in the percentage calculation or a transaction recorded in one account but not the other.
Frequently asked questions
How long does a quarterly close take?
Who owns the quarterly close, the GP or the administrator?
What is the difference between a quarterly close and the year-end audit?
When do the fair value marks have to be final?
What if a capital call landed on the last day of the quarter?
Sources
- ILPA Reporting Template v2.0 suggested guidance (PDF)ilpa.org/wp-content/uploads/2025/01/ILPA-Reporting-Template-v.-2.0-Suggested-Guidance.pdf
- ILPA reporting timing guidance for direct fundsilpa.org/industry-guidance/templates-standards-model-documents/ilpa-templates-hub/
Terms used in this article
- NAV (net asset value) NAV, net asset value, is the value of a fund's assets, with investments carried at fair value, less its liabilities at a reporting date, and equals the total of all partners' capital accounts.
- Capital account A capital account is the running balance of a single partner's economic interest in a fund: contributions in, allocations of income, gains and losses, less distributions out.
- Fair value Fair value is the price that would be received to sell an investment in an orderly transaction between market participants at the measurement date.
- Management fee The management fee is an annual charge paid by the fund to the management company, typically 2% of committed capital during the investment period, often stepping down afterwards to a lower rate or a basis of invested capital, to cover salaries, rent and the cost of running the firm.
- Distribution waterfall A distribution waterfall is the sequence in which a fund's proceeds are allocated between limited partners and the general partner, typically return of contributed capital first, then a preferred return to LPs, then a catch-up to the GP, then the remaining profit split at the carried interest rate.
- Fund administrator A fund administrator is the firm, or the software operated in-house, that maintains a private fund's books: partner capital accounts, capital call and distribution processing, fee and waterfall calculations, NAV, investor statements and audit support.
- ILPA Reporting Template The ILPA Reporting Template is a standardised quarterly schedule, published by the Institutional Limited Partners Association, in which a fund breaks out management fees, partnership expenses, fee offsets and carried interest for each limited partner, quarter to date, year to date and since inception.
- Capital account statement A capital account statement is the periodic report, usually quarterly, that shows a single limited partner the movement in their capital account over the period: opening balance, contributions, allocated income, gains and losses, management fees and expenses, distributions, and closing balance, alongside their commitment and unfunded commitment.
- Valuation policy A valuation policy is the written document, adopted by the general partner and usually referenced in the LPA, that sets out how a fund determines the fair value of each investment at each reporting date: the methods used, the inputs and their hierarchy, who prepares and approves the marks, how often they are reviewed and how conflicts of interest are handled.
- Partners' capital Partners' capital is the equity of a limited partnership fund, the sum of every limited and general partner's capital account, equal to total assets less liabilities.
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