The generic term ‘finance’ encompasses a wide range of activities. It includes various functions, of which investment management and accounting are two major pillars.
One of the family office’s primary function is to determine risks and maximize return from investments. For this purpose, decision makers need accurate and detailed information that is presented efficiently and on a real-time basis.
Investments can be held directly by an individual family member or through an intricate structure of trusts and partnerships. Such complex information can be captured only if a robust, modern and dynamic accounting system is in place. After all, investments and accounting are linked:
Daily accounting and administrative tasks determine the overall success and effectiveness of a family office. Best practices indicate that accounting operations and controls should be closely aligned to investment management activities.
An ideal family office investment and accounting system is one which:
- Consolidates both financial and non-financial data of different asset classes
- Generates analytical and regulatory reports
- Uses automated processing to reduce errors
- Builds in best practices to maintain uniformity in processes
- Supports the unique needs of each family office
- Includes robust audit capabilities to support reviews and track data changes.
The system should be designed to show the full and correct picture of the family’s wealth, including all of its assets, liabilities and expenses in a single frame.