Shouldn a CPA firm do the auditing and verification work?
No. In our opinion, CPA firms are not well-suited for this type of analysis, including the Big Four. A CFA or math PhD – with a background in mutual fund product development – is required. We have two such folks on staff. The issues have nothing to do with a fund’s audited financials, such as the income statement, balance sheet, capital transactions, etc. Those important elements are the rightful purview of the big accounting firms. Discussions of risk and how a fund operates also are extremely important. They are the purview of the legal and compliance departments. Then there is the hardcore math. For several reasons, fee and performance tables often are wrong. Next, share class suitability can be a function of the characteristics of the securities owned at the portfolio level. Buying Cisco (CSCO) over Chevron (CVX) can affect which share is best for investors. (It also affects firm revenue.) Call us to discuss this issue or for a quick check of the suitability profile of a share clas
