With hedge funds falling faster than final salary pension schemes, it hasn’t been a particularly great year for the common or garden hedge fund accountant. Their numbers went through the roof between 2005 and 2007, but their services have been less in demand of late. Thanks to Bernie Madoff and his alleged biggest ever ponzi scheme in the history of mankind, things could be about to change.
Now that Madoff’s been outed as a possible charlatan, investors of any ilk are going to be a lot more careful about where they put their money. That means a lot more due diligence, and a lot more scrutiny of who’s auditing the accounts.
“This is going to have a significant impact on the degree to which the numbers are tested,” says John Godden, chief executive of the IGS Group, which advises hedge funds on raising money. “Accountants and auditors are going to make hay.”
Given that Madoff’s fund was audited by a three man band (comprising a 70 year old partner who was rarely there, a secretary and a man allegedly wearing tight trousers and tie-dyed shirts), investors may now err in favour of funds audited by the Big Four.
The head of hedge fund business development at one Big Four firm says it’s still early days and there hasn’t been any noticeable increase in business yet. One suspects they’ve got spare capacity: KPMG has more than quadrupled the number of auditors it employs to cover hedge funds in the past five years, while Deloitte doubled the size of its hedge fund team in 2007 alone.
Lee Bevan, a hedge fund consultant at Mirage Recruitment says accountants haven’t been high on the hedge fund wish for a while. “They’ve been looking more for salespeople and investor relations professionals,” he says. “We haven’t worked on an accounting role for at least six months, but that could change.”