Managerial Costing for Pension Funds
Pension funds and retirement systems are required to submit a comprehensive financial report (CAFR) based on financial accounting principles akin to Generally Accepted Accounting Principles (GAAP). These reports provide an overview of assets, liabilities, investments, and expenses. Crucially, while CAFR serves to fulfill external financial reporting requirements, it does not provide a source of actionable management information in support of internal strategic or tactical decision-making. Learn more about CAFR.
Alta Via has developed newly globally-adopted costing principles and specialized techniques to help clients transform financial accounting information into relevant decision support information, which enables these complex organizations to have a better understanding of how various functions consume their resources and what their cost drivers are. These principles and tools enhance organizations’ ability to control their costs, improve organizational efficiency and optimize decision-making.
Currently, the industry lacks the technological tools to turn cost data into valuable costing and decision support information. Alta Via understands that the principles and tools we have developed can greatly benefit the pension and asset management industry. The principles, already adopted globally in the commercial sectors [manufacturing and services], can be readily adopted as pension fund and asset management industry standard for reporting private market investment costs.
Private Equity Reporting
In early 2016, the Institutional Limited Partners Association released the ILPA Reporting Template to collect standardized costing data on costs, fees and carried interest. The use of the ILPA template is intended to increase cost transparency in the Private Equity industry (https://ilpa.org/best-practices/reporting-template). Currently, 140 individual organizations actively use the template and this number is expected to continue to grow. ILPA opted to develop a template in favor of reporting guidelines, believing that it would lead to ‘technological and third party solutions’ to accelerate the implementation of the template. Alta Via Consulting is offering such a solution.
Alta Via has built a reputation as a world leader in advanced managerial cost accounting and the implementation of processes that support our customers’ costing and decision-support needs, for the purpose of improving management effectiveness and enterprise optimization.
Limited Partners, such as pension funds and insurance companies, can have dozens of General Partners, all of whom ideally provide cost data through the ILPA template. While this is a leap forward in cost transparency, having many individual Excel-based cost templates make it a complicated task for LP’s to understand costs and fees at the total level or to do comparative analysis. Pension funds have indicated that they’ve experienced difficulty in aggregating the large amounts of private equity cost data into usable management information.
Alta Via offers an efficient in-memory data warehouse solution that utilizes a single database of all the information and easy aggregation and slice-and-dice of all the collected cost templates’ cost information. Included in this solution is a dashboard that provides a complete private equity costing overview. The Alta Via solution mimics the ILPA Excel look and feel—the person entering the data would not know they are not working in Excel. The solution also allows for uploading the XLS documents into the Alta Via solution, and could even be automated to pull the data periodically directly from the individual GPs’ systems.