Why is Annex IV Reporting More than Just a Conversion?
In the wake of 2008’s global financial crisis, ESMA implemented the Alternative Investment Fund Managers Directive (AIFMD) in 2013 to protect investors and improve transparency. The essential requirements under AIFMD included the authorisation of the fund manager and control over the delegation of tasks.
At the heart of the AIFMD lies Annex IV reporting. Under Annex IV reporting, alternative investment fund managers (AIFMs) are required to report relevant information to local regulators for every country they market in.
Since AIFMD was implemented several years ago, it may seem that the AIFMs have had enough time to establish reporting processes and meet the requirements. However, in reality, many AIFMs find Annex IV reporting to be challenging. Here’s why Annex IV reporting is more than just a conversion.
Why Annex IV reporting is more than just a conversion:-
- Tedious Calculations
The sheer volume of the data field in Annex IV reporting proves challenging for the AIFMs. The template for Annex IV reporting carries 246 explanatory questions multiplied by the number of funds the manager has to report on. Moreover, the AIFMs need to review and validate regulatory calculations according to the ESMA and NCA classifications, which is a difficult task due to the complexity of its calculations.
- Time-Consuming Process
Collating and integrating data from multiple sources, including portfolio managers, central administrators, and management companies, is time-consuming. Moreover, the reports with these complex tasks have to be provided a mere 30 days after the reporting period. Therefore, the time-consuming process even becomes more challenging due to a limited time frame.
- Inability to View Previous Filing Reports
Viewing and using previous filing reports can be challenging for AIFMs while preparing Annex IV reporting amid all the tedious calculations and collation of data from multiple sources.
- High Standard Quality Checks
To ensure error-free reports, AIFMs need to perform syntax and logical checks. They must ensure a clear audit trail to explain, field by field – where the data originated, how it was transformed, and who did the amendments.
- Inability to Make Last Minute Changes
After all the tedious calculations and report generation, making last-minute changes in the report can be a serious challenge for the AIFMs.
Why is DataTracks Your Ideal Partner for Annex IV Reporting?
Even the most seasoned AIFMs can feel overwhelmed by Annex IV reporting. Therefore, companies need a robust AIFMD solution that can tackle these challenges. A robust solution like the one provided by DataTracks can help you ensure high quality and accuracy. And not just that, DataTracks help you generate reports in the required format on time, every time.
Moreover, the AIFMD solution of DataTracks has an in-built validation that runs all the ESMA business rules and reports errors. The solution maintains a cell by cell, user-specific audit trail to help track any changes made to a specific cell. Plus, it highlights which user is accountable for the change.
And to make the conversion even more hassle-free, all the previous filing reports are stored in our application. By simply clicking on the roll forward button, the user can use the previous filing data.