Fund Accounting Basics - What is Fund Accounting?

Understanding Fund Accounting

Basics Of Fund Accounting

When we see a job-post on any job portals or company’s career website saying they want to hire for “Fund Accounting Process”, or you go to an interview, you get to hear a word from the Human Resource (HR), that, we are hiring for “Investment Banking Fund Accounting Process”. On this juncture, the freshers get confused that, what exactly is “fund accounting”? What would be the fund accounting process? They don’t have any knowledge about this word. It is a “conundrum” for them. They may answer whatever, but we would like to help all of you, who want to make career in the fund accounting profile.

The experienced ones reading this blog post about the fund accounting for investment banking profile may have full knowledge. We would like the experienced ones to share their part of knowledge with us, to improve us, to make us much better in understanding the basics of the fund accounting. (Thanks in advance!)

We would like to go step-by-step in making you understand about the modus operandi of fund accounting. Let’s walk the talk, and not talk the talk.

A graduate/bachelor’s degree in finance is required to go on the road of fund accounting. It will be “cherry on the cake”, if you have master’s degree, as it holds very relevance in this profile.

What is fund accounting?

For a novice, the fund accounting is simply means reconciliation of the funds (whether it is debt or equity). It is a backend part of the investment banking. The fund accounting is also known as FAS (Fund Accounting Services) or FASCASH profile. It comes under the umbrella of BFSI.

What is BFSI?

Banking, Financial services and Insurance (BFSI) is an industry term for companies that provide a range of such financial products/services such as universal banks. BFSI comprises commercial banks, insurance companies, non-banking financial companies, cooperatives, pensions funds, mutual funds and other smaller financial entities.

The fund accounting can be divided in to these functions:-

• Reconciliation of funds or portfolios
• Cash Breaks
• Interest Coupons
• Hedging

The above points are discussed as below:

Reconciliation:  In simpler terms, fund accounting means reconciliation of the funds (whether it is debt or equity). In professional terms, fund accounting goes for reconciliation of the mutual funds or portfolios – whether they are debt or equity – with trade settlements and updating of the margins balances (which may or may not include these margins, such as, LCH – London Clearing House, CME – Chicago Mercantile Exchange, ICE – Intercontinental Exchange), and accordingly updating the margin interest. There is also position close movement in each margin, which means buying or selling of the securities (or shares) for a specific number of lot.

The margin balances are updated according to the client’s bank statement. Numerous type of movements come into the funds, according to its nature – big sized fund, small sized fund or medium sized fund.

Cash Breaks: In simpler terms, the cash breaks are the custody movement that comes in to the fund. You will find numerous reason codes for the custody movement, which are bank loans (BL), swaps variance (SV), trade variance (TV), interest variance (IV), dividend variance (DV), futures (FV), claims, collaterals variance (CV), paydown (PV) etc.

Interest Coupons: The interest coupons are of 3 types – CME Coupons, LCH Coupons, ICE Coupons.  

We already have discussed the acronym of all the above three with you. These coupons are basically related to the interest of the fund. When these are settled, they may result in positively or negatively effect on the fund’s interest.

There may be one leg or two legs for one security which consist of fixed and float.

 Their time duration varies according to the market. They may come on daily, weekly, monthly, quarterly basis etc.

Hedging: The hedging word simply means “to protect your assets from any loss in the present or future”. So, in fund accounting, the hedging surely comes, as the investor wants to protect its fund from any type of loss – whether it is market loss or business loss, etc.

Every master fund which has hedging, always has its hedge fund. The hedging is done from master fund to hedge fund or vice-versa.

When you will go in a specific profile, you will get to learn many more things about it. The fund accounting is a profile in which you will learn new every day. We can provide you with the interview questions, which could be asked by the interview, who is hiring for the investment banking fund accounting.

If we see from a career-oriented perspective, then, fund accounting holds a pool of great knowledge. Now, we would like you to share your experience with us on the fund accounting profile.

Check our other blog links:

Read aboout Bytedance Interview Tips here.

Read aboout Infosys Gurgaon Interview Tips here.

Read aboout Ameriprise Financials Gurgaon Interview Tips here.

Read aboout Copal Amba (Moody Analytics) Gurgaon Interview Tips here.

Read aboout Accenture Noida Interview Tips here.

Read aboout Honest Reviews of Samsung SDS India, Gurgaon here.

Exclusive Annual Financial Report Writing of Marks & Spencer

Annual Financial Report of Marks & Spencer for Paperpedia Pvt Ltd.

The United Kingdom is a birth-place and home of many Brobdingnagian brands, which are now, nationally and internationally, recognized by the world. Among the gargantuan retail brands of the U.K., Mark & Spencer is an every house-hold name in the United Kingdom, as same as, Walmart in the United States.

Company’s Overview
Originally, Mark & Spencer was established by Michael Marks and Thomas Spencer in Leeds in 1884. Now, the company has moved its headquarter to the City Of Westminster, London. The company was inaugurated with the idea of “only selling British goods”, and eventually made its long-term policy. The company had started their operations with their own manufacturing and selling of the goods, under their brand name, but as the time passed by, the company made more diversification to its brand-umbrella, and include the products of other brands. One of the examples is of selling Kellogg’s Corn Flakes, by the company in 2008.

From the date of foundation stone in 1884, since then, till year 2016, M&S has 852 national and worldwide stores, with most of them internationally in India, Tukey, Russia, Greece, Ireland, France, Poland, Hungary, Finland, and Spain.

Company’s Operations and Strategic
Mark & Spencer, generally, deals in retail sector. It is a public limited company. Mark & Spencer is registered as LON:MKS under London Stock Exchange (LSE), and as MAKSY in the OTC market (OTCQX). The company’s operation model clearly enunciates that, the company serves a particular section - upper and middle class. According to the company policies, it is their “target audience”. The products are manufactured and sold by keeping in mind the “customer baseline”, which means, the company has made its roots in to the “cost conscious segmentation”. It has been seen that the company is trying to make its product to be available to every potential customer as a “high-quality product”, as they want to position their product among its customers.

It is quite fascinating that, in the year 1998, the company had become first company in the whole U.K., to make a pre-tax profit of over £1 billion. But this state of the company did not see the sun for more than a day. A surprise loss to the company made its investor – a colossal loss, from which they all are succumbing of.  This financial position of the company took the company to a graveyard and still, the investor’s hope in the company’s investments is not rekindled.

Financial Position of M&S
M&S has enjoyed its idyllic time to its fullest. The seeds of the M&S were well planted by its founders that, it has grown substantially in a span of time, considering the profits and expansion, nationally and internationally, achieved by Mark & Spencer. If we put a gaze on the financial position of the company from the year 1997, then the company has surely made prodigious growth. The stars of M&S were high, but suddenly slurp in the profits in late 1998, tarnished the company’s image in the eyes of the stakeholders. A colossal loss of £145 million was recorded from year 1998 to 2001. This was the period when the company’s stars were totally shattered.

M&S has gone through many rough patches. The road is not smooth for M&S.

Considering the financial position of M&S in 2015, the company has reported a profit of £10.300 billion, which was 10 times more than the profit in 1998 – a sense of doing remarkably well, if we look at the old book. The operating profit, which is basically earnings before interest and taxes, reported by the company was £762.5 million in 2015.

The number of employees have also rise with the Mark & Spencer. Till 2015, M&S has 83,069 in its boat to row the diversified operations of the company. As at 2^nd April 2016, total employees were 80,041, in which 57,841 (72%) were females and 22,200 (28%) were males. Total senior managers were 168, in which 70 (42%) were females and 98 (58%) were males. The Board Of Directors consist of 13 members, in which 5 were female (38%) and 8 (62%) were male.

The price of per share of Mark & Spencer on 24^th December, 2016 was 352.00 GBX (Great British Pence). The high was 355.63 and the low was 348.90, with a variance of -0.85%. The P/E ratio, or simply price earning per share, is 22.86.

Investments Thesis
Mark & Spencer had invested £400 million in its IT and supply chain management. M&S spokesperson gave a statement about the investment, "We will spend £400m in 2009/10, shifting the focus of our capital expenditure from our property portfolio, where we have made considerable investment over the last three years, to our IT and supply chain infrastructure."

This investment decision made a significant rise in sales of M&S, by 0.4 percent. This type of investment was the need of hour, as the company’s slow growth in its share market was allaying the investors from investing in the company. A grand amount of £400 million was superfluous to its investors.

Annual Report 2016

According to the Mark & Spencer’s official annual report for 2016, they have published the below report:

·         The operating profit for M&S has increased from 762.5 in 2015 to 784.9 in 2016, means an increase of +22.4 to the company.

·         The profit before tax has also seen a rise from 661.2 in 2015 to 689.6 in 2016, which means +28.4 more profit to the company.

·         The intangible assets have decreased from 858.2 in 2015 to 802.8 in 2016, which means -52.8 in the intangible assets of the company.

·         The current assets have increased from 797.8 in 2015 to 799.9 in 2016, which means an increase of +2.1 to the current assets of the company.

·         The current liabilities have decreased from 1624.6 in 2015 to 1617.7 in 2016, which a decrease of -6.9 to the liabilities of the company.

·         The profit for the year has decreased from 481.7 in 2015 to 404.4 in 2016, which means a decrease of -77.3 from the profits of the company.

·         The profit before taxation has decreased from 600 in 2015 to 488.8 in 2016, which means a decrease of -111.2 to the company.

·         Profit attributable to equity shareholders of the company has decreased from 486.5 in 2015 to 406.9 in 2016, which means -79.6 to the company.

(All the above figures are in GBP Millions)

If we look through a layman’s eye onto the current (2016) financial position of Marks & Spencer, it is seen that, it is not a good option for investors to invest in this company, as we have seen the decrease in the current assets of the company with the decrease in the profits, both – operating profit and profit for the year, has been decreased.

References

Marks & Spencer Group – Regulatory News.

Marks & Spencer – Company’s Summary

Marks & Spencer Share Price Trends

Marks & Spencer Information

Annual Report of Marks & Spencer

Check our other blog links:

Read aboout Bytedance Interview Tips here.

Read aboout Infosys Gurgaon Interview Tips here.

Read aboout Ameriprise Financials Gurgaon Interview Tips here.

Read aboout Copal Amba (Moody Analytics) Gurgaon Interview Tips here.

Read aboout Accenture Noida Interview Tips here.

Read aboout Honest Reviews of Samsung SDS India, Gurgaon here.

Interview Questions for Accounts and Finance Fresher of Xchanging Company

HR Common Interview Questions for Finance/Accounts Fresher

Xchanging Interview Question Answers for Fresher

Common Accounts/Finance Interview Questions for fresher

We have gathered a list of interview questions, which are commonly asked during the Accenture’s interview. Our database will provide you the genuine interview questions which have been asked in the accounts process interview of the Accenture. Go on then, read the interview questions and crack the interview.

Going for the Intelligence Business or in simple terms, Business Analyst Interview to the Copal Amba, Gurgaon as a fresher? Are you nervous that, what would they ask you? What would be their questions to you as a fresher? How will you tackle the interview questions as a fresher for accounts and finance? You must be feeling anxious and tense before appearing for the interview.

Don’t be fidgety. We have made a list of interview questions answers asked by the company for you. Before going to the interview, read all the interview questions given below, which have been asked by the HR managers and Operations Manager to an analyst going as a fresher to Xchanging Technologies, Gurgaon.

First of all, let’s us discuss the company’s information with all of you.

Company Name: Xchanging Technologies PLC

Address: Plot no-271, Udyog Vihar, Phase- II, Gurgaon, Haryana 122016

1) Interview Process of Xchanging Technologies PLC is as below:

The interview at Xchanging Technologies PLC at its Gurgaon location is conducted in 4 rounds:

A) HR Round

B) Aptitude Test Round

C) Operations Manager round

D) HR Manager round

They are discussed as below:

A) HR round:

In the first round at the Xchanging Technologies, the HR will initiate the interview process. They will generally ask you the simple questions, like,

i) Introduce yourself

ii) How you come to know about this interview?

iii) What do you know about the company?

iv) Have you heard the company’s name before?

v) Are you comfortable with the night/rotational shifts?

vi) What are your strengths and weaknesses?

Basically, questions like these are asked in the first round of the interview from a fresher for accounts and finance profile. Don’t worry, there won’t be any hardcore finance or any other questions from the HR.

  

B) Aptitude Test Round:

If in the first round, the HR is satisfied with your answers as well as communication skills, then, they will give you aptitude test to perform. The aptitude test is consist of general questions from English, Accounting, Maths, Passage Writing, etc.

You have to pass that test to go to next round of the interview at Xchanging Technologies, Gurgaon.

C) Operations Manager round

If the HR manager is satisfied with your writing skills, then, you will go through the Operations Manager round, in which, the main manager will ask you the interview questions for finance and accounts at Xchanging Technologies, Gurgaon branch.

i) Tell me about yourself.

ii) What are the golden rules of Accounting?

iii) We will send you to Bangalore for the training. Are you ready for that?

iv) Why have you written this passage on this topic? (I have already mentioned in Aptitude Test round that they ask you to write a passage in aptitude test.)

v) Do you know MS-Excel?

vi) Which functions do you know about in MS-Excel?

vii) Are you comfortable with the rotational shifts?

C) HR Manager round

This is the last round. In HR round at Xchanging Technologies, the salary is discussed with you by the HR manager. If you agree to all the terms of the company, then, your offer letter will be printed as soon as you say, yes. So, the choice is on you to accept or reject the job offer. Please confirm with the HR in the first place about sending you to Bangalore for the training.

2) Interview Rating:

If you are well aware of the basic accounting area, then, it is very easy to pass the interview of Accounts Executive as a fresher at Xchanging Technologies. You should familiar yourself with all the basic knowledge of accounting, like golden rules of accounting, journal entries, ledger posting etc.

The whole interview process takes a whole day as the HR or main operation manager could be busy. Before going there for the interview, be physically and mentally prepared.

3) Salary Offered:

To the freshers, the Xchanging Technologies at its Gurgoan location offers only Rs 12,000 (INR) CTC per month as a salary, which comprises of base salary, dearness allowance, provident fund, medical insurance, etc. They say that it is according to the industry standards.

If you have any other interview questions asked by the interviewer at the Xchanging Technologies, then, kindly share with us, for the benefit of ours and others. Thank You.