Amber's industry benchmark of operational quality and best practices. Operational certification is awarded to funds whose policies, procedures and processes meet the highest standards across the asset management industry.
Amber is engaged by the fund to conduct a comprehensive operational risk assessment of the fund, the manager and the administrator. Amber has approximately US$62 billion in AUC (Assets Under Certification) and funds range in size, strategy and location including those managed by well recognised firms.
Amber Certification offers a number of key benefits:
Please visit our Certified Funds Area to browse the list of certified funds.
To be awarded Amber Certification, funds must demonstrate sufficient policies and procedures to reduce the risk of theft and fraud, a material misstatement of the NAV, and other key operational risks.
Key areas considered by Amber,s Operational Certification review include (but are not limited to:
Amber provides recommendations that are appropriate for the size and strategy of the firm to ensure it is operating in accordance with global industry sound practices. We utilise a consistent and systematic framework in which to gather information and assess operational risk. Our approach is described in our published Amber Certification Methodology. [link to ACM pdf]
Amber's certification review is an annual process.
Amber's operational certification reports provide a consistently applied format and documented approach to review funds. Whilst the primary topics covered are consistent, in our experience, each manager is quite unique and the reports reflect and identify that.
Amber also offers hedge fund managers, with firm wide assets under management of less than US $1billion, the option to engage Amber to produce an Operational Certification Summary report. The same underlying certification methodology and process is used for both the operational certification and operational certification summary reports.
All Amber operational risk reviews are borne out of our industry leading operational certification review process. Amber's methodology creates a consistent and systematic framework in which to gather information and assess operational risk irrespective of fund size or strategy.
Amber's Operational Certification Methodology has been designed in light of current global industry sound practice standards whilst also considering the recommendations of industry trade associations. In particular, Amber's methodology considers the operational recommendations of the MFA's Sound Practices for Hedge Fund Managers, AIMA and the UK HFSB Standards.
1. How are Amber's operational certification reports distributed?
Only the hedge fund manager may distribute the report through a fund specific password provided by Amber. Investors may then access the report from Amber's website, free of charge, by clicking on the name of the fund and entering the password received from the manager.
2. Who engages Amber and how does the firm reduce any potential conflicts of interest?
Amber is engaged by the fund and the fund manager in a similar manner to auditors and administrators. Amber recognizes the potential for conflicts of interest and has addresses them in the following ways:
3. How is an Amber Certification different from a ISAE 3402 / SSAE 16 (formerly SAS70) report?
All Amber operational certification reports are comparable in scope and format, and are written in way that is concise and digestible for investors. The scope of a ISAE 3402 / SSAE 16 report may vary as this may be dictated by the manager. In addition, the format of each ISAE 3402 / SSAE 16 report is unique as the layout is determined by the manager.
A ISAE 3402 / SSAE 16 Type II review involves controls testing. Amber's approach is not to recreate an audit but to perform thorough due diligence, including operational risk areas that cannot be tested. For instance, the adequacy of segregation of duties, key compliance policies, corporate governance practices, business continuity plans and the appropriateness of staff qualifications, to name a few, are all important to the assessment of operational risk yet cannot be tested.
It is extremely important for investors to connect the dots between the roles of the manager and the fund administrator and to consider how they compliment each other on a fund specific basis. For example, to what extent can the administrator independently price or verify prices? How many instances has the manager overridden prices? For securities fair valued by the manager, what support is provided to the administrator and how is the administrator reviewing the reasonability of these prices?
Amber provides managers with recommendations and guidance on operational sound practices at the time of review and during the certification period. Amber certified funds have been benchmarked against global operational best practice standards.