AMBER CERTIFICATION

07 17

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:

  1. Consulting through detailed feedback on the findings of our review and associated recommendations;
  2. Visibility for the fund through the certification announcement to our community of registered users and,
  3. Efficiencies to investors and managers who use our reports to streamline the operational due diligence process.

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:

  • Staffing / Segregation of duties
  • IT infrastructure - physical / logical / BCP
  • Compliance function
  • Account opening and asset transfer controls
  • Trade flow processes / Reconciliations
  • Existence confirmation
  • Portfolio valuation responsibility / independence / hard to value assets
  • NAV calculation / NAV review / investor statements
  • Fund administration services
  • Auditors / audited financial statements

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.

Sample Certification report

Sample Certification Summary report

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.

Amber Certification Methodology

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:

  • Amber charges a fee to perform an operational review of the fund. Our contract stipulates that the fee is due regardless of whether or not we award certification.
  • Once Amber has conducted its certification review, the manager will receive feedback from Amber on the results of its findings and any recommendations for improvements. The manager has the opportunity to make improvements on any areas of weakness noted which, once verified by Amber, are reflected in Amber's certification report as changes made subsequent to our onsite visit. Accordingly, the potential for conflicts of interest are reduced.
  • Investors and managers may access the Amber Certification Methodology that outlines the scope of each Amber certification review and our opinion on critical operational risk areas such as wire transfer controls, valuation, segregation of duties and reconciliations, to name a few. The transparency of our methodology, and the fact that our views are in line with global industry best practice recommendations, mitigates the risk of a manager influencing Amber's views.

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.

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Use this form or email us at info@amberpartners.com for any requests.

Offices

BERMUDA

AMBER PARTNERS LTD.

29 Front Street, Hamilton HM 11, Bermuda

Mailing Address: P.O. Box HM 1889, Hamilton HM HX, Bermuda

Tel: +1 441 296 8777

LONDON

AMBER PARTNERS (UK) LTD.

53 Chandos Place, Covent Garden, London, WC2N 4HS

Tel: +44 (0) 20 7812 7323

NEW YORK

AMBER PARTNERS (USA) LTD.

260 Madison Avenue, New York, NY 10016, USA

Tel: +1 917 267 4578

Please send us a message using the form on the left or email us at info@amberpartners.com.

For regional matters contact:
Americas - Jamie Jared Donnelly, Managing Director
Europe and Asia - Gareth Jones, Director
Middle East - Reiko Nahum, CEO and Founder