Fund accounting is one of the most typical services the custodians alongside the safekeeping function.

This type of accounting is used by the financial funds on money entrusted to them by donors, grantors, or other external sources. In fund accounting, the organization’s financial resources are classified into separate funds based on the purpose for which they have been donated, and the organization’s financial statements show the use of these funds separately from its general operating funds. For example, within the pooled funds (mutual, ETFs, UCITS, etc.) you have a large number of stakeholders which are entitled to the slices of such funds.

Fund accounting function allows the organisations to demonstrate to its stakeholders how the funds have been used and provides a level of transparency and accountability.

Please note, none of the information on this blog represents the opinion of my employer and all information does not represent a financial advice.