Question 1

Scenario: A portfolio company undergoes a valuation adjustment—how do you reflect this via journal entries, and how does it cascade through financial statements?

Accepted Answer

To reflect a valuation adjustment, I would first record a journal entry to adjust the asset's value, typically involving a debit to a loss account and a credit to the asset account. This adjustment would affect the balance sheet by changing the asset's value and potentially impacting equity. The income statement would reflect the loss due to the adjustment, impacting net income. This, in turn, cascades to affect retained earnings in the equity section of the balance sheet.

Question 2

Walk through the process of calculating NAV for a private equity fund—how do you handle capital calls, distributions, management fees, and carried interest?

Accepted Answer

To calculate NAV for a private equity fund, I start by determining the fund's total assets and liabilities. Capital calls are accounted for as increases in cash or investments, while distributions reduce the fund's assets. Management fees are deducted as expenses, and carried interest is calculated based on the fund's performance, impacting the net assets. This comprehensive approach ensures accurate NAV calculation.

Question 3

Describe how you account for an early sale (partial exit) of an underlying investment in the fund.

Accepted Answer

When accounting for an early sale of an investment, I first determine the proportion of the investment being sold and calculate the gain or loss based on the sale proceeds relative to the carrying value. I then adjust the investment account and recognize the gain or loss in the income statement. It's important to ensure all related transaction costs are accounted for and disclosures are updated in the financial statements.

Question 4

A capital call is delayed—what impact does this have on NAV and interim reporting?

Accepted Answer

A delayed capital call can affect the NAV by potentially lowering it due to the non-receipt of expected funds. Interim reporting may reflect discrepancies in planned vs. actual cash flows, possibly affecting liquidity ratios and investor perceptions.

Question 5

A portfolio company issues dividends—how do you book those in the fund accounting system?

Accepted Answer

When a portfolio company issues dividends, they are recorded as income in the fund accounting system. The process involves creating a journal entry that credits the dividend income account and debits either cash or receivables, depending on whether the dividend has been received. This ensures accurate tracking and reporting of income within the fund.

Question 6

Explain deferred tax liabilities arising from fund structure differences, and how you'd account for timing differences.

Accepted Answer

Deferred tax liabilities arise when there are temporary differences between the accounting and tax bases of assets and liabilities due to fund structure differences, such as varying depreciation methods. These are accounted for by recognizing a liability on the balance sheet that reflects the expected future tax payments. Timing differences are managed by regularly reviewing and adjusting the deferred tax liability as the differences reverse over time.

Question 7

What is goodwill in investment acquisitions, and how does impairment testing work?

Accepted Answer

Goodwill in investment acquisitions represents the premium paid over the fair value of net identifiable assets. Impairment testing involves assessing whether the carrying value of goodwill exceeds its recoverable amount, typically done annually or when indicators of impairment arise, following standards like IFRS or GAAP.

Question 8

Scenario: A portfolio company’s fair‑value model assumptions change—how would you justify and document the adjustment to an audit team?

Accepted Answer

To justify the adjustment, I would first thoroughly analyze the reasons for the change in assumptions, such as market conditions or company-specific factors. I would document the rationale, including supporting data and expert opinions, and communicate this clearly to the audit team. This ensures transparency and allows the team to assess the impact on financial statements accurately.

Question 9

Ind AS/IFRS requires fair value measurement—how would you report Level 1 vs Level 3 investments?

Accepted Answer

Under Ind AS/IFRS, Level 1 investments are valued using quoted prices in active markets, making them highly reliable. In contrast, Level 3 investments require significant judgment as they are valued using unobservable inputs. I would disclose Level 1 investments with their market prices, while for Level 3, I would include the valuation method, assumptions, and sensitivity analysis to provide transparency.

Question 10

Which accounting standard governs accounting for investments in associates in PE funds, and what are its recognition tests?

Accepted Answer

The accounting standard that governs accounting for investments in associates in private equity (PE) funds is IAS 28 - Investments in Associates and Joint Ventures. The recognition tests include significant influence over the investee, typically indicated by 20% to 50% ownership of voting rights. This standard requires the equity method of accounting, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor’s share of net assets of the investee.

Question 11

Scenario: You discover a material reconciliation difference in capital account between administrator and fund manager—walk me through your steps to resolve it.

Accepted Answer

Upon discovering a material reconciliation difference, I would first verify the data sources to ensure accuracy. Then, I would communicate with both the administrator and the fund manager to understand their records and identify the root cause of the discrepancy. Following this, I would work collaboratively to reconcile the accounts, implementing any necessary adjustments and documenting the process for future reference.

Question 12

How do you adjust accounting entries when an investor fails to fund a capital call?

Accepted Answer

When an investor fails to fund a capital call, I first adjust the investor's capital account to reflect the shortfall. This could involve reclassifying the due amount as a receivable. Additionally, I would communicate with the investor to understand the reason for the default and consider any contractual remedies or penalties. It’s crucial to maintain accurate records for reporting and future reconciliation.

Question 13

Provide the typical journal entries for management fees, audit fees, and accrued expenses in a PE fund scenario.

Accepted Answer

In a PE fund scenario, typical journal entries would be: for management fees, debit 'Management Fees Expense' and credit 'Cash' or 'Accounts Payable'; for audit fees, debit 'Audit Fees Expense' and credit 'Cash' or 'Accounts Payable'; and for accrued expenses, debit 'Expense Account' and credit 'Accrued Liabilities'.

Question 14

Walk through booking a reinvestment of distributions as part of a distribution waterfall.

Accepted Answer

To book a reinvestment of distributions in a distribution waterfall, first, calculate the total distribution amount due to investors. Next, determine the reinvestment portion based on investor instructions. Adjust the capital account by reducing the cash distribution and increasing the capital account by the reinvested amount. Finally, update records to reflect the reinvestment, ensuring compliance with fund agreements.

Question 15

Scenario: Inter‑company transaction between GP and fund—how do you eliminate entries and update master ledger?

Accepted Answer

To manage an inter-company transaction between GP and a fund, I first identify the reciprocal entries in both entities' books. I then eliminate these entries by offsetting them against each other, ensuring no duplication in the consolidated financials. After that, I update the master ledger to reflect these adjustments accurately, maintaining a clear audit trail for future reference.

Question 16

What fund accounting systems or ERP platforms (e.g., eFront, AltaReturn, Geneva) have you used, and how did you configure NAV calculation workflows?

Accepted Answer

I have extensively used Geneva and eFront for fund accounting. In Geneva, I configured NAV workflows by setting up automated reconciliation processes and custom reporting templates to streamline data capture and validation. With eFront, I customized data integration modules to ensure seamless data flow from front office to back office, optimizing the NAV calculation process.

Question 17

Scenario: You need to automate recurring accruals—what tools or scripts would you implement, and how would you test validation?

Accepted Answer

To automate recurring accruals, I would use tools like Python for scripting and Excel VBA for integration with spreadsheets. I would implement scripts to fetch and process data automatically. For validation, I would test the scripts by running them on historical data to compare results with manual calculations, ensuring accuracy and reliability.

Question 18

With the rise of AI, blockchain & ML, how do you think fund accounting workflows (NAV validation, analytics) are evolving?

Accepted Answer

AI, blockchain, and ML are revolutionizing fund accounting workflows by enhancing accuracy and efficiency. AI and ML improve data analytics and NAV validation through automated processes and predictive insights. Blockchain offers secure, transparent transaction recording, reducing reconciliation efforts and errors. Overall, these technologies streamline operations, allowing professionals to focus on strategic decision-making.

Question 19

How do you confirm expenses with underlying portfolio companies and ensure consistent recognition?

Accepted Answer

To confirm expenses with portfolio companies, I regularly review financial statements and supporting documents, ensuring they align with agreed-upon budgets. Consistent recognition is maintained by adhering to standardized accounting policies and conducting periodic audits to verify compliance.

Question 20

Describe control procedures you’d design for expense accruals in fund accounting.

Accepted Answer

To design control procedures for expense accruals in fund accounting, I would implement a multi-step process. First, establish a clear policy for identifying and documenting expenses, ensuring all potential liabilities are captured. Second, implement a review and approval process, where accruals are cross-verified by multiple team members. Lastly, conduct periodic audits to ensure compliance and accuracy, mitigating any risk of misstatement.

Question 21

Scenario: You detect discrepancy in prepaid/unrealised expense classification—how do you test, correct, and document it?

Accepted Answer

First, I would review the financial records to confirm the nature of the discrepancy. I would then ensure that the expenses are correctly classified according to accounting standards. After making necessary adjustments, I would document the process and rationale for changes, and communicate with relevant stakeholders to ensure transparency.

Question 22

How would you explain to an investor why a fund has positive EBITDA but negative cash flow?

Accepted Answer

EBITDA focuses on earnings before interest, taxes, depreciation, and amortization, providing a view of operational profitability. However, cash flow considers actual cash movement. Negative cash flow can result from high capital expenditures, changes in working capital, or debt repayments, not reflected in EBITDA.

Question 23

Discuss fund-level working capital—what are the key lines and why are they important?

Accepted Answer

Fund-level working capital primarily includes cash and cash equivalents, receivables, and payables. These lines are important as they indicate the fund's ability to meet short-term obligations and manage liquidity. Effective management ensures operational efficiency, reduces financial risk, and enhances the fund's ability to capitalize on investment opportunities.

Question 24

Case: Two underlying portfolio companies merge—explain how you account for this consolidation within the fund’s financials.

Accepted Answer

When two portfolio companies merge, you first determine the acquirer for accounting purposes. Then, consolidate their financials by combining assets, liabilities, and equity, eliminating intercompany transactions, and adjusting the acquired assets and liabilities to fair value. This ensures the fund's financials present a true and fair view post-merger.

Question 25

Case: A portfolio company IPOs mid‑year—how would you adjust NAV and reflect partial liquidity?

Accepted Answer

To adjust NAV, I would first re-evaluate the company's market value post-IPO using the latest market price. For partial liquidity, I would account for the portion sold and update the NAV accordingly, also considering transaction costs and market conditions.

Question 26

Scenario: Dividend recapitalization is executed—how is it treated in fund accounting, distribution reporting, and investor IRR?

Accepted Answer

In fund accounting, dividend recapitalization is recorded as a liability and a distribution to investors. It impacts distribution reporting by increasing the distribution amount, reflecting a return of capital. For investor IRR, it may temporarily boost the IRR as investors receive cash distributions, but it's crucial to analyze the long-term effects on the fund's leverage and performance.

Question 27

Case: Fund raises sidecar vehicle capital and later merges it—how do you account for separate promotion terms and combined NAV?

Accepted Answer

When a fund raises sidecar vehicle capital and later merges it, you need to first account for the capital raised under the separate sidecar vehicle, ensuring that any specific promotion terms are documented and adhered to. Upon merging, you must reassess the combined Net Asset Value (NAV) by consolidating the assets and liabilities of both entities. This requires careful attention to the terms of the merger agreement to ensure accurate financial reporting and compliance with any specific promotional terms originally agreed upon.

Question 28

How would you evaluate whether a secondary buyout qualifies for carried interest recognition?

Accepted Answer

To evaluate whether a secondary buyout qualifies for carried interest recognition, I would first assess the investment's performance against the hurdle rate. Next, I would ensure that all conditions for carried interest outlined in the fund agreement are met, such as the preferred return. Finally, I would verify compliance with accounting and tax guidelines related to carried interest.

Question 29

Describe reporting requirements under Companies Act / AIF norms in India versus US or Cayman structures.

Accepted Answer

In India, reporting requirements under the Companies Act and AIF norms include detailed financial disclosures, annual reports, and adherence to accounting standards. In contrast, US structures follow GAAP or IFRS, requiring regular SEC filings. Cayman structures often have more flexible reporting, focusing on investor agreements. The key differences lie in the level of disclosure and regulatory oversight.

Question 30

Scenario: Certain investors are tax-exempt—how does that affect withholding, feedback, and NAV allocation?

Accepted Answer

Tax-exempt investors do not require withholding tax deductions, which can lead to adjustments in the fund's overall tax obligations. Feedback to investors involves clear communication about their tax status and implications on distributions. NAV allocation must account for the tax-exempt status to ensure accurate valuation and equitable distribution among all investors.

Question 31

Scenario: Auditors find misclassification between expense and capital expenditure — how do you remediate and report back?

Accepted Answer

First, I would thoroughly review the transactions in question to understand the nature of the misclassification. Then, I would reclassify the entries correctly according to accounting standards. I would also assess the impact on financial statements and make necessary adjustments. Finally, I would prepare a detailed report for the auditors explaining the steps taken to remediate the issue and ensure compliance.

Question 32

How do you manage allocation of fund expenses across vintage years and investor classes?

Accepted Answer

I manage the allocation of fund expenses by first identifying the specific expenses associated with each vintage year and investor class. I use a combination of direct allocation for expenses that can be directly attributed and proportional allocation for shared expenses, ensuring that the allocation is in line with the fund's governing documents and industry standards. Regular reviews and adjustments are made to ensure accuracy and fairness.

Question 33

How do you process U.S. tax reporting for a Cayman‑structured PE fund with U.S. investors?

Accepted Answer

Processing U.S. tax reporting for a Cayman-structured PE fund involves preparing and filing Form 1065 and Schedule K-1s for U.S. investors to report their share of income, deductions, and credits. Additionally, ensuring compliance with FATCA and CRS regulations is crucial. This process requires a thorough understanding of both Cayman and U.S. tax laws to accurately report income and ensure all tax obligations are met for U.S. investors.

Question 34

Walk through how you’d disclose and account for a related‑party transaction with the GP.

Accepted Answer

To disclose and account for a related-party transaction with the GP, I first identify the transaction and confirm its nature and terms as per the relevant accounting standards, such as IAS 24. I ensure full transparency by disclosing the transaction in the financial statements, detailing the nature of the relationship, transaction amount, and any outstanding balances. Additionally, I account for the transaction by recording it at arm’s length value, ensuring it reflects fair market conditions, and documenting all necessary approvals and justifications in the financial records.

Question 35

Could you describe a situation where you had to explain a negative NAV movement to an LP?

Accepted Answer

In my previous role, a fund experienced a 5% drop in NAV due to market volatility. I scheduled a call with the LP to explain the situation, breaking down the market factors and reassuring them of our long-term strategy. I highlighted our risk management practices and provided a timeline for expected recovery, which helped maintain their confidence in our fund.

Question 36

Scenario: Investor demands early redemption—how would you handle the liquidation accounting and adverse effect on remaining NAV?

Accepted Answer

To handle an investor's early redemption request, I would first calculate the precise amount for liquidation accounting, ensuring compliance with the fund's policies. I would then assess the impact on the NAV and explore options to minimize adverse effects, such as reallocating remaining assets. Clear communication with stakeholders about the process and expected outcomes would be crucial to maintain trust and transparency.

Question 37

Scenario: Purchase price multiple assumptions change—how do you re‑project exit returns and IRR?

Accepted Answer

When purchase price multiple assumptions change, I would revisit the valuation model to adjust the exit multiple accordingly. This involves recalculating the projected exit value and updating the cash flow projections. I would then use these updated figures to recalculate the Internal Rate of Return (IRR) and other return metrics. Additionally, I would conduct a sensitivity analysis to understand how different exit multiples affect the overall return profile and communicate these insights to stakeholders.

Question 38

Paper LBO: PE acquires a $150 EBITDA company at 10× using 60% debt—exit EBITDA grows over years, explain how to approximate IRR on paper.

Accepted Answer

To approximate IRR, first calculate the purchase price as $150M EBITDA * 10 = $1.5B. With 60% debt, equity is $600M. Assume EBITDA grows to $200M and exit multiple remains 10×, exit value is $2B. Debt repayment over the period must be estimated; assume debt is reduced by operating cash flows. Calculate the equity value at exit and compare it to initial equity investment to estimate IRR, considering time period and cash flows.

Question 39

What factors most influence IRR in a leveraged buyout structure?

Accepted Answer

The IRR in a leveraged buyout is primarily influenced by the entry and exit multiples, as they determine the purchase and sale price of the company. Additionally, the level of debt and interest rates can significantly impact cash flows. Finally, operational improvements and cost efficiencies achieved during the holding period can enhance the company's profitability, thereby affecting the IRR.

Question 40

Explain private equity-specific constructs like IRR, MOIC, multiple hurdle, catch‑up, and promote, and how they impact fund accounting.

Accepted Answer

IRR (Internal Rate of Return) and MOIC (Multiple on Invested Capital) are metrics used to assess investment performance. IRR reflects the annualized return, while MOIC indicates the multiple of the original investment. A hurdle rate is the minimum return required before the GP earns a performance fee, often followed by a catch-up phase where the GP receives a larger share of profits. Promote refers to the share of profits the GP earns once the hurdle is cleared. These constructs affect fund accounting by determining the allocation of profits and influencing how performance fees are calculated and distributed.

Question 41

How do you stay current with evolving accounting standards, valuation trends, and PE regulations?

Accepted Answer

I stay current by regularly attending industry webinars and workshops, subscribing to leading financial publications, and being an active member of professional accounting associations. This approach helps me keep up with updates in accounting standards, valuation trends, and PE regulations.

Question 42

Have you ever had to correct errors in a junior’s accounting entries? Walk through your mentorship and remediation approach.

Accepted Answer

Yes, I have encountered situations where junior team members made errors in accounting entries. My approach is to first review the errors with them, explaining the impact and the correct methodology. I encourage them to ask questions and provide additional training if needed. I emphasize the importance of accuracy and double-checking their work, fostering a supportive environment where they feel comfortable seeking guidance. This not only corrects the immediate issue but also builds their confidence and competence.

Question 43

Walk me through your career: what drove you into private equity fund accounting?

Accepted Answer

My career began with a degree in finance, where I developed a strong interest in investment management. I initially worked in corporate accounting, which provided me with a solid foundation in financial reporting and analysis. My interest in private equity fund accounting was piqued by its dynamic nature and the unique challenges it offers. I was particularly drawn to the opportunity to work closely with investment teams and gain insights into fund operations and strategies. This field allows me to leverage my analytical skills and passion for financial markets in a more specialized context.

Question 44

How do you communicate technical accounting concepts (e.g. fair value, deferred tax) to non‑finance stakeholders?

Accepted Answer

I communicate technical accounting concepts by breaking them down into simpler terms, using relatable analogies, and focusing on how these concepts impact their areas. For example, I might explain fair value as the current market price of an asset, similar to how one would value a property or car.

Question 45

Describe a time you had to manage conflicting deadlines across multiple funds. How did you prioritize?

Accepted Answer

When faced with conflicting deadlines across multiple funds, I first evaluate the deadlines based on their strategic importance and potential penalties for delays. I discuss with team members and stakeholders to understand dependencies. By organizing tasks in order of urgency and impact, I ensure that all critical deadlines are met efficiently.

Question 46

Your fund is subject to a regulatory audit—share how you’d prepare documentation, testing logs, and investor transparency affidavits.

Accepted Answer

To prepare for a regulatory audit, I would first ensure that all documentation is complete and up-to-date, including financial statements and compliance reports. I would organize testing logs to demonstrate the effectiveness of controls and processes. Additionally, I would prepare investor transparency affidavits to ensure all disclosures are accurate and meet regulatory standards.

Question 47

During a due diligence test for an acquisition, you find an unrecognized liability—how would you reflect it in fund accounting?

Accepted Answer

Upon discovering an unrecognized liability during due diligence, I would first verify the accuracy and legitimacy of the liability. Next, I would ensure it is recorded in the financial statements, adjusting the balance sheet to reflect this liability. This might involve re-evaluating the valuation of the acquisition target and discussing with stakeholders any potential impacts on the acquisition terms.

Question 48

A GP waives part of carried interest—what is the journal entry impact and how does it affect the distribution waterfall?

Accepted Answer

When a GP waives part of the carried interest, the journal entry typically involves a reduction in the carried interest liability and a corresponding increase in the capital account of the LPs. This waiver can alter the distribution waterfall by increasing the LPs' share of the profits, potentially accelerating their return of capital and preferred return before the GP earns any remaining carried interest.

Question 49

If a fund adopts triple‑entry/blockchain‑based bookkeeping, how would it change reconciliation, auditability, and transparency?

Accepted Answer

Adopting triple-entry bookkeeping with blockchain would significantly enhance transparency by providing a tamper-proof ledger accessible to all stakeholders. This improves auditability, as auditors can verify transactions in real-time, reducing the need for extensive reconciliations. The immutable nature of blockchain ensures data integrity, simplifying the reconciliation process and increasing trust among parties.

Question 50

Scenario: A portfolio company issues convertible debt—how would you account for it in fund financials and valuation?

Accepted Answer

To account for convertible debt, I would first separate the debt and equity components using the fair value method. In the fund financials, the debt portion would be recorded as a liability, while the equity portion would be recorded in equity. For valuation, I would consider the potential dilution effect on equity and adjust the valuation model accordingly, ensuring that the convertible feature's impact is reflected in the investment's fair value.

Private Equity Fund Accounting Interview Q&A

A. Fund Structure & NAV / Valuation

Q1: Scenario: A portfolio company undergoes a valuation adjustment—how do you reflect this via journal entries, and how does it cascade through financial statements?

Q2: Walk through the process of calculating NAV for a private equity fund—how do you handle capital calls, distributions, management fees, and carried interest?

Q3: Describe how you account for an early sale (partial exit) of an underlying investment in the fund.

Q4: A capital call is delayed—what impact does this have on NAV and interim reporting?

Q5: A portfolio company issues dividends—how do you book those in the fund accounting system?

B. Accounting & Reporting Standards (Ind AS / IFRS / US GAAP / SA)

Q6: Explain deferred tax liabilities arising from fund structure differences, and how you'd account for timing differences.

Q7: What is goodwill in investment acquisitions, and how does impairment testing work?

Q8: Scenario: A portfolio company’s fair‑value model assumptions change—how would you justify and document the adjustment to an audit team?

Q9: Ind AS/IFRS requires fair value measurement—how would you report Level 1 vs Level 3 investments?

Q10: Which accounting standard governs accounting for investments in associates in PE funds, and what are its recognition tests?

C. Journal Entries & Reconciliations

Q11: Scenario: You discover a material reconciliation difference in capital account between administrator and fund manager—walk me through your steps to resolve it.

Q12: How do you adjust accounting entries when an investor fails to fund a capital call?

Q13: Provide the typical journal entries for management fees, audit fees, and accrued expenses in a PE fund scenario.

Q14: Walk through booking a reinvestment of distributions as part of a distribution waterfall.

Q15: Scenario: Inter‑company transaction between GP and fund—how do you eliminate entries and update master ledger?

D. Systems, Tools & Automation

Q16: What fund accounting systems or ERP platforms (e.g., eFront, AltaReturn, Geneva) have you used, and how did you configure NAV calculation workflows?

Q17: Scenario: You need to automate recurring accruals—what tools or scripts would you implement, and how would you test validation?

Q18: With the rise of AI, blockchain & ML, how do you think fund accounting workflows (NAV validation, analytics) are evolving?

E. Financial Analysis & Internal Controls

Q19: How do you confirm expenses with underlying portfolio companies and ensure consistent recognition?

Q20: Describe control procedures you’d design for expense accruals in fund accounting.

Q21: Scenario: You detect discrepancy in prepaid/unrealised expense classification—how do you test, correct, and document it?

Q22: How would you explain to an investor why a fund has positive EBITDA but negative cash flow?

Q23: Discuss fund-level working capital—what are the key lines and why are they important?

F. Case‑Based / Scenario Questions

Q24: Case: Two underlying portfolio companies merge—explain how you account for this consolidation within the fund’s financials.

Q25: Case: A portfolio company IPOs mid‑year—how would you adjust NAV and reflect partial liquidity?

Q26: Scenario: Dividend recapitalization is executed—how is it treated in fund accounting, distribution reporting, and investor IRR?

Q27: Case: Fund raises sidecar vehicle capital and later merges it—how do you account for separate promotion terms and combined NAV?

Q28: How would you evaluate whether a secondary buyout qualifies for carried interest recognition?

G. Tax, Compliance & Regulatory Reporting

Q29: Describe reporting requirements under Companies Act / AIF norms in India versus US or Cayman structures.

Q30: Scenario: Certain investors are tax-exempt—how does that affect withholding, feedback, and NAV allocation?

Q31: Scenario: Auditors find misclassification between expense and capital expenditure — how do you remediate and report back?

Q32: How do you manage allocation of fund expenses across vintage years and investor classes?

Q33: How do you process U.S. tax reporting for a Cayman‑structured PE fund with U.S. investors?

H. Ethics, Investor Relations & Stakeholder Communication

Q34: Walk through how you’d disclose and account for a related‑party transaction with the GP.

Q35: Could you describe a situation where you had to explain a negative NAV movement to an LP?

Q36: Scenario: Investor demands early redemption—how would you handle the liquidation accounting and adverse effect on remaining NAV?

I. Private Equity / Investment Concepts & Deal Mechanics

Q37: Scenario: Purchase price multiple assumptions change—how do you re‑project exit returns and IRR?

Q38: Paper LBO: PE acquires a $150 EBITDA company at 10× using 60% debt—exit EBITDA grows over years, explain how to approximate IRR on paper.

Q39: What factors most influence IRR in a leveraged buyout structure?

Q40: Explain private equity-specific constructs like IRR, MOIC, multiple hurdle, catch‑up, and promote, and how they impact fund accounting.

J. Behavioral / Fit & Professional Thought Process

Q41: How do you stay current with evolving accounting standards, valuation trends, and PE regulations?

Q42: Have you ever had to correct errors in a junior’s accounting entries? Walk through your mentorship and remediation approach.

Q43: Walk me through your career: what drove you into private equity fund accounting?

Q44: How do you communicate technical accounting concepts (e.g. fair value, deferred tax) to non‑finance stakeholders?

Q45: Describe a time you had to manage conflicting deadlines across multiple funds. How did you prioritize?

K. Advanced & Situational Challenges

Q46: Your fund is subject to a regulatory audit—share how you’d prepare documentation, testing logs, and investor transparency affidavits.

Q47: During a due diligence test for an acquisition, you find an unrecognized liability—how would you reflect it in fund accounting?

Q48: A GP waives part of carried interest—what is the journal entry impact and how does it affect the distribution waterfall?

Q49: If a fund adopts triple‑entry/blockchain‑based bookkeeping, how would it change reconciliation, auditability, and transparency?

Q50: Scenario: A portfolio company issues convertible debt—how would you account for it in fund financials and valuation?