Fund Administration Management is a fund administration company providing

Fund Administration and Transfer Agency services for a number of large global

clients in the funds sector. Its head offices are based in Dublin but it outsources

some its anchor activities to three main locations: Gdansk, Bangalore & Manila.

You work as an associate in the Learning & Development team based in Gdansk;

your primary role is to train new hires on the various aspects of their Fund

Administration role. The new hires will be preparing and reviewing Fund

accounting in a busy Fund Administration environment.

You have previous industry experience having worked in several roles in fund

administration which include preparing Net Asset Values $($NAVs$)$ for funds

alongside some experience in the transfer agency department.

For training purposes, you have developed a fictitious training fund and

prospectus which allows new hires to practice their understanding of some core

accounting entries before progressing to administering funds in the live

environment.

The fictitious prospectus ofthe company and key details of the training fund on

Tuesday $20$th of February $2024$ are as follows:

$$ Net Asset Value at the start of the day on the $20$th of February is $10,400,327$

$($broken out across accounting category below$)$ and the shares$/$units in issue

are $1,000,000.$ The NAV Per Share is therefore $10\mathrm{.}40$ per share.

$$ Base currency of the Fund is Euro, it$$s a single class fund

$$ Fund is priced close of business $$ uses close of business $($COB$)$ exchange

rates.

$$ The companyholdsadiversifiedportfolio of securities including equities

and derivatives.

$$ Expenses, the following expenses will need to be setup and accrued for:

o Investment Management fees $1\mathrm{.}5\%$ of previous Total Net Assets

o FundAdministration fees of $0\mathrm{.}3\%$ per annum of previous TotalNet

Assets

o Fixed Audit Fees of $11,500$ perannum

o Fixed Legal Fees of $20,000$ perannum.

Fund Accounting Test Assignment $1$ Page $5$ of $7$

Section $2$ Assessment Requirements

PART A $$ PowerPoint Presentation

Accounting Equation $=$ Assets $$ Liabilities $=$ Capital $(+$Income $$ Expenses$)$

Using the template provided in IOB learn, prepare a brief PowerPoint presentation

$($PPT$)$ which draws on the information provided for FAM.

In your presentation, show how you would record the below accounting entries for

the $20$th of Februaryincluding the impact these entries would have on the accounting

equation outlined above.

Your presentation should use graphics to enhance and support your understanding

of the impact these transactions would have on the accounting equation.

Ensure you include all workings and journals which should be presented as per the

manual.

The opening position and accounting equation on the $20$th of February is:

$12,400,827\mathrm{.}00($Assets$)2,000,500($Liabilities$)=10,285,327($Capital$)+230,000$

$($Income$)(115,000)($Expenses$)$

Assets less Liabilities $=$ Capital $(+$Income $$ Expenses$)$

Assets $12,400,827\mathrm{.}00$ Capital $10,285,327$

Liabilities $2,000,500$ Income $230,000$

Expenses $115,000$

Total $10,400,327$ Total $10,400,327$

No of Shares $1,000,000$

NAV per Share $($rounded to $2$dp$)10\mathrm{.}40$

Prepare five slides showing the following entries:

$$ SLIDE $1$ The training fund receives redemption orders of $5,000$ shares, The

settlement date is February $22$nd$.$ Show workings, journal for $20$th February and

impact on the accounting equation.

$$ SLIDE $2$ Calculation of Fund Administration Expenses for the $20$th of February based

Fund Accounting Test Assignment $1$ Page $6$ of $7$

on the prior day Total Net Assets. Show workings, journal and impact on the

accounting equation.

$$ SLIDE $3$ Calculate both Fixed expense entries for the $20$th of February. Show workings,

journal and impact on the accounting equation.

$$ SLIDE$4$ Dividend income of $8,000$ euros was received into the fundon the $20$th of

February with a payment day of the $11$

th of March. Show workings, journal and impact

on the accounting equation.

$$ SLIDE$5$The fund purchased the below First Call Options contracts. Show

workings, journal and impact on the accounting equation

Type Buy

Security First Call Options

Contract Size $100$

Number of Contracts $50$

Premium $3\mathrm{.}75$ Euro per share

Commission $40$ Euro in total

Trade Date $20$th of February

Settlement Date $23$rd of February

Options Terms: To acquire $5,000$ MSFT ordinary shares at an exercise price of

$87\mathrm{.}50$ per share.

Exercise Date: $16$th of March

Note: Each slide should build on the previous e$.$g$.$ slide one will show the opening

position for the accounting equation plus the slide $1$ journal entry. Slide two will build

on this and show the new accounting entry and then include day $2$ journal entry and

so on through the slides.

Fund Accounting Test Assignment $1$ Page $7$ of $7$

PART B $$ Foreign Equity Purchase & subsequent Sale

Using the data presented below, prepare the accounting entries and workings for each

date as it would appear in the base currency of the Fund.

Clearly show your workings for each accounting entry $.$

$$ February $28$th$-$ Purchase of $8,400$ Kingfisher Equity shares at a mid$-$

d