Fund accounting in Mauritius: a pillar of transparency
The accounting of an investment fund goes well beyond simple bookkeeping. It forms the foundation of investor and regulator confidence in the fund's management. In Mauritius, all FSC-licensed investment funds are required to comply with IFRS standards (International Financial Reporting Standards), ensuring international transparency and comparability.
The calculation of the Net Asset Value (NAV) is at the heart of fund accounting. It determines the value of each unit and, by extension, the price at which investors enter and exit the fund. For closed-end funds (CEFs), the NAV serves as a key performance indicator, enabling calculation of the DPI, RVPI and TVPI metrics expected by Limited Partners.
Applicable accounting standards
IFRS framework for investment funds
The main IFRS standards applicable to investment funds domiciled in Mauritius are:
| Standard | Purpose | Application to the fund |
|---|---|---|
| IFRS 9 | Financial instruments | Classification and measurement of portfolio investments. Distinction between amortised cost, fair value through OCI and fair value through profit or loss. |
| IFRS 13 | Fair value measurement | Fair value hierarchy (levels 1, 2, 3). Methodological framework for valuing all of the fund's assets. |
| IFRS 7 | Financial instruments: disclosures | Mandatory disclosure of market, credit and liquidity risks in the notes to the financial statements. |
| IAS 32 | Financial instruments: presentation | Classification of the fund's units (debt vs equity), treatment of redeemable units (puttable instruments). |
| IAS 21 | The effects of changes in foreign exchange rates | Determination of the fund's functional currency and accounting for translation differences. |
| IFRS 10 | Consolidated financial statements | Consolidation exemption for investment entities: controlling stakes are measured at fair value. |
Investment entity exemption (IFRS 10)
Funds qualifying as investment entities under IFRS 10 benefit from a major exemption: they are not required to consolidate their controlling stakes. Instead, these investments are measured at fair value through profit or loss. This exemption considerably simplifies the accounting and reporting of private equity, venture capital and fund-of-funds vehicles.
Investment entity criteria (IFRS 10): The fund must (i) obtain funds from one or more investors for the purpose of providing investment management services, (ii) commit to invest solely for returns from capital appreciation and/or investment income, and (iii) measure and evaluate the performance of substantially all of its investments on a fair value basis.
Calculating the Net Asset Value
Calculation methodology
The NAV is calculated using the following fundamental formula:
NAV formula
NAV = Total fund assets - Total fund liabilities
NAV per unit = NAV / Number of units in issue
The detailed calculation process comprises five sequential steps:
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Asset valuation
Valuation of each portfolio position according to the valuation policy set out in the PPM/prospectus and the IFRS 13 hierarchy. Reconciliation with the depositary's positions.
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Accrued income calculation
Recognition of accrued interest, declared but not yet received dividends, bond coupons and other income pending settlement.
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Deduction of expenses
Allocation of management fees, administration fees, legal fees, audit fees, depositary fees and any other provisions (taxes, commissions).
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Adjustments
Amortisation of formation expenses, foreign exchange adjustments, tax provisions, swing pricing adjustments where applicable.
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Determination of the NAV per unit
Division of the total NAV by the exact number of units in issue after taking into account all subscriptions and redemptions for the period.
Fair value hierarchy (IFRS 13)
The valuation of the fund's assets follows the three-level hierarchy defined by IFRS 13. This hierarchy favours market-observable data and requires increased transparency for level 3 assets.
| Level | Description | Asset examples | Valuation method |
|---|---|---|---|
| Level 1 | Quoted prices in active markets for identical assets | Listed shares, ETFs, liquid government bonds | Market closing price |
| Level 2 | Observable data other than level 1 quoted prices | Corporate bonds, OTC derivatives, forward currencies | Models based on market data |
| Level 3 | Unobservable data (internal models and assumptions) | Unlisted equity stakes, real estate, private debt | Multiples, DCF, recent transactions |
Valuation of level 3 assets
The valuation of illiquid level 3 assets is one of the most complex and critical aspects of fund accounting. Commonly used methods include:
- Market multiples — Application of multiples (EV/EBITDA, P/E, EV/Revenue) derived from comparable listed companies, adjusted for an illiquidity discount (typically 10-30%) and for differences in size, geography and risk profile
- Discounted cash flow (DCF) — Projection of future cash flows discounted at a rate reflecting the specific risk of the investment (adjusted WACC)
- Recent transaction value — Use of the price of a recent transaction (funding round, partial disposal, offer received) as a starting point, with adjustment for subsequent events
- Adjusted net asset value — For holding companies and funds of funds: sum of the fair values of underlying assets, net of liabilities
- Independent valuation — Use of a specialised external valuer (RICS, IVSC) for real estate assets and complex stakes
Point of attention: The International Private Equity and Venture Capital Valuation Guidelines (IPEV Guidelines) are the market reference for valuing unlisted stakes in PE/VC funds. The FSC and institutional investors expect managers to apply these guidelines for level 3 assets.
NAV calculation frequency
| Fund type | Typical frequency | Publication timeline | Rationale |
|---|---|---|---|
| CIS Global (liquid assets) | Daily or weekly | T+1 to T+3 | CIS Global regulatory requirement + daily liquidity needs |
| CIS Professional (hedge fund) | Monthly | T+15 to T+30 | Partially illiquid assets, complex strategies |
| CIS Professional/Expert (PE/VC) | Quarterly | Q+45 to Q+60 | Level 3 assets requiring in-depth valuations |
| Closed-End Fund | Quarterly or semi-annually | Q+45 to Q+90 | No redemptions, indicative NAV for LP reporting |
Financial reporting
Annual financial statements
Mauritian funds are required to prepare audited annual financial statements compliant with IFRS. The complete set comprises:
- Statement of financial position (balance sheet) — Portfolio assets, cash, receivables; liabilities, provisions, net assets attributable to unit holders
- Statement of comprehensive income — Investment income (dividends, interest, coupons), realised and unrealised gains/losses, operating expenses
- Statement of changes in net assets — Subscriptions, redemptions, net result, distributions
- Statement of cash flows — Operating, investing and financing activity flows
- Notes to the financial statements — Accounting policies, detailed risk analysis (market, credit, liquidity), fee breakdown
- Schedule of investments — Exhaustive list of all positions with fair value, percentage of net assets, IFRS 13 level
Annual audit
The annual audit is mandatory for all FSC-licensed funds. The auditor must be independent and FSC-approved. The main firms active in Mauritius are the Big Four (Deloitte, EY, KPMG, PwC) as well as BDO, Grant Thornton and Baker Tilly. The audit covers:
- Compliance of the financial statements with IFRS standards
- Validation of asset valuations, particularly level 2 and 3 assets
- Verification of the accuracy of the NAV calculation over the financial year
- Review of the administrator's internal controls (SOC 1 / ISAE 3402 if available)
- Compliance with FSC regulatory requirements and the prospectus/PPM
Accounting risk management
Fund accounting incorporates an important risk management dimension, with controls at every stage of the process:
Valuation risk
Valuation policies documented and approved by the board, independent valuation committee, use of external valuers for complex assets, annual review of methodologies.
Operational risk
Robust internal controls with segregation of duties, daily reconciliations (positions, cash, NAV), documented NAV error correction procedures.
Currency risk
Monitoring of currency exposures in the portfolio, accounting for translation differences under IAS 21, documented hedging policies where applicable.
Liquidity risk
Regular stress testing, monitoring of the liquid assets / payable liabilities ratio, gate and side pocket management policies documented in the PPM.
Our expertise in fund accounting
Our team supports fund managers and administrators across all aspects of accounting and NAV calculation:
- Definition of valuation policies and accounting procedures compliant with IFRS and the IPEV Guidelines
- Review and validation of NAV calculations produced by the administrator
- Preparation and review of annual and interim IFRS financial statements
- Coordination with auditors and the FSC for an efficient audit process
- Advice on complex accounting matters: derivative instruments, structured products, level 3 assets, crypto-assets
- Setting up valuation committees and independent valuation review procedures
For funds requiring outsourced accounting management, discover our outsourced accounting solutions in Mauritius. In addition, funds subject to international reporting obligations must ensure FATCA/CRS compliance alongside their accounting.
Accounting expertise for your funds
Accounting rigour and NAV reliability are prerequisites for attracting demanding institutional investors. Our team helps you put in place the highest standards.