auditing..

Discussion in 'Professional Trading' started by ptunic, Mar 11, 2004.

  1. ptunic

    ptunic

    I'm figuring I'll eventually need audited statements of my trading history before I can raise money, etc.

    I'm in the middle of opening a new account with interactivebrokers.com and just asked them what the fee is for getting paper statements-- and they don't support that at all. They say I have to print it out myself. I'm not sure that will square with an auditor. Maybe if I log in right in front of him/her and let them print it out they will accept it as true-- I don't know.

    I'm honestly debating whether I need to switch to a different brokerage firm, though other than this issue IB meets my requirements for now.

    Anyone have experience with this?

    Thanks,
    -Taric
     
  2. ptunic

    ptunic

    In case this helps anyone, I found some more information here.. IB will let you pay a fee (not sure how much) to do a special printout and direct mail of your account balance / trading history for auditing purposes.

    However, Tradestation has a procedure for direct trading history export to auditing firms, which for someone like a day trader probably saves a ton of money since some of the big auditors can use automated software instead of manually entering in every single trade.

    I think I'll stick with IB for the time being though..

    -Taric
     
  3. Aaron

    Aaron

    What leads you to think an auditor would ever need to type in a list of all trades? I don't think that is the case. An auditor (at least the Schindler Fund auditor) is interested in 1) beginning balance, 2) ending balance, and 3) and in-flows/out-flows. Whether the money you made in the month was due to 1 trade or 10,000, they'll all be lumped together as a single line on your income statement.

    Even for a Sch. D, it's unlikely that your tax accountant would type in all of your trades. And an auditor will test and verify your financial statements, not recreate your trading history.
     
  4. ptunic

    ptunic

    Aaron,

    Ahh-- thanks for the info-- that helps a lot. I just assumed they would need all the trades for some reason like calculating maximum number of days in drawdown or that kind of thing (though I guess most of the hedge fund databases aren't nearly that detailed). Also I don't know if this is a separate issue or not but in general if the investors don't mind monthly results as opposed to daily that saves a lot of effort as well.

    But that puts me at ease a lot more, besides saving a lot of time, it also makes it easier to protect your strategy from reverse-engineering.. whew.

    By the way how I originally found ET was I was reading your interview on the site (sort of randomly from Google) and found it interesting-- great stuff! Pretty inspiring!

    -Taric