Approve a VCC Fee-Accrual Override With Evidence

Open an override case without changing the ledger

Freeze the current calculation, source data, rate, base, period, currency, minimum, cap, allocation and journal reference. Record who identified the issue and whether an invoice, contract change, data correction or service event triggered it. Do not overwrite the original workbook or administrator file. Identify affected VCCs, sub-funds and classes, and separate a provisional estimate from an approved accounting entry. The case file should state the question precisely, such as an incorrect asset base, duplicate day count, missing minimum or allocation to the wrong compartment.

Read the governing fee terms

Compare the constitution where relevant, offering document, supplement, management or service agreement, side letter, board approval and provider quotation. Determine which document governs the rate, base, timing, minimum, cap, expenses, taxes and allocation. A provider invoice may apply a commercial interpretation that the fund has not accepted. Conversely, an internal model may not reflect an authorised amendment. Record conflicts and effective dates, then obtain advice before treating ambiguous wording as an accounting fact. Keep commercial renegotiation separate from correcting the accrual already governed by existing terms.

Related guidance: VCC setup cost guide

Recalculate independently

A reviewer who did not prepare the original accrual should rebuild the amount from controlled source data. Reconcile assets, commitments, transaction counts, service periods, day-count convention, currency and any agreed minimum or cap. For umbrella structures, test whether shared expenses follow the approved allocation policy and whether a class-specific term has been applied only to that class. Document rounding and partial periods. Compare the independent result with the ledger and invoice, then explain the variance in components rather than presenting only a replacement total.

Related guidance: VCC sub-fund guide

Measure NAV and investor impact

Show the adjustment by VCC, sub-fund, class and valuation point. Consider whether subscriptions, redemptions, transfers, distributions or performance-fee calculations occurred while the accrual was wrong. Determine whether the matter is an ordinary true-up, a NAV error or a potential investor correction under the fund’s policies and documents. Do not use the accounting journal to decide materiality retrospectively. Present gross and per-share effects, affected dealing populations, disclosure considerations and uncertainty to the authorised decision maker before the override is posted.

Related guidance: VCC compliance checklist

Approve and post the adjustment

The approval paper should contain the issue, governing evidence, original and corrected calculations, variance bridge, investor impact, proposed journal, payment effect, communications and remediation. Use maker-checker control and a unique case reference. Post the difference as a visible adjustment rather than deleting the original entry. If the invoice is paid, match it to the approved amount and preserve any disputed balance. Coordinate the administrator and manager so the same correction is reflected in NAV, general ledger, expense allocation and reporting without parallel versions.

Reconcile and prevent recurrence

After posting, reconcile the journal, trial balance, NAV, invoice, payment, sub-fund allocation and investor correction record where applicable. Close only when each downstream record agrees or has an owned exception. Identify whether the cause was stale assets, wrong rate setup, missing contract data, manual copying, unclear allocation, late invoice or weak review. Update the source rule and test the next cycle rather than relying on a reminder. Track repeated overrides by provider, fee type and cause so directors can see when an isolated true-up has become a control weakness.

Related guidance: VCC provider directory