Fa Roll Forward

Roll-Forward

When to use

Use this to prove the movement of a balance across a period — total NAV, partners'/members' capital, a single investor's capital account, investment cost, an accrual, or an allowance — by walking beginning balance through every flow to the ending balance and tying the endpoint to the GL. Roll-forwards are the backbone of the capital statement, the financial-statement movement notes, and every balance-sheet reconciliation that has to show how the number changed.

Not for: proving a point balance to a source with no movement analysis (use fa-gl-recon) or striking/pricing the NAV itself (fa-nav-tieout). This proves the walk, beginning to ending.

Method

1. Define the balance and period. Name the account (fund-level or investor-level), beginning date/balance, and ending date. Beginning must equal the prior period's proven ending.
2. Enumerate the movements in economic order: capital in (subscriptions/contributions/drawdowns), capital out (redemptions/distributions/returns of capital), income, expenses, realized and unrealized P&L, fees/carry, FX, and reclasses.
3. Sign each flow. Contributions and gains increase; redemptions, distributions, expenses, and losses decrease. Decision point: a return of capital reduces the capital balance; a return on capital (income) flows through P&L — don't conflate them.
4. Compute the ending balance. Beginning + increases − decreases = ending. Recompute independently.
5. Tie the endpoint to the GL / register. Ending roll-forward balance must equal the GL account (fund-level) or the investor register (investor-level). Decision point: if it doesn't tie, a flow is missing or mis-signed — find it before you publish.
6. Cross-check the pieces. Sum of all investor accounts must equal fund-level capital; sum of class roll-forwards must equal total NAV.
7. Present and sign off. Show the walk, the tie, exceptions, and reviewer.

Example

Investor A capital account, Q2. Beginning $5,000,000. Movements: subscription 5/1 +$1,000,000; management fee −$22,500; allocated income +$18,000; allocated net gain +$310,000; incentive allocation (carry) −$60,700; redemption 6/30 −$500,000. Ending = 5,000,000 + 1,000,000 + 18,000 + 310,000 − 22,500 − 60,700 − 500,000 = $5,744,800. Ties to the investor register at $5,744,800. Cross-check: sum of all investor endings = fund capital per GL. Signed.

Pitfalls

• Beginning balance not equal to prior ending. Roll-forwards chain; a beginning that doesn't match last period's proven ending imports an error you'll never find inside this period.
• Mis-signing a flow. Distributions and redemptions reduce capital; booking a redemption as a positive flips the walk and can still coincidentally "look" plausible.
• Return of vs return on capital. A distribution that is a return of capital cuts the basis; treating it as income overstates capital and P&L.
• Investor accounts not summing to fund capital. A per-investor allocation error can leave every account slightly wrong while the total still ties — cross-check the sum.
• Ignoring equalization / carry crystallization. Series or equalization funds book performance fees at crystallization; omitting the incentive-allocation flow overstates every LP's ending balance.

Output format

Account: <fund/class/investor> | Period: <start–end>
Beginning balance: <$>  (= prior ending: Y/N)
Movements:
  + Subscriptions / contributions     <$>
  − Redemptions / distributions       <$>
  + Investment income                 <$>
  − Expenses / fees                   <$>
  ± Realized / unrealized P&L          <$>
  − Incentive allocation / carry      <$>
  ± FX / reclass / other              <$>
Ending balance: <$>  (independently recomputed: <$>)
Tie: GL / register <$>  [match: Y/N]
Cross-check: Σ investor accounts == fund capital  [Y/N]
Sign-off: <preparer / reviewer / date>

Reference

The roll-forward identity

Beginning balance + additions − reductions ± adjustments = ending balance, and the ending must equal the GL (or the register, for investor-level). This is the standard movement proof for every balance-sheet account that changes over time — capital, NAV, investment cost, accruals, prepaids, allowances, fixed assets, and debt. Auditors test the flows, not just the endpoints, because compensating errors in additions and reductions leave the endpoint correct and the account wrong.

Capital roll-forward (partners'/members' capital)

For a partnership/LLC vehicle, each partner's account walks: beginning + contributions + allocated income/gains − allocated expenses/losses − distributions − incentive allocation = ending. Allocations follow the LPA — pro-rata to capital, or via a distribution waterfall (return of capital → preferred return/hurdle → GP catch-up → carry split). The sum of all partner accounts must equal fund net assets.

NAV roll-forward (fund level)

beginning NAV + subscriptions − redemptions + income − expenses ± realized ± unrealized ± FX = ending NAV. Per-share, capital activity transacted at NAV is neutral to existing holders; the per-share walk is market P&L + income − expenses (see fa-nav-tieout for the price bridge).

Contribution/distribution mechanics

• Subscriptions/contributions: cash in, units issued at the dealing-date NAV (open-end) or a drawdown against commitment (closed-end).
• Redemptions: units cancelled at NAV, cash out; may carry gates, lock-ups, redemption fees, or holdbacks pending audit.
• Distributions: income distributions (return on capital, from P&L) vs return of capital (reduces basis); recallable distributions in PE can be re-drawn and restore unfunded commitment.
• Return of capital reduces the investor's basis and, when it exceeds basis, becomes a gain — track basis separately.

Commitment / unfunded roll-forward (closed-end funds)

For PE/credit vehicles also roll the commitment: committed − called (paid-in) = unfunded, adjusted for recallable distributions that restore unfunded. Paid-in capital and unfunded feed DPI/RVPI/TVPI and the capital-call schedule; a mis-tracked recallable distribution understates future drawdown capacity.

Equalization and series

Where a performance fee applies, equalization (via equalization credits/debits or series accounting) ensures each investor bears carry only on their own gains above their own high-water mark. The incentive-allocation flow crystallizes on the fee date (period-end, redemption, or year-end) and must appear in the roll-forward; omitting it overstates capital until the next crystallization.