Four Steps to Implement the New ILPA Templates

Authored by: Merryn Rosewall, Principal, Risk & Quality Control
Updated on: April 30, 2025

Originally published in Alternatives Watch

On Jan. 22, 2025, The Institutional Limited Partner Association (ILPA) released an Updated Reporting Template (Version 2.0) and two versions of the Performance Template as the culmination of the initiative to enhance reporting to limited partners following the vacating of the SEC's Private Fund Advisor (PFA) Rule. The main issues associated with the Updated Reporting Template concern data mapping and increased transparency around expense reporting. The new Performance Template, however, is a significant development in reporting to limited partners, not only requiring capital and subscription line of credit activity to be classified to ILPA requirements, but also necessitating decisions to be made on the adoption of recommended disclosures and calculations in addition to required disclosures and calculations, determination of the appropriate calculation methodologies and assumptions including Marketing Rule considerations, and evaluating the adequacy of existing systems and processes.

GPs must assess their existing accounting systems, internal processes, and data capture and mapping methodologies to ensure they can meet the more granular expense reporting and performance calculation obligations outlined in the updated ILPA templates. ILPA requires that the Updated Reporting Template be implemented for those funds still in their investment period during Q1 2026, or commencing operations on or after Jan. 1, 2026. The Performance Template should be implemented for funds commencing operations on or after January 1, 2026, with initial presentation required after the first four full quarters of activity.

To achieve the increased demands for transparency and performance reporting from limited partners, GPs should work closely with their finance teams and fund administrators on four key areas.

1. Evaluate Current Accounting Systems & Processes

When the New Orleans-based Fifth U.S. Circuit Court of Appeals vacated the PFA Rule, many firms put on hold accounting process development to enhance investor reporting. With the release of ILPA's new templates the exact reporting requirements have been clarified, and GPs need to assess whether their existing processes are sufficient to facilitate ILPA compliant reporting and make improvements to address any deficiencies.

This is particularly consequential for the new Performance Template, as GPs will need to evaluate their current IT capabilities to compile cashflow data in compliance with ILPAs classifications and then calculate and present the performance information in the required format, irrespective if they are applying the granular or gross-up calculation methodology. They will also need to reconcile performance figures prepared by the accounting, deal and performance/marketing teams where applicable, including both investor and investment performance, and ensure they can explain any variances.

On a more granular level they will need to make policy decisions around whether to provide both the required and recommended presentations and calculations, whether to adopt the granular versus gross-up methodology, how to treat recallable distributions and recycled investment proceeds, the identification of the aggregate limited partner population, the definition of realized/unrealized investments, and Marketing Rule requirements and the associated calculation of net investment performance.

2. Enhance Data Capture & Template Mapping

A primary driver for the new reporting templates was limited partner concern regarding the lack of transparency on the fees and expenses being charged to the funds in which they invested. GPs initially pushed back at providing granular detail, including internal chargebacks for functions such as fund administration, accounting, and tax preparation because they did not code time or expenses according to those explicit classifications. The final reporting template consolidates these services into a single line item in a new fee section that covers the work of the PE firm's internal staff, whilst also providing a more detailed breakdown of expenses to third-party vendors.

GPs will need to ensure that expenses paid and allocated are accurately captured and then mapped to the Updated Reporting Template. ILPA permits Legacy Funds, being those outside their investment period prior to 2026, to continue to report utilizing Version 1.1 of the Reporting Template released in 2016. Consequently, in addition to the Performance Template, GPs must determine whether to support both versions of the Reporting Template, or utilize the more current version only, which may necessitate evaluation and reclassification and remapping of historic data.

3. Planning for New Reporting Formats & Limited Partner Education

In a departure from the original version of the Reporting Template, ILPA removed the ability to modify the template itself, including the repurposing, re-ordering or supplementing of line items. Some optionality can be facilitated through certain fields and classifications/definitions, including partner transfers, carried interest, and various expense classifications, but wholesale changes to the template are no longer permitted. Firms that may have used "ILPA-like" templates for reporting will need to adjust their processes to ensure they are conforming with the requirements of the Updated Reporting Template for those funds commencing operations or still in their investment period in 2026.

At the same time, GPs need to prepare investors for the changes and educate them on reporting differences for current funds versus Legacy Funds. GPs should also consider how they will handle requests to provide the new templates for Legacy Funds.

GPs will also need to plan and prepare for potential future developments such as revision to the ILPA call/distribution templates, capture of NAV-line usage and application to unlevered calculations in-line with any future SEC pronouncements. Any system development will have to anticipate and accommodate future reporting changes.

4. Leverage Technology & Automation

The accurate and timely completion of ILPA's new templates requires knowledgeable accounting personnel and, crucially, technology resources. GPs will have to evaluate the adequacy of existing IT systems and determine whether to enhance or outsource. They will also have to assign responsibility for the calculation, reconciliation and reporting of numbers previously prepared by different teams. Producing and delivering both the Reporting Template and the Performance Template concurrently could test system resources.

Technology platforms and automation tools can reduce manual data entry, improve accuracy, and streamline compliance, replacing legacy manual processes and outdated data mapping structures. They can also easily remap data fields, perform recalculations with new criteria, and facilitate quicker processing of reports. Beyond ILPA's new templates, GPs increasingly see technology and automation as tools they can use to differentiate themselves to limited partners and streamline their overall operations and reporting.

ILPA has provided GPs with a reasonable window to implement these changes, with the updated Reporting and Performance Template set to take effect for funds still in their investment period as of Q1 2026, and new funds commencing operations on or after Jan. 1, 2026. GPs that use this time to align their internal processes with the new reporting standards will not only ensure compliance but also benefit from a smoother transition, minimizing operational disruption and potential investor scrutiny. By proactively addressing these challenges, GPs can demonstrate a commitment to transparency and best practices in financial reporting, strengthening trust with limited partners and positioning themselves for long-term success in an increasingly regulated and investor-focused environment.

Published on: April 30, 2025