I have become increasingly aware of how the term “audited” is often used. Several of our clients refer to their performance returns as “audited” or “unaudited.” But are they actually “audited”? In most cases, no. Clearly they’re trying to communicate that they’ve actually been reviewed internally and reconciled with the custodial records (i.e., the “official books and records”). One of our clients mentioned that they use the term because that’s what their custodian uses. Regardless, confusion and misinterpretation can arise from the use of such a term.
Perhaps “reconciled” doesn’t convey the same meaning that “audited” does, but it’s probably more accurate. But if you want to continue to use “audited, then it probably would be a good idea to explain what you mean by it, so that there is no misunderstanding. Especially in light of the Bernie Madoff scandal.