RT Journal Article SR Electronic T1 The Accuracy of Hedge Fund Returns JF The Journal of Portfolio Management FD Institutional Investor Journals SP 111 OP 122 DO 10.3905/jpm.2003.319889 VO 29 IS 3 A1 Bing Liang YR 2003 UL https://pm-research.com/content/29/3/111.abstract AB How can the same hedge fund report different performance measures in different places? The answer is that auditing plays an important role in explaining the differences. Although the majority of hedge funds state that they have auditors, a significant proportion of these funds are not effectively audited. Funds that have gone out of business have been particularly less effectively audited than funds that have survived, and audited funds have much smaller return discrepancies than non-audited funds. There is a significantly positive correlation between the fund size and the auditing variable. Large funds tend to be audited and small funds not. Funds listed on exchanges, funds of funds, funds with broad investor representation, funds open to the public, funds invested in a single industrial sector, and unlevered funds have smaller return discrepancies than other funds. These findings suggest a compelling need for hedge fund auditing.