Manager Due Diligence Workpapers: From Claim to Evidence
A due-diligence workpaper records the claim, supporting evidence, unresolved exception and decision owner. It should let another reviewer reconstruct why an issue was cleared, escalated or left open.
A completed valuation-review workpaper
Use this record structure to turn a manager assertion into a reviewable decision. The entries below belong to the original case on this page.
| Workpaper field | Example entry |
|---|---|
| Issue / assertion | VAL-01: the manager says every illiquid mark receives independent quarterly review. |
| Evidence inspected | Administrator scope: position reconciliation; valuation work excluded. Committee minutes not supplied. |
| Test and observation | Compare the claimed control with the service scope. The supplied scope does not support the claim. |
| Risk implication | Material pricing overrides may lack independent challenge. The review remains unverified. |
| Follow-up evidence | Reviewer identity, valuation policy, recent minutes and pricing-override log. |
| Owner / due point | Assigned operational-diligence reviewer; complete before investment approval. |
| Disposition / closure | Open. Close only after evidence addresses the concern and the authorized reviewer records the conclusion. |
Original teaching workpaper. AIMA supplies broader diligence context; this is not an AIMA questionnaire or proof of misconduct.
Original worked case
An independent valuation claim needs a record
Given: A manager says all illiquid marks are independently reviewed each quarter. The administrator reconciles positions but excludes valuation work; no valuation-committee minutes are supplied.
01 Evidence conflict
The administrator’s scope does not substantiate valuation review.
02 Follow-up request
Obtain reviewer identity, valuation policy, recent minutes and override records.
03 Disposition
Keep the issue open and escalate before approval; specify the evidence needed to clear it.
Answer and interpretation
The workpaper should say “independent review unverified,” not allege fraud or mark the control effective without support.
Change one assumption
If minutes arrive, inspect whether challenge actually occurred and whether material pricing overrides were resolved, rather than checking only that a document exists.
Independent teaching example with the stated assumptions. Not an official exam question, marking key or observed market trend.
The key decisions, at a glance
| Concept | What to do | Watch for |
|---|---|---|
| Claim | Record exactly what the manager says is controlled. | “Robust operations” is not a testable assertion. |
| Evidence | Identify documents, dates, scope and independent corroboration. | A marketing statement is not independent verification. |
| Exception | Describe the gap, its materiality and remaining uncertainty. | Missing evidence is not the same as a confirmed violation. |
| Disposition | Assign an owner, deadline and condition for reconsideration. | A checklist tick cannot replace an unresolved decision. |
1. Claim
Record exactly what the manager says is controlled.
Watch for: “Robust operations” is not a testable assertion.
2. Evidence
Identify documents, dates, scope and independent corroboration.
Watch for: A marketing statement is not independent verification.
3. Exception
Describe the gap, its materiality and remaining uncertainty.
Watch for: Missing evidence is not the same as a confirmed violation.
4. Disposition
Assign an owner, deadline and condition for reconsideration.
Watch for: A checklist tick cannot replace an unresolved decision.
Understand the method
Part 1
Make the claim and test reproducible
A workpaper records a specific claim and how it was tested. Include the manager, subject, period, preparer, reviewer, evidence reference, procedure, result and decision consequence. A reviewer should be able to follow the work without relying on an undocumented conversation. “Reviewed and satisfactory” is not enough to establish what was reviewed or why it was satisfactory.
Use a narrow claim, such as “payments above the stated threshold require two independent approvals,” rather than “operations are strong.” Then define the evidence needed to test that claim. A policy may establish intended design, while a sample of actual payment records tests operation. Record the sample period and limits so the conclusion does not imply broader coverage than the work supports.
Part 2
Separate manager assertions from independent corroboration
An interview gives useful context but is not the same as independent confirmation. A spreadsheet supplied by the manager may need reconciliation to administrator or custodian records. A service-provider report may cover only a specified entity, period and control scope. Identify who produced each item, when it was produced and whether it directly supports the claim.
Evidence can conflict. If reported NAV differs from an independent statement, reconcile the date, scope, fees and pending transactions before calling it an error. If the difference remains unexplained, record the exception and its potential consequence. Do not overwrite contradictory evidence with the latest verbal assurance; preserve the reasoning and resolution trail.
Part 3
Classify exceptions by decision consequence
Some findings request clarification, some require a remedy before funding, and some make the manager unacceptable under the mandate. Use these categories deliberately. A missing document is an evidence gap; a verified control failure is a different finding. State the exposure, materiality and uncertainty rather than inflating every exception to the same severity.
Assign an action owner, due date and closure test. For example, a cash-control issue might require verified role separation plus evidence that the revised process operated on subsequent transactions. Receiving an updated policy alone may not satisfy that test. If an authorized reviewer accepts residual risk, document the rationale, limit and review trigger.
Part 4
Summarize the evidence without losing the unresolved issues
The committee summary should trace each material recommendation back to its workpaper. Highlight unresolved items, their effect on the investment decision and the proposed conditions. Avoid averaging a critical operational issue into a composite score where it becomes invisible. Decision-makers need to know what prevents funding and what can be monitored after funding.
Maintain version control as evidence arrives. Record which conclusion changed, what new evidence caused the change and who reviewed it. Reopen the workpaper when the underlying claim changes, such as a new custodian, different approval rights or a revised valuation process. A completed onboarding file does not prove that controls remain effective indefinitely.
Copyable workpaper fields and completion criteria
Claim / period
- Example entry
- Dual authorization operated during Q2
- Completion test
- Specific and time-bounded
Evidence / procedure
- Example entry
- Policy plus sampled payment logs
- Completion test
- Source, sample and test are reproducible
Exception
- Example entry
- One payment lacks a second approver
- Completion test
- Fact separated from possible consequence
Disposition
- Example entry
- Defer funding pending verified remedy
- Completion test
- Decision owner and rationale recorded
Closure
- Example entry
- Independent review of changed access and subsequent logs
- Completion test
- Evidence satisfies the original condition
More worked practice
Original teaching cases. Use the stated assumptions; these are not official exam questions or marking keys.
Two findings require different follow-up
Given: Workpaper A finds a $0.4m NAV difference on a $100m fund. Workpaper B confirms that the same employee can initiate and approve payments. No reconciliation has yet been completed.
- 1For A, obtain matching-date administrator records and reconcile fees, flows and valuation adjustments before deciding whether the difference is an error.
- 2For B, document the verified segregation weakness, its exposure and the required remedy or exception authority.
- 3Keep both open with separate owners and closure tests; do not close B because A is numerically small.
Interpretation: Evidence gaps and verified control weaknesses need distinct dispositions. The workpaper should preserve that distinction and make the funding decision traceable.
Check your understanding
Answer first, then open the explanation. These checks are original practice and do not generate an exam score.
1. Does a signed policy prove a control operated?
No. It supports design. Operating evidence is needed for a conclusion about actual performance.
2. What should happen when new evidence resolves an exception?
Record the evidence, revised conclusion, reviewer and closure date while preserving the previous finding and reasoning.
3. What makes a workpaper reusable?
Stable fields and a reproducible method, with case-specific evidence and conclusions. Reusing a prior “pass” without retesting is not reuse of a sound method.
Common questions
Does an independent administrator verify every mark?
Not necessarily. Service scope varies. Read the agreement and reports to identify what the administrator actually performs.
When should an issue be closed?
When the documented evidence addresses the defined concern and the authorized reviewer records the conclusion. A response alone is not enough.
Sources and scope
The sources below establish their stated framework or subject context. Calculations and cases are our own teaching material; these sources do not endorse them or establish complete exam coverage.
- AIMA: Investment manager due diligence questionnaires
Industry due diligence framework. Our workpapers are original examples, not reproduced AIMA templates.
- CAIA curriculum and study tools
Official curriculum, companions and required readings for the exam year. The current page now links to 2027 materials.
- ILPA: Principles and best practices
Alignment, governance and transparency in private fund relationships. Our fee and transaction cases use independently stated terms.
- CAIA 2027 curriculum overview
Published topic categories and Emerging Topics reading titles for 2027. The overview is not the complete learning-objective list.
By MiloPrep editorial team. Updated 10 October 2026. Independent study notes, not affiliated with or endorsed by CAIA Association. How we prepare our content.
Notes
- * Study scope: Selected study concepts, not complete curriculum coverage. Match your sitting to the official exam-year materials; CAIA’s current resource page now links to 2027. ↩ Return to content