A recent report from Family Office Exchange, a global membership organization of single family offices and their advisors, revealed that accounting and financial reporting consume nearly one-third (32 percent) of the average family office's time.

The study also found that eight in 10 family offices supply their clients with quarterly financial reports, while more than half (51 percent) provide consolidated annual reports. Approximately two-thirds (67 percent) still generate hard-copy reports, even in an age of accounting software and myriad other technological advances—email, cloud computing, mobile devices such as smartphones and tablets, etc.

"Effective financial reporting is a matter of communication," said Family Office Exchange CEO Sara Hamilton in a statement. "The challenge is to show how the numbers are relevant to the client's goals in a manner that accounts for their learning style, preference for information and financial literacy."

Family offices are private companies that manage investments and trusts for single families, using the families' own wealth as their financial capital. Accounting consultants who work with family members to set and achieve individualized goals must take several key factors into account, including client objectives, preferred method of delivery, timing and audience sophistication. Additionally, the need to maintain accounting compliance should not be overlooked, as penalties for both willful and unintended infractions can quickly get costly—not to mention the time it takes to sort everything out.

Exemptions for family offices
Last year, the Securities and Exchange Commission signed off on a separate set of rules pertaining to family offices that exempted them from the definition of an investment adviser under the Investment Advisers Act of 1940. The exemption was proposed in anticipation of the Dodd-Frank Wall Street Reform and Consumer Protection Act's repeal of the private adviser exemption from registration, and was promulgated by the SEC in June 2011.

Whenever accounting legislation or other regulations are introduced or changed, it is important that entities take the time to keep abreast of the developments. Integrating accounting software into operations can automate much of the process, freeing up professionals to attend to other tasks without having to worry about whether compliance standards are being met.

Read the press release here and access the report here.