ParetoAlpha
The Controls Check

The letter, before the call.

What a family signs before any access, as it is signed. The date, the names and the person who introduced the family are filled in for each engagement.

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ParetoAlpha, Inc. · 2121 Avenue of the Stars, Suite 800, Los Angeles, California 90067

[Date]

[Name], [Title] [Family office]

The Controls Check

  1. What I will do. Over five business days I, J.R. Barbieri, will read the documents in clause 3 and test, against them, four things: who can move the family's money and with how many approvals; whether every account and entity appears in what is reported; where reporting is rebuilt by hand; and which recurring tasks are known to one person only. The finding on who can move money comes within 48 hours of read access to the bank mandates, to the principal and the CFO together. On the fifth day you receive a written finding, each observation beside the document it rests on, and an hour together on it.
  2. The fee. $3,500, invoiced on signature and paid by wire before day one. No other fee, expense or charge.
  3. What I need. Read-only access, in your own systems, to: each bank's signature mandate and online-banking entitlement report; the payments policy; the entity register; one month of bank and custodian statements; the latest consolidated report and the workbooks behind it; and an hour with each person who runs a recurring task. The five business days, and clause 5, start on the day all of this access is given.
  4. Your information. I work in your systems. Your office creates the read-only logins, logs their use and revokes them on day five. I will never hold a credential that can initiate, approve or change a payment. I keep no copy of your documents. The written finding is the only document that leaves your office; my copy of it is kept for four years under the NDA, then destroyed. The NDA attached governs everything I see.
  5. The refund. If the bank's own documents show that no one can move your money alone, and every account appears in your reports, you get every dollar back. If the finding is not delivered in five business days, the same, unless I have stopped the work under clause 9. "Alone" means releasing a payment without a second person's approval, as each bank's own mandate and entitlement report show it. An account is in your reports when it appears in the latest consolidated report. A refund is returned to the account the fee came from within ten business days of the finding, or of the fifth business day if the finding is late.
  6. What this is not. It prepares no tax return, gives no tax, legal or investment advice, and changes nothing in any system. It is not an attest engagement and is not performed by a licensed certified public accountant. It is a reading of the documents you provide, as of the days it is done, and does not assure that no other gap exists.
  7. Liability and insurance. ParetoAlpha's total liability under this letter is limited to the fee paid. ParetoAlpha carries professional liability insurance of $2 million per claim and $2 million in the aggregate, and cyber liability insurance of $1 million; the certificate is attached.
  8. After the check. Nothing follows unless you ask for it.
  9. Who sees the finding, and suspected fraud. The draft goes to the principal and the CFO together on day four. The CFO has one business day to correct facts, in a reply attached to the finding; nothing is removed. The final finding goes to both on day five. If something looks like fraud, I stop the work and tell the principal in writing the same day. If money appears to be in transit, I tell the principal at once, so the bank can be called. What happens next is the family's decision. If the principal appears to be involved, I stop the work, return the fee in full, and step away. Nothing in this letter limits a disclosure the law requires.
  10. Introductions. ParetoAlpha pays no referral fee and takes none. [ ] The family agrees that [name], who introduced it, may be told that the check is done, and nothing more.
  11. Language and law. A Spanish translation of this letter is given on request; the English text governs. The law of California governs this letter; any dispute is heard in Los Angeles County.

For ParetoAlpha, Inc.: J.R. Barbieri, Founder ____________ Date ______

For [Family office]: [Name], [Title] ____________ Date ______

The non-disclosure agreement (one-way)

  1. Confidential information is everything ParetoAlpha sees or is told in the course of the Controls Check, including the existence of the engagement and the family's identity.
  2. ParetoAlpha will use it only to perform the check, disclose it to no one, and copy, download or retain none of it, except its own copy of the signed letter, this agreement, its invoice and the written finding. It keeps the finding for four years and then destroys it, and confirms in writing at the end of the engagement that it holds nothing else.
  3. The family's name will not appear on ParetoAlpha's website, in its marketing or in any example, and no finding will be described in a way that identifies the family, without the family's written consent.
  4. Exceptions: information already public, or disclosure the law requires, with notice to the family where the law permits.
  5. Term: five years; for the family's identity, without end.

The signed engagement letter governs. Questions about any clause come to me before anything is signed. The Controls Check.