Introduction
One of the most common frustrations among Alternative Investment Funds (AIFs) is the perception that audit readiness requires heavy systems, complex tools, and enterprise-style documentation. In reality, many AIFs already perform most of the required IT and cybersecurity activities, patching systems, managing access, working with vendors, and backing up data, but fail audits and inspections simply because evidence is scattered, inconsistent, or informal.
Under increasing scrutiny from regulators, trustees, auditors, and Limited Partners, AIFs are expected to demonstrate not only that controls exist, but that they are consistently executed, reviewed, and governed. The Securities and Exchange Board of India does not mandate sophisticated tooling or enterprise-grade platforms. Instead, it evaluates whether fund managers can prove due care, accountability, and foresight through clear and reliable evidence.
This article explains how AIFs can build audit requirement-ready IT evidence in a practical, proportionate way without over-engineering systems, hiring large IT teams, or adopting unnecessary tools. The focus is on structure, discipline, and alignment with how audits and inspections actually work.
Why AIFs Struggle With IT Evidence (Not IT Controls)
In most AIFs, the core issue is not absence of controls, but absence of proof. Common realities include:
- Patching is done, but reports are not retained
- Access is managed, but approvals are informal
- Vendors are trusted, but oversight is undocumented
- Incidents are handled, but lessons are not recorded
Auditors and inspectors cannot validate intent or verbal assurance. If evidence cannot be produced quickly and clearly, controls are treated as missing.
What “Audit-Ready IT Evidence” Really Means
Audit-ready evidence does not mean:
- Complex dashboards
- Continuous audits
- Heavy GRC platforms
It means:
- Evidence exists when asked
- Evidence is consistent with policies
- Evidence shows execution over time
- Evidence demonstrates oversight and decisions
In simple terms, audit-ready means you can answer “show me” questions confidently and promptly.
Understand the Auditor and SEBI Lens First
Before building evidence, inspection of AIF cybersecurity must understand how auditors and regulators think. They typically assess:
- Governance and accountability
- Control design (what should happen)
- Control operation (what actually happens)
- Review and oversight
- Remediation and learning
Evidence should therefore answer five questions:
- Who owns the control?
- What is supposed to happen?
- Did it actually happen?
- Was it reviewed?
- What was done when issues arose?
Start With a Clear Evidence Map (Not Tools)
The most effective way to avoid over-engineering is to create an evidence map before adopting any systems.
An evidence map answers:
- What controls matter most for AIFs?
- What evidence already exists?
- Where is it generated?
- Who owns it?
Typical evidence areas include:
- Patch management
- User access and identity
- Endpoint security
- Vendor oversight
- Incident response
- Backup and recovery
- Governance reviews
Once this map exists, gaps become obvious and manageable.
Patch Management Evidence: Keep It Simple and Consistent
Auditors do not expect real-time patch dashboards. They expect:
- Defined patch timelines
- Proof that patches were applied
- Visibility into exceptions
Practical evidence includes:
- Monthly or quarterly patch reports
- Endpoint compliance summaries
- Exception logs with justification
Automation helps, but consistency matters more than sophistication.
Access Management Evidence Without Heavy IAM Tools
For most AIFs, access evidence can be built without complex IAM platforms.
Auditors typically look for:
- User lists
- Role or access descriptions
- Periodic access reviews
- Joiner, mover, leaver discipline
Simple, audit-ready evidence includes:
- Quarterly user access exports
- Review sign-offs by email or meeting minutes
- Access change tickets or approvals
What matters is that reviews are periodic, documented, and acted upon.
Endpoint and Device Evidence: Focus on Hygiene
Endpoint controls are a common inspection focus because they are high-risk and measurable.
Audit-ready evidence can include:
- Device inventory
- Patch and health status
- Encryption confirmation
- Security agent deployment reports
Most of this evidence already exists in RMM services or endpoint tools. It simply needs to be saved and organised periodically.
Vendor Risk Evidence Without Bureaucracy
Vendor oversight often fails audits because it is assumed rather than documented.
Auditors expect to see:
- Vendor inventory
- Identification of critical vendors
- Basic due diligence or assurance
- Contractual security obligations
Practical evidence includes:
- Vendor list with risk classification
- Due diligence checklists
- Contract excerpts
- Annual vendor review notes
This can be managed using simple spreadsheets and folders if done consistently.
Incident Response Evidence: Even When Nothing Happens
A common misconception is that incident evidence only exists if incidents occur.
Auditors also look for:
- Incident response plans
- Tabletop or review exercises
- Logs showing no incidents
- Evidence of readiness
Maintaining:
- A simple incident register
- A tested response plan
- Review notes
demonstrates preparedness, not weakness.
Backup and Recovery Evidence That Auditors Trust
Backups alone are not sufficient. Auditors want evidence that backups work.
Audit-ready evidence includes:
- Backup schedules and scope
- Restore test records
- RTO and RPO definitions
One properly documented restore test per year often satisfies inspection expectations.
Governance Evidence: The Hidden Differentiator
Many AIFs fail audits not on controls, but on governance.
Strong governance evidence includes:
- IT and cyber policies approved by management
- Periodic risk reviews
- Trustee or leadership updates
- Remediation tracking
Meeting minutes, review decks, and sign-offs often matter more than tools.
Avoid These Common Over-Engineering Mistakes
AIFs often overcomplicate evidence by:
- Buying large GRC tools prematurely
- Tracking too many metrics
- Creating documentation no one uses
- Treating audits as annual events
Over-engineering increases effort without improving outcomes.
Design Evidence for Humans, Not Just Auditors
Audit-ready evidence should be:
- Easy to explain
- Easy to retrieve
- Easy to understand
If fund leadership cannot explain evidence clearly, auditors and inspectors will struggle too.
Standardise Evidence Collection Cadence
The simplest way to stay audit-ready is to define a cadence:
- Monthly: patch and endpoint summaries
- Quarterly: access reviews and vendor checks
- Annual: incident simulations and DR tests
Routine collection prevents last-minute scrambling.
Centralise Evidence, but Keep It Lightweight
AIFs do not need complex repositories. A simple structure works:
- One central folder or compliance workspace
- Clear naming conventions
- Version control
Consistency beats sophistication.
Tie Evidence Back to Fiduciary Responsibility
SEBI and LPs view IT evidence through a fiduciary lens:
- Were risks foreseeable?
- Were controls reasonable?
- Was oversight demonstrated?
Evidence should tell a story of care, judgment, and accountability, not just technical activity.
How Infodot Helps AIFs Build Audit-Ready Evidence Without Overkill
Infodot Technology works with AIFs to design proportionate, SEBI-aligned evidence frameworks that fit lean operating models.
Infodot helps by:
- Mapping controls to required evidence
- Automating evidence capture where practical
- Creating simple, repeatable reporting templates
- Aligning MSP outputs to audit needs
- Preparing inspection- and trustee-ready evidence packs
This allows AIFs to remain audit-ready continuously without building heavy systems or processes.
Conclusion
Building audit-ready IT evidence for AIFs does not require enterprise platforms or complex architectures. It requires clarity, consistency, and discipline. Most AIFs already perform the necessary activities; they simply need to capture and organise proof in a way that aligns with auditor and regulator expectations.
By focusing on what evidence is needed, why it matters, and how it will be reviewed, AIFs can meet SEBI scrutiny confidently while preserving the lean, agile operating model that makes them successful.
Audit readiness is not about over-engineering systems. It is about engineering trust.
FAQs
What is audit-ready IT evidence?
Proof that IT and cybersecurity controls exist, operate consistently, and are reviewed with clear accountability and oversight.
Does SEBI mandate specific evidence tools?
No, SEBI focuses on outcomes and evidence, not on specific platforms or technologies.
Why do AIFs fail IT audits despite controls?
Because execution is undocumented, inconsistent, or not aligned to stated policies.
Is documentation more important than tools?
Yes, without documentation, tools and controls cannot be validated during audits.
Do small AIFs need the same evidence?
Yes, proportionate evidence is required regardless of fund size.
How often should evidence be collected?
Evidence should be collected periodically, not just before audits.
Are spreadsheets acceptable for evidence?
Yes, if structured, consistent, and maintained properly.
Is patch evidence mandatory?
Yes, patching is a common audit and inspection focus area.
Do auditors expect real-time dashboards?
No, they expect periodic, reliable reports and reviews.
Is access review evidence required?
Yes, access reviews demonstrate control over sensitive systems and data.
What happens if evidence is missing?
Controls are treated as ineffective or non-existent during audits.
Are vendor reviews part of IT evidence?
Yes, vendor oversight is a key governance expectation.
Does incident response require evidence without incidents?
Yes, preparedness evidence matters even if no incidents occurred.
Are backups alone sufficient?
No, restore testing evidence is required to prove recoverability.
Is governance evidence important?
Yes, governance demonstrates fiduciary oversight and accountability.
Do trustees review IT evidence?
Trustees increasingly expect summaries and assurance evidence.
Can MSP reports serve as evidence?
Yes, if aligned to audit and governance requirements.
Is over-documentation a risk?
Yes, excessive documentation reduces usability and discipline.
What is the simplest way to stay audit-ready?
Define evidence cadence and collect reports routinely.
Can emails be used as evidence?
Yes, approvals and reviews via email can be valid if organised.
Is continuous auditing required?
No, continuous governance is expected, not continuous audits.
Does SEBI expect zero audit findings?
No, SEBI expects awareness, remediation, and improvement.
Are policies alone sufficient evidence?
No, execution evidence is required.
Is evidence required for cloud systems?
Yes, cloud access and controls must be demonstrable.
Do LPs review IT evidence too?
Yes, LP due diligence increasingly overlaps with SEBI expectations.
Can audit readiness be outsourced?
Execution can be supported, but ownership remains with fund management.
What evidence do inspectors ask first?
Patch status, access controls, governance, and incident readiness are common starting points.
Is automation necessary for evidence?
Helpful, but not mandatory. Consistency matters more.
How long should evidence be retained?
Typically at least the previous audit cycle, often longer.
Is manual evidence collection risky?
Only if inconsistent or poorly controlled.
Do auditors accept screenshots?
Yes, if clearly dated, labelled, and contextualised.
Can evidence be improved incrementally?
Yes, maturity over time is viewed positively.
Is IT evidence a one-time exercise?
No, it must be maintained continuously.
How does Infodot simplify audit readiness?
By aligning controls, evidence, reporting, and governance without heavy systems.
What is the biggest mistake AIFs make?
Waiting until audits to assemble evidence instead of managing it continuously.
