IVCA Feature: New Member Profile of Deloitte

June 5, 2024

As the new member participants in the Illinois Venture Capital Association (IVCA) keeps expanding, the current membership are given new opportunities for networking, in addition to optimizing support and partnerships, which leads to guidance and new ideas for Venture Capital, Private Equity and support industries.

The latest new member is Deloitte, a familiar multi-function firm that includes Audit & Assurance, Consulting, Regulatory, Risk & Financial, Advisory and Tax Services, and all programs associated with those services.

The following is a Q&A profile with Deloitte, which explores the firm’s background and their expectations for interacting with the IVCA.

New Member: Deloitte
Representative: Maureen C. Lagan, Audit & Assurance Managing Director

IVCA: What is a brief history of and background on Deloitte?

Deloitte.: Deloitte’s history stretches back to 1849, when the Great Western Railway turned to William Welch Deloitte for accounting services – and since that time, clients have relied on Deloitte for solutions to their ever-changing needs through our industry-leading audit, consulting, tax and advisory services.

Globally, our network of member firms spans more than 150 countries and territories and comprises more than 330,000 people; and in the US, our 175,000+ colleagues serve more than 90% of the Fortune 500, and more than 6,000 private and middle market companies.

IVCA: Why did the firm decide to join the Illinois Venture Capital Association?

Deloitte.: We’re joining the IVCA because of the importance of this community to us, and our desire to collaborate, learn from, and share insights with its members. The opportunities to build and help foster relationships within the VC and PE community, and to support positive developments within the industry, are of high importance to our firm.

IVCA: There is a soup-to-nuts range of services that Deloitte provides … what services specifically do you think the Venture Capital and Private Equity industries would most utilize and why?

Deloitte: One of Deloitte’s greatest strengths is our comprehensive suite of services – our ability to bring expertise and experience to a client’s full suite of needs and opportunities. Specific to the Venture Capital and Private Equity industries, some of our top services include the Financial Statement Audit … whether for the VC or PE firm or their portfolio companies, Deloitte delivers right-sized audits that are both risk-based and technologically-enabled, and lead the industry in …

Quality, with the lowest lowest percentage of audits of the Big Four included in PCAOB inspection report Part I.A over a five-year period.

Innovation, we’re the five-time winner of International Accounting Bulletin’s Digital Innovation of the Year award. AND …

Marketplace Success, we’re the most public company audit wins among the Big Four over the past 10 years, and the only firm with more clients gained than lost.

IVCA: What about your tax services?

Deloitte: As national and global issues and regulations fundamentally shift how the tax function operates, tax leaders have become strategic advisors. Deloitte can share its experience, technology, and innovative ideas to help your organization become more agile, and address complexity with confidence.

We offer clients a broad range of fully integrated tax services, including Business Tax, International Tax, Transfer Pricing Tax, Indirect Tax, Multistate Tax, Washington National Tax, Tax Management Consulting, Global Employer Services, M&A Tax, Global Investment and Innovation Incentives, and Private Wealth Tax Services.

For VC and PE funds specifically, some of the issues we routinely advise on are Fund Structuring, Investment Structures and impact to the funds, Allocations pursuant to the partnership agreement, Evaluating the state tax profile, and Analysis of the U.S. withholding process on foreign investors.

IVCA: And of course it all began with Accounting and Reporting Advisory Services.

Deloitte: Deloitte offers a full spectrum of accounting and reporting, risk and controls, business transaction, and transformation services.

Specific to the VC and PE industry, top services include …

Rapid Finance Diagnostic, which is an Evaluation of the finance organization focusing on people, processes, and technology and audit/reporting readiness.

Governance, Risk, & Controls Diagnostic, concerning evaluation of various areas of risk and the related internal controls within each organization, focused on finding actionable areas of improvement for controls to prevent misstatements and fraud within each Portco.

FP&A Rapid Diagnostic is the assessment of FP&A maturity through the FP&A Insights Survey; provides a realistic view of current-state pain points and improvement opportunities. Portco-specific results are summarized, along with improvement initiatives.

IPO Readiness Diagnostic is a tool for self-assessment which supplies valuable insights into the readiness of the organization to go public and operate as a public company across all areas of the organization. A detailed gap analysis and roadmap is provided showing current state, ideal future state, steps necessary to close the gap, and the timing/level of effort to close the gap.

ESG Diagnostic is a brief survey to understand the potential applicability of certain ESG regulations and the maturity of the Portco from an ESG perspective, with a specific focus on environmental data gathering and reporting.

Audit Readiness involves helping clients prepare for a first-time audit by identifying areas of potential challenge, sharing leading practices, and providing insights about key audit issues. Services range from Audit Readiness Labs and Gap Assessments to more direct Audit* and Financial Statement Preparation* assistance. [NOTE on (*) … for non attest clients only].

IPO Readiness is Deloitte specialists provide advice and recommendations before, during, and after the IPO, through services ranging from the development of a personalized IPO readiness assessment, to PMO services, to technical accounting and SEC reporting services, to helping clients navigate the IPO and operate as a public company.

IVCA: That’s an incredible range … you mentioned you’re sending some additional information?

Deloitte: Yes, our IPO Readiness Services are described in detail here … https://www2.deloitte.com/us/en/pages/audit/solutions/ipo-readiness.html

Further information regarding Deloitte’s Services for Private Equity Investors can be found here: … https://www2.deloitte.com/us/en/pages/audit/solutions/accounting-advisory-private-equity.html

Further information about Deloitte’s Services to Emerging Growth Companies is available here … https://www2.deloitte.com/us/en/pages/audit/solutions/startup-audit-services.html

IVCA: What characteristics define company culture based on the vast reach of Deloitte’s internationalism?

Deloitte: As the world’s largest professional services firm, Deloitte is a truly diverse and far-reaching organization. However, despite that scope, all of us are united in our focus … we care about making an impact that truly matters, for our people, clients, and society. Together, we foster a culture in which our people feel empowered to drive positive change every day.

IVCA: What are some of the ‘best practices’ associated with your culture?

Deloitte: We are also guided by values that help us achieve our shared goal. We lead the way as the leading professional services organization in the world – we serve the public interest by advancing business, reducing risk, and inspiring confidence. We develop leaders who thrive on working together to tackle the toughest challenges, preparing clients to succeed both now and in the future.

We serve with integrity because we believe in doing the right thing – always. That is the guiding force behind every decision we make and every action we take. In our marketplace, nothing is more important than our reputation, and so, we commit to conducting business with honesty, distinctive quality, and high levels of professional behavior.

IVCA: What about the practices of the within-the-firm culture?

Deloitte: We do take care of each other … at the heart of Deloitte culture is the understanding that we are all in this together. We place a premium on respect, fairness, and trust – working together to achieve our aspirations. We recognize potential, value varied skill sets and points of view, reward performance, and provide opportunities for growth and leadership.

And finally, We foster inclusion, and we are committed to attracting, retaining, and advancing a diverse workforce, while fostering an inclusive culture where everyone feels a sense of belonging and can grow. We are committed to enable growth, achievement, and pride for all.

IVCA: In your expertise in audit and assurance, what questions do clients have the most when they seek this service, and how do you work with them to answer those questions?

Deloitte: For Venture Capital and Private Equity Funds, questions often focus on the following common audit issues … How can you reduce the burden on my team to provide audit support? How can you improve project management – reducing status confusion and eliminating duplicate requests? How can you provide more value through insights to my organization? How can you reduce time crunches and fire drills before filings? How can you create more efficiency within the audit process? AND … How can you lower my fees – and better control those fees going forward?

IVCA: How do you answer those questions?

Deloitte: Several ways, including …

Employing a Risk Assessment-Based Audit Approach, which uses advanced analytics to provide assurance in certain areas, and includes getting management’s view of where you see risk in the organization. This, in turn, reduces the burden on the fund and creates efficiency and improves project management within the audit.

Which means less time answering questions and providing support for lower-risk items, with less chance of duplicating efforts, thanks to better coordination with management and internal audit).

We Optimize our Approach to Audit Timing by planning for and effectively using “the interim” for planning and risk assessment procedures, control walkthroughs, investment transaction testing, capital testing, and preliminary valuation procedures, we are able to reduce the stress on the fund and minimize any time crunch around the filing

And thirdly we are Leveraging industry Leading Technology. Our Deloitte Omnia platform retrieves data securely and seamlessly, enables real-time progress reports and requests, streamlines confirmations and enhances reporting, and identifies data trends and outliers.

And our award-winning DNAV valuation technology enables us to often price 100% of Level 1 and Level 2 securities, which cuts significant time out of the investment valuation audit process and allows us to focus on other areas of the audit and financial statements. It also helps provide real-time benefits during the audit, along with deep and impactful findings that could help inform how the fund approaches future challenges. All of this helps us to manage audit fees and provide greater insights via our services.

IVCA: What about Emerging Growth Companies seeking their first audit?

Deloitte: Yes, the questions are different, usually … How should they organize their accounting records? How can they engage an employee or professional who understands the process? What accounting complexities might they face? How much time and effort will the audit take? Who should own the audit’s results? AND … What are the indicators of an effective first-time audit?

IVCA: All right then, what do you offer to answer these questions?

Deloitte: To support companies in answering these and other questions, Deloitte offers Audit Readiness Services, which help companies prepare for a first financial statement audit by one, brainstorming audit areas of potential challenge, two sharing leading practices for a successful financial statement audit, and lastly providing insights pertaining to …

Key elements of a financial statement audit and/or audit of internal controls over financial reporting; Documentation needed to facilitate a successful financial statement audit; Typical phases and timing of a financial statement audit; Anticipated audit requests; And key areas of focus and resource requirements for a financial statement audit.

IVCA: What type of Audit Readiness Services can that include?

Deloitte.: These include Audit Readiness Labs, Audit Readiness Gap Assessments, Audit Assistance Services* and Financial Statement Preparation Assistance.* [NOTE on (*) … for non attest clients only].

IVCA: Again, what you sending along for further information?

Deloitte: Further information on how we serve VC and PE Funds and other Investment Managers is located here: https://www2.deloitte.com/us/en/pages/financial-services/topics/investment-management.html/#quilt

Further information on our audit services for startups is available at https://www2.deloitte.com/us/en/pages/audit/solutions/startup-audit-services.html

Further guidance on preparing for a first-time audit can be found here: https://www2.deloitte.com/us/en/pages/audit/articles/preparing-first-time-audit.html

IVCA: Philosophically and commercially, the company has a stake in DEI initiatives. Given the recent backlash to DEI in general, what makes this service offering more vital than ever?

Deloitte: At Deloitte, we are passionate about creating a culture that empowers our people, our clients, and our communities to thrive and achieve their full potential, and we firmly believe that increasing diversity, fostering equitable access to opportunities and resources, and promoting inclusion and understanding are critical to achieving those goals,

Also, as a professional services organization, our business is built on the knowledge and unique perspectives of our people. DEI enables us to leverage our team members’ unique qualities to deliver the most valuable perspectives to our clients, and the most engaging experiences for our colleagues. It helps us continue to evolve, attract the best talent, and keep our competitive edge.

To support our clients in their DEI efforts, we have developed a diverse team of diversity, equity, and inclusion specialists who bring perspectives across industries, sectors, and geographies, and draw on the power of Deloitte’s leading practices, proprietary tools, and experience advising the world’s most influential organizations.

IVCA: What are you sending for fuller information on those policies?

Deloitte: Deloitte’s DEI Transparency Report is available at https://www2.deloitte.com/us/en/pages/about-deloitte/articles/dei/diversity-equity-inclusion-transparency-report.html

Further information on our DEI services can be found at https://www2.deloitte.com/us/en/pages/about-deloitte/solutions/diversity-inclusion-strategy-services.html

IVCA: What does Deloitte hope to achieve in their interaction with the VC/PE community within the IVCA?  

Deloitte: Our goal is to learn from and bring value to the Venture Capital and Private Equity community. We look forward to sharing our perspectives from serving VC and PE firms, as well as their portfolio and emerging growth companies. We can provide insights into the challenges that venture capital-backed companies face, and can offer a broad perspective on financial and operational business issues, leading practices and industry trends.

We also help foster relationships between finance and Venture capitalists in the Chicago ecosystem. Additionally, as part of the IVCA, we look forward to collaborating on and supporting your key initiatives, such as your Diversity Program.

IVCA: Thank you for this comprehensive overview. If an IVCA member wants to connect with Deloitte, which specific individual or individuals they should contact?

Deloitte: Please reach out to the following …

Maureen Lagan, Audit and Assurance Managing Director and Chicago Investment Management Audit Leader, at mlagan@deloitte.com or 312-486-2758

Steve Crowe, Tax Partner and Central Region Investment Management Tax Leader, at scrowe@deloitte.com or 312-486-5273

Tracy Harrison, Audit and Assurance Managing Director and Central Region Emerging Growth Company Audit Leader, at traharrison@deloitte.com or 312-486-4258

For the website of Deloitte, click here.

The 2024 IVCA Invitational tees off at the Olympia Fields Country Club on Monday, June 24, 2024. For more information, click here.