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Venture Capital Accountants and Auditors

The Job

Accountants and auditors are important behind-the-scenes players in the business world. Smart executives know that their organizations are only as good as their accounting and auditing departments.

Job responsibilities for accountants in the venture capital industry vary by the size of the employer, the stage of the fund’s investments, and other factors, but major responsibilities include:

  • working closely with partners during the launch and set-up of new funds, during the acquisition of portfolio companies, and during exits (i.e., mergers, the sale of the company, or an initial public offering)
  • maintaining and updating financial data in investment databases
  • reconciling cash received from investors and investments
  • managing general ledgers for the firm and its portfolio companies
  • documenting financial variances and responding to investor inquiries
  • determining the fair value of the firm’s portfolio for limited partners (fair value is defined by the Financial Accounting Standards Board as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”)
  • preparing financial statements (e.g., assets and liabilities, operations for the latest investment period, cash flows, and changes in net assets)
  • preparing tax returns and being responsible for other tax-related issues
  • providing monthly or quarterly accounting of investor contributions and withdrawals and computing profit and losses for the accounting period
  • preparing semi-annual and annual reports for limited partners
  • overseeing monthly fund transactions (e.g., interest calculation, investor subscriptions, invoice payments, expense accruals tracking, etc.)
  • collecting and preparing data for regulatory filings
  • working closely with external and internal auditors during year-end reporting
  • assisting the chief financial officer with the preparation of financial forecasts
  • providing accounting services, as needed, to the firm’s portfolio companies

Specialized accountants known as auditors ensure that financial records comply with government regulations and that they have been prepared according to generally accepted accounting principles. Those who work as salaried employees of companies or other organizations are known as internal auditors. “The role of internal audit is to provide independent assurance that an organization’s risk management, governance, and internal control processes are operating effectively,” according to the Chartered Institute of Internal Auditors. The work of internal auditors is checked and verified by independent auditors, who are typically employed by public accounting firms. Major duties for auditors include:

  • reviewing the general ledger and other financial documents for accuracy
  • identifying and addressing client issues discovered during the audit process
  • recommending improvements on internal controls, operating efficiencies, and profitability to management
  • conducting due diligence on a company the client is considering acquiring
  • validating financial and nonfinancial data for internal and external review
  • performing an annual risk assessment of the business and continuous monitoring of the firm’s risk management plan based on its risk analysis