Anyone had experience with an outside
Management Override
Answers
This is more an indication of a less connected "upper management" than an indictment of the accounting staff.
As a
This never results in a good thing. (1) your books should conform with the "audited" financials after they are issued and could lead to more adjusting entries whether you can support them or not (2) could result to restatements but you can't blame the auditing firm as ultimately the responsibility is yours. Do not forget, they are YOUR statements and not the accounting firm's.
But I can NOT get the context in your post as to why "upper management" is pushing the outside accounting firm. There must be a "bigger" reason.
At the end of the day (another buzzword), are you going to issue out financial statements that you can live with and defend?
I've heard of pressure to finish the work because the financials/audit needs to be completed.
This push was not for nefarious reasons but for business matters (loan requests, M & A/JV's) that require the quick(er) completion of an audit.
Thanks for the comments. Backstory on this is an entire turnover of prior year's accounting staff, me included. Getting up to speed, etc required lots of time for even a modicum of confidence in the books.
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Absolutely can't agree more. I just took over as CFO and it was taking me 4x-5x as long to do the financials as my predecessor and while I'm down to about the same time now, lots of stress to get them out "on-time".
How long is it taking to close the books? If is taking over 15 days to get completed financials it may be more of a process issue.
Are you utilizing accruals, or waiting for the actual invoices to be received?
I worked at a company where it took us 15-20 days to have "completed" financials done. Then we got a new CFO, it took us 5 days to close the books. Granted there were more accruals, but we were able to forecast the expenses fairly accurately.
If accounting entries are done systematically within the month/periods and not as last minute postings and there is a robust pre-closing process in place to ensure that data [in proper quality and without backlog] are ready and complete by month end - core closing activities and financial statements should be ready in best scenario within 5 days after period close [BD+5]. Depends also on tools which are used by external provider and the process within that company.
But with semi-automated accounting tools and systematic approach Statements are feasible to produce on BD+5 latest.
In my view, it takes time. A turn over of the staff can and will pose great challenges in getting financials statements out, period. You will have issues with accruals, expense recognition, revenue recognition, etc. However, the leadership team needs to understand that it will take time to set processes, policies, align the entire organization to the new requirements, etc. Is the push for intra-month vs quarter end, vs year end financials? When was the last time that the GL accounts were reconciled? Is the organization aligned to the new finance regime? If you are new to the job, then my suggestion is to set the stage, be honest with what the expectations are about how long it takes to close and what sort of resources are required for the ramp up. I think CFOs have the pressure to do more with less. However, you own the financials and the integrity of those not the accounting firm. It takes time and resources to get the job done and done well.
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Accounting