Audit Preparation and Management (Financial Services)
Industry: Financial Services
A provider of specialized financial services to other financial services companies had highly efficient processes for serving customers but was having trouble closing its books timely and accurately, as well as completing its annual independent audit in a reasonable time frame.
The company had not closed its books for any of the months in the current year and was relying on estimates to report operating results to investors. As a result, the company needed to revise the operating results that it had reported to its investors for the current year. The prior year’s independent audit was also taking an inordinate amount of time to complete. The challenges with which the company ultimately requested CFOCP’s assistance were:
• Assist the company with closing its books for the current year.
• Help the company prepare for and manage the independent audit for the current year, which was required by a lending agreement to be completed in half the time required for the prior year’s audit.
CFOCP worked with the company to develop and lead an organized approach to address these challenges:
• CFOCP developed a disciplined approach to assign a specific preparer and reviewer for each significant process and subsidiary. The approach revealed and supported the need to backfill positions that had become vacant through attrition and gone unfilled. While the company was hiring the needed resources, CFOCP provided temporary assistance.
• CFOCP met with company and independent audit personnel to determine the reasons for the protracted delay (and significant cost overrun) of the prior year audit. Based on those discussions, it was determined that revenues were the key area of audit difficulty, so CFOCP recommended and led an internal audit of revenues for the current year.
• During the audit of the current year, CFOCP recommended and facilitated frequent and regularly scheduled meetings with the independent audit team to ensure that appropriate progress was being made by the company and audit teams and that any issues were promptly resolved.
CFOCP’s solutions generated the following value-added outcomes:
• The company’s books were closed for the current year.
• Documentation gaps revealed by the internal audit of revenues were remediated, and estimated revenues were reconciled to actual results.
• The independent audit was completed by the deadline.
• The company’s culture was strengthened to embrace timely, accurate and auditable financial reporting.
Audit Preparation and Management
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