Newsletter – October 2014
Fin Tech Case Study
CFO Consulting Partners was engaged by a start-up Fin Tech Company to assist in setting up their entire financial infrastructure, including establishing and documenting GAAP and regulatory policies, establishing and documenting internal controls and procedures, and constructing the regulatory reporting process. CFO CP also assisted in the preparation of US GAAP financial statements for a Review and eventual audit by the company’s external audit firm. The Company is a pioneer in its industry and needed the Review report to be included in its application for regulatory approval.
CFO CP assisted in developing the workpapers and supporting documentation for the Review and eventual audit. In particular, CFO CP reviewed the trial balance, general ledger from date of inception to the Review period and all the underlying accounting records for propriety and accuracy/completeness. CFO CP ensured that the information requested by the audit firm was prepared in advance and reviewed by management, that it was accurate, and that it had a well-documented audit trail. CFO CP also prepared the relevant schedules and analyses for some account balances. Since the client is a start-up, CFO CP prepared the financial statements from date of inception to the relevant period end, including detailed footnotes. CFO CP worked closely with the auditors throughout the duration of fieldwork and assisted in resolving Review issues with the auditors.
The auditors completed the Review process and issued their Review report within five business days and, the materials required for regulatory approval were filed on time. As a result of CFO CP’s involvement, the books and records have clear Review trails and the Company has a chart of accounts that is specifically designed for its business. Also, all the significant accounting policies and internal controls were well documented. CFO CP was commended by the Company’s CFO, senior management and the CPA firm for exceptional work.
From time to time, we read about accounting errors in public companies. Often these result in restatements and may even result in a shareholder lawsuit.
- Weak internal controls
- Deficiencies in its management reporting practices
- A lack of a solid understand of the industry by its board and audit committee
- An over-reliance on excel worksheets and/or a corporate culture that lives for “quarter to quarter” earnings.