2020 brought with it a multitude of challenges. One that remained throughout the majority of the year and continues to have an impact on companies of all sizes and industries is the prospect of employees working remotely, either mandatorily or voluntarily. Faced with new challenges and work situations, management must remain vigilant and agile in order to adapt continuously to ensure success throughout the year-end financial close process.
Close activities may require a lengthier timeline with delays in preparation and review as well as considerations around any scenarios or struggles unique to this past year.
Consider the following high-level plan when re-thinking your close process for a partially or fully remote work scenario.
- Establish a routine of regular virtual check-ins with team members and emphasize the need for proactive communications
- Review any required disclosure changes through issued guidance and discuss with third-party auditors regarding their enhanced focus areas as a result of financial results
- Ensure the safe and secure transmission of sensitive data for remote close and potential external audit work through having increased cybersecurity
- Identify potential problem areas and work to cover those items early on in the close process especially:
- Long-lived asset impairment
- Collectability of accounts receivable and the need for a reserve
- Review of obsolete inventory
- Goodwill impairment
- Cut-off of sales and purchase transactions near year-end
- Going concern considerations as a result of the above
Should you have any further questions regarding close process considerations, do not hesitate to reach out to a GBQ representative.
Article written by:
Brad Denzel, CPA
Assurance Senior