Beat the Year-End Audit Rush: Tackle These Interim Projects Now 

How different could audit life be if you had the resources to move a significant amount of audit effort from January and February 2025 up to October or November this year instead? 

Suddenly, you can: 

• Allocate time to socialize critical accounting conclusions with various impacted parties, allowing them to consider audit’s impact on planning and budgeting cycles. 
• Manage workloads, burnout, and stress that often occur in Q1. 
• Improve the quality of deliverables and drive audit efficiencies. 
• Reduce last-minute surprises and create capacity to collaboratively work through issues. 

As is the case every year, the year-end audit process presents significant challenges and resource demands for companies and their auditors. That’s why it’s critical to proactively address certain accounting tasks during the interim period. So how do you make this a reality? 

Why Now? Key Interim Activities for Maximum Audit Value and Time Savings 

Management may not have the bandwidth to frontload audit work. But the challenge grows more pronounced the longer they wait. The sooner auditors can start their work, the better the outcome for all parties: public and private companies, auditors, regulators, and strategic audit advisors that may be introduced to the project. 

By taking a “help us help you” approach to interim accounting activities, management teams can generate more lift and value at this point in the audit cycle. Four functions in particular are critical to making this happen: Controllership, FP&A, Internal Audit, and IT. 

Get started on: 

1. Goodwill Impairment: Assess goodwill, identify potential impairment indicators, and gather necessary documentation. 
2. Long-Lived Asset Impairment: Evaluate the value of long-lived assets and conduct impairment testing. 
3. Acquisitions: Address post-acquisition accounting considerations, including purchase price allocation, intangible asset valuation, and revenue recognition. 
4. Internal Controls: Review and strengthen internal controls to ensure accurate financial reporting, especially if changes to control strategy were recently implemented. The evaluation of material weaknesses or significant deficiencies can also occur as they’re identified rather than letting them pile up. 
5. Going Concern: Assess the company’s ability to continue operations and address any potential concerns, especially those that may push out filing dates. Testing of projected financial information used in the going concern analysis is getting more and more attention from auditors and the Public Company Accounting Oversight Board (PCAOB). 
6. Financial Reporting: Begin drafting disclosures and pro-forma financial statements (Form 10-K). 
7. Third-Party Valuation Experts: Engage valuation experts in advance to avoid delays, lock in the scope, document rationale for any anticipated changes in methodology, and ensure timely completion of valuations. 
8. Projected Financial Information (PFI): Scrutinize PFI used for valuations and impairment testing to ensure its reasonableness. When the PFI is overly optimistic, it’s helpful to “sensitize down” starting in Q3. 
9. Technology: Ensure accounting systems and data extraction processes are efficient and compatible with audit requirements. The cleaner and more accessible the data is now, the faster the audit process. 
10. Financial Statement Close Process: Improve the quality of account reconciliations and analysis (common auditor-identified pain points) now since close capabilities are a routine issue. 

The cascading effects of an intense audit period can negatively impact operational accounting, FP&A, and other key finance cycles, which will need to be considered and guarded against ahead of time. By accelerating the above activities – either in total or individually – management can get ahead of the audit curve, enhance their ongoing ability to meet audit responsibilities, and spare other teams from being pulled into fire drills. 

Practical Tips for Implementing an Interim Focus 

Management teams and their advisors can help streamline and advance interim accounting by: 

• Establishing a dedicated interim review process or governance structure to maintain a coherent approach to the pre-audit period. 
• Assigning resources to specific accounting areas, with process owners and milestones guiding progress. 
• Developing checklists and templates for efficient data gathering to free-up staff from manual compilation work. 
• Leveraging technology such as Oracle, NetSuite, SAP, or another ERP of record for more effective reporting, data analysis, and automation. 
• Fostering collaboration between accounting and other departments to facilitate information-sharing and accountability. 

CrossCountry Consulting’s audit specialists speak the language of auditors and take the burden off management teams by driving value at all points in the process before, during, or after an audit – wherever support is needed, we plug in.     

To maximize your interim audit period, contact CrossCountry Consulting.