Getting a handle on inventory

Inventory is a key balance sheet item for many companies. Depending on the nature of your operations, inventory may include raw materials, work-in-progress (WIP) inventory and finished goods. While you need to have enough inventory on hand to meet your customers’ needs, carrying excessive amounts can be costly. Here are some smart ways to manage […]

ESG audits: Navigating new frontiers in corporate responsibility

Reporting on environmental, social and governance (ESG) matters is an increasingly crucial area of corporate compliance. While ESG reporting and disclosure apply primarily to public companies, there are efforts aimed at requiring private companies to also report on these matters. For example, the European Union’s Corporate Sustainability Reporting Directive requires private organizations that meet specific […]

Auditing WIP today

External auditors spend a lot of time during fieldwork evaluating how businesses report work in progress (WIP) inventory. Here’s why this warrants special attention and how auditors evaluate whether WIP estimates seem reasonable. Valuing WIP Companies may report various categories of inventory on their balance sheets, depending on the nature of their operations. For companies […]

Mind the GAAP: How to ensure transparency when using non-GAAP metrics

At Financial Executives International’s Corporate Financial Reporting Insights Conference last November, staff from the Securities and Exchange Commission (SEC) expressed concerns related to the use of financial metrics that don’t conform to U.S. Generally Accepted Accounting Principles (GAAP). Companies continue to have trouble complying with the SEC’s guidelines on non-GAAP reporting, said Lindsay McCord, chief […]

How to minimize billing bottlenecks

Managing accounts receivable can be challenging, especially in an uncertain economy. To keep your company financially fit, it’s a good idea to occasionally revisit your billing and collections processes to ensure they’re as efficient and effective as possible. Consider these helpful tips. Resolve billing issues quickly The quality of your products or services, and the […]

Spotlight on auditor independence

Auditor independence is the cornerstone of the accounting profession. Auditors’ commitment to follow the standards set forth by the American Institute of Certified Public Accountants (AICPA), the Securities and Exchange Commission (SEC), and the International Auditing and Assurance Standards Board (IAASB) ensures stakeholders can trust that audited financial statements present an accurate picture of the […]

Cash vs. accrual accounting: What’s the difference?

Financial statements are critical to monitoring your business’s financial health. In addition to helping management make informed business decisions, year-end and interim financial statements may be required by lenders, investors and franchisors. Here’s an overview of two common accounting methods, along with the pros and cons of each method. 1. Cash basis Under the cash-basis […]

Why it’s important to get your company’s financials done on time

Have you completed your company’s year-end financial statements yet? Most calendar-year entities issue their year-end financials by March of the following year. Lenders and investors may think the worst if a company’s financial reports aren’t submitted in a timely manner. Here are three assumptions your stakeholders could make when your financial statements are late. 1. […]

Auditing revenue recognition

The top line of an income statement for a for-profit business is revenue (or sales). Reporting this line item correctly is critical to producing accurate financial statements. Under U.S. Generally Accepted Accounting Principles (GAAP), revenue is recognized when it’s earned. With accrual-basis accounting, that typically happens when goods or services are delivered to the customer, […]

Liquidity overload: Why having too much cash may be bad for business

In today’s uncertain marketplace, many businesses are stashing operating cash in their bank accounts, even though they might not have imminent plans to deploy their reserves. However, excessive “rainy day” funds could be an inefficient use of capital. Here’s a systematic approach to help estimate reasonable cash reserves and maximize your company’s return on long-term […]