Year End Audit Surprises
If your outside CPA adjusts your net income by more than 5% of net income, then you have a problem. Your internal accounting department should be able to report financial statements with 95% accuracy.
Greater than 6 Year End AJE’s
A company should not have more than 6 to 8 year-end adjustments from their CPA firm. If the number, not just the dollar amount, is greater than ten; then you need to improve your processes.
High Turnover in Accounting
The average tenure of a CFO is 4 years. If your accounting staff has a frequent turnover, then it might be a sign that either you are not adequately staffing for the growth of the company or your systems need to be improved.
Liquidity is Tight
In a growing economy, when recovering from a recession, liquidity at most companies is expected to be tight. However, if the company is constantly being surprised by cash shortfalls, bumping up against their borrowing base and “flying blind” with respect to cash flow; then the cash conversion cycle is not being managed.
Can’t Complete the Audit
If your outside CPA firm can’t complete the audit on time, it is often due to several internal factors. Either they are not getting the internally generated schedules on time or not at all. Either way it is a sign that your accounting department is not managing the audit process.
Closing the Books Late
The company should have their financial statements completed by the second to third week of the following month. First class organizations close their books within 7 to 10 days. If you are receiving the financial statements after 30 days from month end, then you have a problem.
Action Plan for a Company
All of these symptoms are a sign that your accounting department has not kept up with the growth or needs of the organization. Often what is required is an improvement in your accounting systems and processes to improve the productivity and accuracy of your information flow.
Every company regardless of its size needs a CFO Services. B2B CFO® is the nation’s largest CFO Services firm providing small and mid-market business owners with CFO services. We are more than 215 CFOs with over 6,000 cumulative years of experience. No matter what your company’s issues or needs are, it is highly likely that we have already successfully handled similar situations and have worked in your industry. No accounting firm or independent CFO can match us. All this experience is available to any business owner engaged with a B2B CFO® Partner.