Quality and timeliness of closing
Organizations need to reinvent their finance operating model by integrating digital into their processes to close the books on time and gain quick insights into financial performance in less predictable times. This makes it more critical for finance professionals to perform accounting on a continuous basis rather than waiting for inputs at the end of every month. Every day counts, and each insight matters.
Confidence in numbers
As uncertainty from Coronavirus continues and finance teams manage the operational challenges of keeping processes running and understanding the impact on the business, controllership teams have the added responsibility of delivering accurate financial reporting. R2R teams have to check if the financial information being reported considers the impact of COVID-19.
Balance-sheet reviews to analyze dimensions such as causal relationships, correlation analysis, and policy exceptions identify gaps in financials. Risk-control frameworks deliver robust controls and spot potential control lapses that also help report precise numbers.
Quality of balance-sheet reconciliation
Reconciliation is important to maintain the financial integrity of balance sheets and track open items so they can be resolved in a structured way. Today, organizations have to adopt a risk-based approach to clearing material open items that can misrepresent financial statements. Organizations that have reconciliation tools will be better off than others. For example, policies embedded in the tools should define low, medium, and high-risk reconciliations to drive controllership with optimal effort.
Disclosures and reporting requirements
Companies will be required to make additional disclosures related to the impact of COVID -19 on, for example, business risk, the effect on supply chains, and loss in sales or revenue. With delays in receiving information from the most affected countries, auditors will rely on stress testing to verify that existing controls are working.
New ways of working
As more people work from home, there will need to be greater coordination across finance operations, upstream and downstream teams, and a continuous assessment of the situation's impact on, for example, the company's financial exposure, liquidity, demand and supply, production planning, and monthly spend.
Organizations that have already adopted global R2R delivery models and have mature workflows in place are best placed to deal with remote work, just as those companies that have embraced cloud solutions instead of on-premise technologies are. Any issue in accessing the application systems can create a ripple effect of delays when processing transactions like journal, reconciliation, intercompany accounting, fixed assets, allocations, and reserving. Which means the business has to wait for insights too.
Along with these key considerations, R2R teams have to watch out for areas that could be significantly impacted by COVID-19. R2R functions must focus on:
- Changes in accounting estimates the company was using before COVID-19 – for example, revenue recognition, bad-debt provisions, onerous contracts, and tax and inventory provisions
- Special considerations, including government-relief programs accounting, disclosures of events occurring after the balance sheet date
- Impairment and fair-value assessment require revisiting the business assumptions used in impairment testing – for example, mark-to-market of investments and derivatives, goodwill and intangible impairment, cash-generating units impairment, and fair-value measurement of financial assets