Frequently Asked Questions (FAQ)
Outsourced Accounting
Outsourcing accounting can make sense when your business is rapidly growing, and internal accounting is no longer effective or efficient. This can include delayed financial reporting, inconsistent quality, or increasing costs.
Generally, yes. Accounting outsourcing can often save costs compared to hiring a full time accountant, while also providing greater flexibility and expertise.
Outsourced accountants can support with a broad range of accounting needs, including bookkeeping support, monthly close support, financial reporting support, and often strategic advisory.
Outsourcing accounting can include handing over your bookkeeping process to an external specialist, while your internal team can focus on higher-level tasks such as planning, strategy, or process improvement.
For many businesses, yes. Outsourcing can be a great way to quickly add accounting expertise and capacity, at a lower cost than hiring an internal team.
Potential downsides include less direct control over day-to-day accounting, and communication challenges if expectations are not clearly defined.
Accounting outsourcing can provide a wide range of benefits, including:
- Expert guidance. Engaging an accounting expert allows them to focus on the correct accounting treatment for transactions, allowing you to focus on other matters.
- Faster Timelines. Due to their expertise, an outsourced accountant can normally process transactions within a few hours for a given week.
- Lower cost. Hourly or monthly fees for an outsourced accountant are often lower than the salary of an equivalent full-time hire, and do not require payroll taxes or benefits.
- High quality reporting. An outsourced accountant can tap their expertise to ensure correct accounting treatment, and provide financial reporting in a clean, easy-to-understand format.
- Focus on Key Activities. Having your bookkeeping handled by an outsourced accounting expert gives you the peace of mind to focus on other tasks, such as customer service or growing the business.
Technical Accounting
A technical accountant helps resolve complex accounting issues that are not always straightforward to evaluate, and ensures accounting records and financial statements are in compliance with accounting guidance.
The technical accounting process includes the following:
- Research of current/upcoming accounting guidance and requirements under complex accounting frameworks (e.g., US GAAP, IFRS)
- Interpretation of the authoritative guidance, as well as industry practice (i.e., how other companies in the same industry evaluate the resulting accounting treatment)
- Making necessary accounting adjustments, preparing supporting documentation such as memorandums or workbooks, and implementing any necessary changes to existing processes or controls
- Preparing the company's financial statements (and related footnotes) in compliance with the requirements under the framework.
- If applicable, discussion with the company's auditors or other reviewers on the accounting treatment and underlying interpretation of the guidance.
Some examples of technical accounting can include:
- Revenue Recognition (under ASC 606)
- Lease Accounting (under revised guidance of ASC 842)
- Business Combination / Acquisition Accounting (under ASC 805)
- Share-Based Compensation (under ASC 718)
- Complex Equity Transactions
- Debt Transactions, including debt modifications or extinguishment
- Preparation of Financial Statements and related footnotes
Technical accounting focuses on complex or "unqualified" accounting areas that often involve judgment and interpretation. Financial accounting is generally more broad, and focused on recording and reporting transactions in historical periods.
The role of a technical accounting manager is to identify and resolve Specfic accounting issues, ensure accounting records and financial reporting are in compliance with applicable accounting guidance and standards, and support strategic business decisions.
A technical accounting specialist can bring significant value by helping your team navigate complex accounting guidance and requirements, reducing risk of errors and restatements, and ensuring your financial reporting is compliant and decision-useful.
Audit Readiness Prep
The main steps in preparing for an audit can include:
- Identifying areas of higher risk and focusing time and efforts in these areas.
- Reviewing and organizing internal accounting records.
- Evaluating accounting records for compliance with technical accounting standards, and ensuring sufficient support is available.
- Preparing and reconciling supporting documentation, schedules, and reports.
- Responding to PBC (prepared by client) requests.
The purpose of audit preparation is to ensure accounting records and financial reporting are accurate and in compliance with the applicable accounting standards, as well as to ensure supporting records are available and properly organized.
Audit planning and preparation can include understanding the scope and timeline of an audit, evaluating internal accounting processes and records for high risk areas, identifying and correcting gaps or weaknesses, and organizing all supporting documentation before fieldwork begins.
Audit report preparation generally refers to the final stage of an audit, where auditors summarize their findings and issue an opinion on the fairness of the company's financial statements. This process can include detailed review of all reports and disclosures, and communication with management around potential adjustments.