Workforce and tools
With competing priorities and availability, it is critical to identify and fulfill essential roles, while developing clear communication lines and tools to ensure transparency.
People come first
While the outbreak may threaten the economic growth of your company, the health and well-being of your workforce is your priority. A healthy workforce is a productive workforce.
Assess and define your team
Canvas your global workforce and ask yourself, who is available to assist in the close, both internally and externally? What work is “mission-critical” and are those resources healthy and available to work a full day? Perform a baseline assessment of the available resources and supplement with internal or external resources for critical tasks where gaps exist.
Collaborate digitally
In-person meetings, or informal “pop-in’s” must be replaced with a digital collaboration platform that centralizes and simplifies communication flows, as well as integrates into third party tools such as chat, email, and calendars. These tools also allow for your workforce to stay connected while tending to personal obligations.
Set expectations, be flexible
With competing priorities like caring for children or sick family members, or employees who are stepping up to help with little experience, it is critical to set and manage expectations and understand this may extend the close. It’s important to establish work hours, clear roles and responsibilities, stay connected daily with video meetings, and be flexible, as curveballs are inevitable.
Next Steps:
Determine your global workforce availability and identify gaps
Supplement workforce gaps with contractors, consultants, or internal resources with capacity
Rapidly deploy digital collaboration tools to simplify communications and workflows
Define virtual rules of the road to set expectations
Operational changes
A fully virtual close requires a change in how you manage controls, as well as a clear understanding of workflows and the systems and data required to execute activities.
Identify manual processes and controls
Review your close checklist and desktop documentation and identify all manual, paper-based processes and controls, as well as individuals involved. Evaluate readily available tools to digitize manual approvals and establish the process and source system to store manual approvals. Establish cadence with internal audit function to gain alignment on any control changes required, as well as determine if any materiality threshold changes are warranted to reduce workloads.
Ensure access to data and systems
You have your team assembled, now ensure they can access all required systems and data remotely to execute tasks. Determine if there are any data breaks due to the lack of remote system or application access. Verify that IT resources are available to support system maintenance and that non-mission critical finance system updates are pushed to a later date. Don’t forget to include any Business Process Outsourcing (BPO) providers in your evaluation.
Verify close tasks and redesign workflows
Review close tasks and sequencing of those tasks. Create a robust consolidated close checklist and issues tracking site that can be used to help monitor the completion of close activities. Distribute the close checklist to the team, with clear roles and responsibilities for the tasks, as well as revised dates. Re-route workflows to account for changes in approvals, staffing, and system access. Ensure that there are back ups for each approver in the workflow. Lastly, determine if any quarter close tasks can be accelerated or delayed to lessen the burden on your teams.
Next steps:
Review manual processes and controls and establish a plan to execute those tasks and support audits with available digital tools
Determine remote access capabilities for key systems and data
Redesign the close processes to account for a virtual close and ensure there is a robust close checklist with clear owners and dates
Estimates and regulations
As the financial impacts continue to evolve, companies need to identify the near and long term changes to their financial statements, as well as how regulatory bodies are responding.
Determine impacts to estimates
Given the significant impacts to supply chains, customer demand, liquidity/cash flows, and market conditions, the accounting function is having to identify any changes to estimates, such as inventory, goodwill, debt covenants, and receivables. Determine whether impairment tests, loan covenant tests, or FMV changes are required based on the impacts to your company and allot sufficient time to complete testing. Liquidity challenges could also affect the results of going concern assessments.
Evaluate whether additional disclosures are required
The potential financial effects of the outbreak are difficult to predict and are constantly changing. Evaluate whether additional or revised disclosures for past or future operations may be required if new and substantial information becomes available after the period balance sheet date.
Monitor regulatory environments
Given the significant economic impacts from the outbreak, regulatory changes could be on the horizon. Closely monitor changes from governing bodies like the SEC, and work with your external auditor to review any changes that have been impacted by the outbreak.
Next steps:
Review the accounts with estimates and identify the disclosure impacts early—the time involved could be significant
Consider MD&A disclosures for past and future operations that will need to be disclosed for transparency
Monitor regulatory environments in the US and globally and model future impacts on operations and the accounting implications, while working closely with your external auditor
