What are the best practices for integrating two companies' financial reporting systems after a merger?

1 Assess the current state

The first step in integrating two financial reporting systems is to assess the current state of both companies. This involves identifying and documenting the similarities and differences in their accounting standards, policies, procedures, software, hardware, data, and controls. The assessment should also evaluate the strengths and weaknesses of each system, as well as the gaps and overlaps that need to be addressed. The assessment should be conducted by a cross-functional team of experts from both companies, who can provide insights and recommendations on how to align and harmonize the systems.

2 Define the target state

The next step is to define the target state of the integrated financial reporting system. This involves setting the objectives, scope, timeline, budget, and governance of the integration project. The target state should reflect the strategic vision, goals, and values of the merged entity, as well as the expectations and requirements of the stakeholders. The target state should also consider the best practices and industry standards for financial reporting, as well as the potential risks and opportunities for improvement. The target state should be communicated and approved by the senior management and the board of directors of the merged entity.

3 Develop the transition plan

The third step is to develop the transition plan for moving from the current state to the target state. This involves designing and implementing the changes and enhancements to the accounting standards, policies, procedures, software, hardware, data, and controls of the financial reporting system. The transition plan should also include the testing, training, communication, and support activities that are necessary to ensure a smooth and successful integration. The transition plan should be executed by a dedicated project team, who can monitor and manage the progress, performance, and issues of the integration.

4 Monitor and evaluate the outcomes

The final step is to monitor and evaluate the outcomes of the integrated financial reporting system. This involves measuring and reporting the results and benefits of the integration, such as data quality, compliance, efficiency, transparency, and value creation. The outcomes should also be compared and contrasted with the objectives, scope, timeline, budget, and governance of the integration project. The monitoring and evaluation should also identify and address any problems or challenges that may arise during or after the integration. The monitoring and evaluation should be conducted by an independent audit or review team, who can provide feedback and recommendations for further improvement.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?