Preparing for your first remote financial close

My colleagues and I have been talking to our clients about the challenges they are going to face as they prepare for the upcoming month-end financial close. You can catch a replay of our webcast on the topic here. Since many of you are dealing with this issue today, I wanted to offer some thoughts in this forum as well. 

Why is this close cycle different?

1. Your teams, and their business partners, are remote, and very likely distracted! This will create increased risk to systems access, process delays and difficulties with collaboration. These factors mean that normal close activities will likely take longer than usual.
2. There have been abrupt changes to the macroeconomic environment, and these will drive incremental work for your team. For example, accounting teams may need to test goodwill, equity investments and other assets for impairment or update estimates of future cash flows. Incremental disclosures, and updates to risks factors and the MD&A may be required.
3. Unable to do an inventory count? Unsure which scenarios to model for? Need access to paper records? Everyone is likely to find themselves with inadequate information of some form or another, and this will need to be addressed.
4. Transmission of sensitive data for remote close and external audit will require increased cybersecurity
5. Most internal controls are not designed for a remote workforce. Companies may need to implement new or different internal controls to mitigate risks and update their controls documentation accordingly.

The SEC issued relief this week to extend filings due on prior to July 1st, which provides increased time for companies facing these challenges. Even with that relief, we recommend that companies take immediate steps to prepare.

What can you do to get ready?

• Assess the impacts to your organization. The impact will be different for each company. Start by understanding the impact to your business forecast, key processes, control environment and systems capabilities. We’ve compiled a list of over 70 considerations to help you plan, which is accessible through the webcast. 
• Establish a virtual command center. Be rigorous in your approach to managing this close cycle – have a detailed plan and know what happens (or doesn’t happen) every day against that plan. Mitigate risks quickly and efficiently.
• Use a risk-based approach to identify required analysis given the current economic environment, and re-sequence your close calendar to take into account likely delays in normal close activities.
• Involve FP&A and IR early in the process, and support business partners with frequent updates.

I wish all of you in the LinkedIn community health and safety during these unprecedented times. If my team and I can be of help to you as you navigate this close process, please don’t hesitate to reach out.