ASC 842 and Lessor Accounting: The Adoption Clock Is Ticking
What Is Accounting Advisory? Partnering for Growth and Success
Accounting is such a broad term. Yes, it obviously includes ledgers, spreadsheets, guidance, and the like. But at its heart, it's so much more than that. Accounting is a vehicle and service that helps organizations reach their goals, both big and small, whether that's an IPO, building out a tech stack, or streamlining the month-end close. The problem, of course, is that some of those goals are tougher to achieve than others, even for a fleet of in-house CPAs.
But that's why accounting advisory services exist – to give CFOs and their finance organizations the horsepower they need to achieve those lofty goals. To fix complex problems. Or sometimes just ensure they maintain a tight, compliant ship. And it accomplishes all of this without inflating headcounts and labor costs like the Goodyear blimp.
Naturally, this is a topic we know like the back of our hands here at Embark. Therefore, we wanted to give you a backstage pass to financial accounting advisory services (FAAS) – what they do, how they do it, and the myriad of ways FAAS can help your organization reach its shimmering potential.
What Are Accounting Advisory Services? A Closer Look
Let's get a digital show of hands – how many of you understand ESG is critical to your company's future but have no idea how to implement effective ESG initiatives? Or start to zone out when you hear "new lease accounting standards?" Or maybe want to attract private equity investors, but your financial statements look like the closing minutes of a neighborhood yard sale?
These are the types of things that keep CFOs up at night, and they're just the tip of the iceberg. Like it or not, this is an extraordinarily complex world we live in, one filled with extraordinarily complex rules and regulations. That's why most companies need specialists when going public, initially tackling the tangled web of SOX compliance and other regulatory requirements, or identifying and implementing the right ERP – all of these, and countless more, require very specific skill sets.
Of course, a CFO can hire specialists in each of these areas, but there are only so many dollars and open seats to go around in a finance organization. In other words, it usually doesn't make good business sense to expand your headcount in such a dramatic way, only to pay out the nose for talent that likely isn't on par with outside specialists.
Enter an accounting advisory firm, one that possesses the requisite skills and knowledge to address complex accounting issues and drive new initiatives, all while fitting in with your accounting and finance functions, vision, and overarching culture. And although the areas a well-equipped advisory team can help you with could go on for miles, some of the larger areas include:
- Technical accounting & complex transactions
- Financial audit facilitation
- Internal audit and control environments
- Internal and external financial reporting
- Process improvement and optimization
- Financial cleanup
- Technology implementation
- Finance transformation initiatives
- Transaction advisory
- Valuation assessments and services
- Capital markets services
- and oh-so-many more
As we said, that already lengthy list is a mere drop in the bucket, depending on the scope of services an accounting advisory firm can provide.
Strategic Planning for Growth and Value Creation
To reiterate, accounting advisory can feel like a somewhat nebulous term from a distance, simply because of everything it can entail. However, to avoid a forest-in-the-trees scenario, we don't want to convey a notion that accounting advisory services are strictly transactional in nature.
Granted, Embark can certainly help you address any of those items from that hefty list above, from revenue recognition and complex GAAP issues to restatements and business combinations – to expand the list even more. However, if that's all you see in an outside advisory partner like Embark – or any other experienced advisory group, for that matter – then you're truly missing out on the best of what a relationship with the right firm can bring to your organization.
To that point, the best consultants from the best firms will help you strategize for the future so you can reach your financial and operational goals, even when those goals are still a bit hazy or unformed. For example, let's say your board wants you to improve your management reporting so your decision-makers have the information they need to successfully drive the enterprise forward. Sounds pretty straightforward, right?
Well, an accounting advisory firm will think big picture rather than exclusively focusing on the specific tasks at hand. Again to use ourselves as an example, Embark's team of specialists will get to know you, your goals, and what you want to accomplish with the engagement, undoubtedly streamlining your management reporting so it's faster and more insightful than you thought possible. But for an advisory partner that generates genuine value for your organization, the discussion doesn’t stop there.
- Where are you on the business intelligence curve given your current data environment and systems?
- Are you descriptive, constantly reacting to trends and forces after the fact?
- What do you need to become more predictive or prescriptive in your decision-making, where you can accurately forecast for the road ahead?
In this example, what might have started as an engagement around management reporting evolves into a much bigger conversation, one that ultimately opens your eyes to automation tools, data dashboards, and other solutions that can transform your management reporting into a distinct competitive advantage.
Now, whether you actually decide to pursue those expanded avenues is an entirely different matter. However, at the very least, you now have significantly improved management reporting for leadership to rely on, along with an understanding of the difference between mere reporting and true, forward-looking business intelligence, not to mention the tools that can help you generate it.
The same holds for IPO readiness, mergers and acquisitions, an effective restructuring strategy, new standards implementation – we’re looking at you, CECL – or beefing up your cybersecurity for your first PCAOB audit. In other words, virtually anything outside the purview of the finance and accounting professionals on your staff, yet still essential to your success, falls within the jurisdiction of an experienced advisory team.
Think of it this way – when you hire Embark, it's not exclusively about the task at hand. Yes, we can advise you on accounting for SPAC warrants and your 13-week cash flow forecast. But you're also leveraging our perspective, experience, and opinions on what you can do to drive growth, create value, and reach your potential, even when it's something you might not have thought of yet. And that's about as powerful an asset a business can have.