As companies close out the year and seek a new level of clarity and planning for the year ahead, a cross-functional group of Riveron experts gathered for a webinar discussion exploring how to ensure year-end preparedness. The economic landscape presents many complexities that will inevitably impact year-end planning and audit cycles. The specialists also provided considerations for how to overcome the year-end intricacies driven by economic uncertainty. Here are key takeaways from the event:

(1) Prepare for increased scrutiny due to volatility and M&A

Inflation rates, high borrowing costs for both companies and consumers, lower GDP growth rates, and many other factors are driving today’s economic uncertainty. In turn, specialists are calling for continued agility and predict an increased need for financial and accounting rigor. With regards to the auditing cycle, many companies are already experiencing more extensive annual impairment testing. In the past, auditors typically first performed a qualitative test to determine whether a company appeared well-positioned to continue forward in a comparable environment. Now, against a backdrop of volatility and change, auditors might be more likely to conduct both the qualitative and quantitative sides of the process, to revisit value assumptions that may no longer hold.

In addition to the general economic landscape, mergers and acquisitions (M&A) are another major driver of change. While the rapid pace of M&A transactions may have cooled, attention must be paid to the post-transaction environment. Here, companies should prioritize integration considerations knowing the new context will call for structural changes across accounting, finance, and operations.

As a business combination occurs, it is essential to make time upfront to standardize new systems and policies, as well as to validate existing data. Having conversations earlier will prevent significant delays in the future. On the accounting side, leadership will likely need to assess and establish new financial and reporting policies. In particular, companies should give attention to all aspects surrounding the transition between predecessor and successor—financial statements, accounting policies, and choice in auditors. Correspondingly, teams may need to add different expertise in order to handle new purchase accounting and financial integration skills. On the tax side, companies facing a changing operating environment need to gain a complete understanding of the new tax footprint and ensure the implementation of appropriate internal controls.

(2) Get a head start, anticipating resource constraints

Labor costs and employee retention will continue to be a challenge across all industries, and companies must continue to do more with less. This can be especially burdensome for accounting and finance professionals that may already operating on teams with fewer people than intended due to prevalent accounting workforce constraints.