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Case Study

Providing Forensic Accounting Assistance

Team Size
1 Director, 2 Vice Presidents
Project Duration
1 mont + ongoing support to the CFO

The Situation

A sponsor backed telecommunications company with $800 million in revenue required a forensic accounting analysis to determine the justification and feasibility of a reinvestment. Accordion was engaged to conduct a detailed review of the balance sheet accounts, assess reasonableness of accounting method and review processes and controls. In addition, our team was requested to review and validate  the Company’s 13-week cash flow forecast and 2016 budget.

Services

Finance Function Assessment & Design

Budgeting & Forecasting Process Improvement

Process & Controls Implementation

The Execution

  • Piloted a comprehensive review of select balance sheet accounts:
    • End-to-end process review of the accounting policies, WIP and deferred revenue transactions flows.
    • Recommended process and control enhancements to mitigate the risk of financial reporting inaccuracies.
    • Conducted the Company’s variance account analysis.
    • Ran a review for significant, unsupported, and unusual WIP and deferred revenue activity/movements.
  • Identified inaccuracies in the Company’s internal cash flow model that would impact liquidity and/or covenants:
    • Evaluated the accuracy, tie-out of cash flow build-up.
    • Assessed cash flow forecasting approach and internal consistency with 2016 Budget relative to 2015.
    • Tested and verified cash flow calculations.
  • Presented conclusions with respect to 2016 Budget:
    • Evaluated the basis of the presentation of  the 2016 Budget build-up on a consolidated basis.
    • Ensured that there was no carryover of the 2015 accounting revenue period error into 2016.
    • Tested and verified accuracy and consistency of calculations of: (i) P&L; (ii) Consolidated P&L; (iii) Consolidated Balance Sheet; (iv) Consolidated Cash Flows.

The Results

Accordion conducted an in-depth review of Work-in-Progress and Deferred Revenue for the Company. Our team’s timely deliverables and forensic analysis provided the Sponsor the requisite visibility into the Company’s balance sheet, cash flow and 2016 budget resulting in an informed investment decision.