Many finance chiefs face an unprecedented task in the coming weeks: closing the books on a turbulent first quarter with most or all of their finance staff and auditors working remotely.
Communication skills and technological capabilities are being put to the test as companies adapt internal controls and processes to function securely outside of their offices during the coronavirus pandemic.
Remote-work mandates have eliminated the side-by-side, in-person work that can speed up the financial reviews and account reconciliation that companies do at the close of every quarter.
“To be able to close the month with no one sitting in the same room—if you can’t do that, you could really slow down the growth of the company,” said Sarah Spoja, finance chief of Tipalti Inc., a San Mateo, Calif.-based financial technology company.
Companies that rely heavily on cloud-computing technology to automate accruals, adjustments and internal transactions may be in for a smoother close than those that use on-premise technology on virtual private networks or enter data into spreadsheets manually.
Virtual private networks aren’t optimized for speed and spreadsheets are inherently error-prone, executives say.
Closing the books with antiquated technology during the pandemic could lead CFOs to expedite efforts to upgrade the back office, said Grant Halloran, chief executive of Planful Inc., the financial planning and analysis software company formerly known as Host Analytics Inc.
Even for large companies with sophisticated technologies, the quarterly close presents new obstacles with regard to auditing, communication and the need for timely and accurate results. Many companies have warned investors that their companies’ quarterly or year-end guidance will be flawed given the uncertainty surrounding the outbreak.
Regulators have offered relief to companies who need more time to file financial statements. The Securities and Exchange Commission on Wednesday extended the filing periods during which public companies affected by the pandemic are eligible for a 45-day extension to file certain disclosures.
the San Ramon, Calif.-based oil company, has been performing dry runs of the closing process to test its capabilities and systems. It is the first time that Chevron employees in virtually every office have been working from home, CFO Pierre Breber said.
While some companies have previously tested procedures for doing internal closes, many are facing elements of the internal and external audit that had not been tested before.
a Geneva, Switzerland-based maker of eye-care products, has never completed an audit entirely remotely, said Charles Silvey, Alcon’s head of audit. The company finds itself in uncharted territory as it conducts a compliance audit for its Mexico office, while that office’s employees work from home, he said.
Mechanicsville, Va.-based health-care logistics company
Owens & Minor Inc.
has been working with external auditors to ensure that they can perform quarter-end audit work remotely, CFO Andy Long said. Mr. Long hopes the company can execute the financial close without the finance team coming into the office.
“I’m pretty confident that 99% of our work will be able to be done remotely for the close process,” Mr. Long said. “On the audit side, I think that’s still a work in progress.”
Johnson & Johnson
says employees in some territories or small countries may not be able to get into the office to close on their quarter-end financials. J&J has been working with external auditors to ensure they have a mutual understanding about materiality, CFO Joseph Wolk said.
“I’m not expecting any lack of quality just because some of this is being done remote,” he said.
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