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Audit Readiness

By September 1, 2014Newsletters

At CMF, we have noticed a significant uptick in buyer interest in carve outs as a response by middle-market private equity groups to find investment opportunities at the right price. On the sell-side, companies are looking to divest non-core business segments in order to generate a significant return in a frothy M&A market and focus on their core.

These fast-moving carve-out situations can be complex and audit readiness is a risk for CFOs and auditors alike; in a carve out situation, the risks can be significant. Complexity can arise from the fact that:

  • Carved out divisions typically do not have stand-alone balance sheets
  • Certain corporate expenses might not have been passed down to the division, impacting stand-alone margins
  • Technical accounting issues are pervasive
  • Complete financials and footnotes for the division will need to be created, generally from the ground up
  • The manpower and bandwidth required of management and audit teams are substantial

How Can CMF Help with Audit Readiness?

  • Project Management:¬†CMF has experience working cross-functionally with the following groups: corporate finance, divisional finance, HR, legal, and internal and external audit; we know how to identify issues, map out resources, develop a plan, and manage it to complete the audit
  • Technical Knowledge: CMF can create divisional stand-alone balance sheets, fully allocated and supportable income and cash flow statements, and footnotes; we also have strong technical capabilities to craft white papers and develop new, stand-alone accounting policies that are in accordance with GAAP
  • Contingent Resources: CMF has Controller and Analyst-level resources available to augment a Company’s existing finance department
  • Visibility: We surface issues as soon as possible and resolve them in cooperation with the company and the auditor, enabling internal staff to focus on day-to-day operations, auditors to focus on efficient and timely completion of audits, and shareholders to have the confidence that it will all come to closure soon.

To learn more about CMF’s Audit Ease program, click here, or contact Brian Dwyer.

See full newsletter here.

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