The Financial Reporting Checklists
Every Firm should be Doing
Presented by
Rebecca Kelley, CPA
Maggie Kennedy, CPA
FM34
4/5/2017
3:00 PM - 4:15 PM
The handouts and presentations attached are copyright and trademark
protected and provided for individual use only.
Financial Reporting Checklists
Rebecca Kelley, CPA
Maggie Kennedy, CPA
Introductions
Rebecca Kelley, CPA
Consulting Partner
[email protected]
Maggie Kennedy, CPA
Consulting Senior Manager
[email protected]
1
Course Objectives
Illustrate financial reporting checklists and
how to create them for your firm.
Examine three ways to maintain control
and oversight without being in the details.
Summarize comparative financial analysis
for your firm.
Audience Participation
Why did you choose this session?
What are you hoping to take away?
2
Checklists
Compliance Checklist
Monthly Close Checklist
Compliance Checklist
Q: What is it?
A: Tool for organizing key compliance
deadlines, identifying recurrence and
assigning responsibility.
3
Compliance Checklist
Q: Who is responsible?
A: Each task owner is responsible for signing
off on his/her monthly tasks. Accounting
manager or equivalent administers list.
Compliance Checklist
Q: How does this benefit my firm?
A: Protects your firm from missed deadlines,
penalties and risk of loss of institutional
knowledge
4
Compliance Checklist
Compliance Checklist
Key points:
• Include ALL recurring tasks and filings
• Globally known and accessible, including
executive management
• Link source documents whenever possible
5
Monthly Close Checklist
Q: What is it?
A: Tool for managing the month-end close
process, assigning detailed task
responsibility and approval
Monthly Close Checklist
Q: Who is responsible?
A: Each task owner is responsible for signing
off on his/her monthly tasks. Accounting
manager or equivalent administers list.
6
Monthly Close Checklist
Q: How does this benefit my firm?
A: Creates accountability and
helps to ensure accuracy of
monthly financial reporting.
Monthly Close Checklist
Key points:
• Include reconciliation for each balance
sheet account, P&L analysis, internal and
external financial reporting requirements
• Identify both preparer and reviewer for each
• Maintain consistent business day goals for
each step in the monthly close process
7
Control and Oversight
Three ways to maintain
control:
• Balance Sheet Analysis
• Income Statement
Analysis
• Key Performance
Indicators (KPIs)
Balance Sheet Analysis
Cash Balance Trend
• DO: Maintain cash balance adequate to
fund operations
• DON’T: Build cash balances as a means to
“strengthen the balance sheet”
8
Balance Sheet Analysis
Current Ratio
Total Current Assets
Total Current Liabilities
• Indicates firm’s level of liquidity
• <1 indicates poor financial health
• >2 indicates inefficient use of assets
Balance Sheet Analysis
$1,400,000
4.50
4.00
$1,200,000
3.50
$1,000,000
2.50
2.00
$600,000
Current Ratio
$800,000
1.50
$400,000
1.00
$200,000
0.50
Cash
OCT-16
SEP-16
AUG-16
JUL-16
-
JUN-16
$-
MAY-16
Cash Balance
3.00
Current Ratio
9
Balance Sheet Analysis
Days in Accounts Receivable
Average AR Balance
(Net Fees / 365)
• How timely is your firm collecting fees from
clients upon delivering services?
• How does this affect the firm’s cash flow?
Balance Sheet Analysis
Days in Accounts Payable
Accounts Payable
Daily Purchases
• How timely is your firm paying its vendors?
• How does this affect the firm’s cash flow?
10
AR/AP Analysis
45
$1,400,000
42
40
40
$1,200,000
$1,000,000
34
Days
30
$800,000
28
28
27
25
$600,000
25
24
Cash Balance
35
23
23
20
$400,000
15
$200,000
15
14
OCT-16
SEP-16
AUG-16
JUL-16
JUN-16
$0
MAY-16
10
Axis Title
AR Days
AP Days
Cash Balance
Income Statement Analysis
Net Fee Trend
• 13-month trend reveals seasonality, prior
year comparability
• Are net fees growing at the expected rate?
11
Income Statement Analysis
Personnel Expenses as % of Net Fees
• How efficiently is the firm utilizing its human
capital?
• Are fee rates in line with growing salary and
benefit costs?
Income Statement Analysis
Operating Expenses as % of Net Fees
• How do the firm’s operating expenses
fluctuate with revenue?
• How are operating expenses scalable or
controllable?
12
Income Statement Analysis
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
Net Fees
Personnel Expenses (Producers)
OCT-16
SEP-16
AUG-16
JUL-16
JUN-16
MAY-16
APR-16
MAR-16
FEB-16
JAN-16
DEC-15
NOV-15
OCT-15
$-
Operating Expenses
Key Performance Indicators
Productivity
Utilization
Average number of billable hours
for producers
Blended Rate
Gross fees divided by gross
billable hours
Partners: Other Producers Number of non-partner producers
divided by number of partners
Utilization Rate
Number of billable hours divided by
total hours for producers
13
Key Performance Indicators
Client Value and Producer Efficiency
Write-downs
Produced billable fees not billed to the
client (various reasons)
Net fees
Gross fees less write-downs
Realization %
Net fees divided by gross fees
Net fees per FTE
Net fees divided by total full time
employees (can be segregated by level
or position type)
Key Performance Indicators
Profitability and Operational Efficiency
Days in Unbilled WIP Average unbilled WIP divided by daily
net fees
Collection %
Fees collected divided by fees billed
Unbilled WIP as % of Average unbilled WIP divided by gross
Gross Fees
fees
14
Questions?
15
Your opinion matters!
Please take a moment
now to evaluate this
session.