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For CFOs, Fourth Quarter Can Be Best Time for Year-End Cleanup

By:
S.J. Steinhardt
Published Date:
Nov 29, 2022

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Chief financial officers need to look beyond preparing for fourth quarter reports at this time of year and use the time for a year-end cleanup, a CFO magazine guest column advised.

In calling year-end cleanup a “time for redemption,” Eric Segal of CFO Consulting Partners provided a fourth-quarter checklist for CFOs to improve financial and business performance.

Treating service providers as if they are business partners “will put you on a better path beyond 2022,” he wrote. He advised contacting auditors, banking partners and lawyers to discuss any noteworthy issues that may arise in the coming year.

“The fourth quarter is a good time to clean up the immaterial things that may have accumulated throughout the year,” he wrote in noting that this is the time to review key general ledger accounts.

Preparing for uncertain times may also mean laying off staff. Segal recommended developing a process to adhere to generally accepted accounting principles (GAAP) if and when the appropriate severance reserves must be booked. In assessing assets, GAAP impairment testing rules should also be followed to “review the expected benefit and/or fair value of the assets compared to the current book value.”

Segal added that the fourth quarter is also the right time to assess the value of  company assets, both long-term and short-term, such as account receivables and goodwill.

Additionally, at this time of year, significant accruals should be analyzed to assure that they can supported on the balance sheet. “Find out today which legal actions are probable and estimable, so you are not chasing a law firm on New Year’s Eve,” he wrote.

Finally, Segal urged CFOs to take control of internal controls by testing them to assure compliance with the Sarbanes-Oxley Act, with the goal of discovering and remediating any deficiencies in advance of an audit.

“The year-end process can be a stressful time for CFOs,” he concluded. “Don’t allow the fourth quarter to manage you.”

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