Audit Preparation Mindshift Partners has provided Audit Preparation for clients virtually since its inception in 2004. Our CPAs and consultants create preaudit schedules before the auditors come in, thereby enabling the auditors to perform their field work in a more expedited manner.
We can be helpful with the following:
- Preaudit financial statement preparation
- 10-K, 10-Q and MD&A Preparation
- Workpapers
The main advantage to using MindShift Partners is that we fill the gap between what your internal staff can do, and what your auditor can't do because of their independence requirement. Our unique approach to Audit Prep also allows the auditor to save significant time and scarce resources, and the company to save money. The result for the client is a faster, smoother, less costly audit process.
Here are some Examples:
- Material financing transactions; revenue recognition
- Goodwill impairment
- Purchase accounting
- Stock options
-Warrants
- Junior capital
These are all areas beyond a simple A/R aging or trial balance, where an outside party can be helpful in assessing the impact on the financial statements, and preparing workpapers before the company's materials go to the auditor for review.
Our rates are lower than auditor and consulting firms and we add value by streamlining the overall audit process. We also work in a complementary, streamlined fashion with your auditors to get the job done quickly and correctly. The end result is that you save time and money on your audit/review process, quarter after quarter, year after year.
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Situation
A New-York based hedge fund invested in a $50MM wireless company in Burbank with the objective of taking the company public. An auditor was chosen, and the dates for the road show to institutional investors were set. The Bookkeeper/Controller at the company had never been through an audit, however, and did not know which schedules to prepare. The NY-based auditor was not getting the information that they needed in the format that they expected. The auditor in turn chose to focus on its other clients. This slowed down the entire process, and put the timeline for completing the deal at risk.
Action
MindShift Partners was retained by the company to prepare preaudit schedules, and we also provided an Acting CFO during the transaction. We analyzed a number of issues, including revenue recognition and the equity section, and prepared the balance sheet schedules in the expected format. Due to our involvement, the auditor got re-engaged in the process. The schedules that we prepared enabled to complete their fieldwork in a short timeframe (and at a relatively low cost) because they were able to hit the ground running.
Result
The deal got back on track, and the company paid less in audit costs than it otherwise would have.
Situation
A company in the oil-exploration industry switched auditors, and wanted to prepare preaudit schedules to speed up field work and lower audit costs.
Action
MindShift Partners was engaged to prepare preaudit schedules. Significant attention was paid to revenue recognition, accounting treatment for stock options, and the equity section of the balance sheet which was quite complex.
Result
The auditors' fieldwork took only 2 days. The company got a clean audit opinion. Due to the fact that our rates were lower than the regional audit, the company was able to save significantly on their audit costs.
Situation
A company in the healthcare industry needed a consultant who could work daily with their Controller to prepare preaudit schedules.
Action
MindShift Partners sourced a CFO-level consultant to work side-byside with the company Controller to complete schedules and perform analysis.
Result
Our consultant got the company and the Controller fully prepared for the audit, such that fieldwork was expedited and the company got a clean opinion. This is a good example where MindShift sourced a single Consultant, versus a team of Consultants with significant Partner involvement. This approach helped the company control their engagement costs.
Diligence Prep MindShift Partners works with companies undergoing a transaction to prepare schedules to expedite the due diligence process. In doing so, we focus the analysis on the traditional "problem" areas of the balance sheet to ensure compliance with GAAP:
- Revenue recognition
- Accounting for stock options
- The equity section
Having all the schedules ready, organized and ACCURATE for all the deal parties to review maximizes the various parties' time, and allows the auditor to complete its review of issues in an expedited manner, which typically results in lower Accounting-related deal costs.
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Situation
An LA-based asset management firm engaged a local investment bank to explore strategic options for one of its portfolio companies in the building materials industry. The decision was taken to sell the company.
Action
MindShift Partners was brought in to prepare preaudit schedules prior to due diligence and audit. We dug into the balance sheet to ensure GAAP compliance. In doing so, we found several instances where the accounting treatment appeared not to conform with GAAP, and we were tasked with doing preliminary analysis so that the auditors could render a definitive opinion. We communicated with the company's investment banking firm so that they could revise their timetables and manage the issue with potential investors in the deal.
Result
The due diligence process was delayed slightly while the auditor opined. The upshot, however, was that the potential investors in the deal appreciated the fact that the company surfaced the issue proactively, rather than appearing to "hide the ball" for the investors to uncover later, if at all. The company found a buyer, and the deal was completed.
Investor-Grade Financial Models We have helped several companies to build investor-grade models to attract investment. Those models have impacted other areas in the company, particularly marketing and strategy.
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Situation
A funded startup needed an investor-grade model to raise capital.
Action
We created the model, and also put in an Acting CFO part-time.
Result
The model impacted other areas of the business, including Marketing and IT. We were able to add value not only in the Finance area, but in several areas of the business, including software selection, Google adwords campaigns, and promotions. We eventually provided critical input on strategy which materially increased the company's valuation.
Analysis Mindshift has worked on several analysis projects where the company simply didn't have the capabilities in-house to perform the work. In one case, the client leveraged our capabilities to perform activity-based costing analysis to implement dynamic pricing for their products. In another case, the client worked with Mindshift to restructure their balance sheet to maximize liquidity.
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Situation
An LA-based ticketing company had recently transitioned to a new Accounting system, and was having trouble getting accurate AR and AP balances.
Action
MindShift's consultants worked with the systems vendor to analyze the interface that was causing the problem. After some modifications to the interface, there was a reconciliation process between balances in the old and new systems.
Result
The company was able to reconcile AP and AR balances between the systems, and the vendor fixed the interface that was causing the problem.
Situation
A company in the trade show industry was in a cash crunch, and needed help restructuring its balance sheet.
Action
First, we renegoitated payment terms with key vendors. Second, we restructured the company's debt maturities to free up additional liquidity. Third, we assessed the company's pricing strategy relative to its competitors, and recommended raising prices.
Result
The company generated more liquidity while still paying key vendors. The company was also able to avoid Chapter 11, due mostly to raising its prices, thereby generating additional revenue.
Situation
A company in the produce industry wanted to better understand its direct and indrect costs so that it could more scientifically price its products, and keep its margins consistent across products.
Action
MindShift Partners was engaged to do an Activity-Based Costing analysis to understand the true costs of direct costs such as labor, and indirect costs such as allocated corporate overhead, and then make recommendations regarding pricing based on those costs.
Result
Our consultant analyzed the company's costs extensively as they related to each product, and created a model for the company to use ongoing to price its products according to those costs. The margins were more consistent across products, and made much more sense after we were done. Best of all, we trained the client to understand, use and maintain the model ongoing, so they were able to make rational pricing decisions in a dynamic way without being perpetually dependent on consultants.
Situation
An e-commerce company in the computer and electronics business wanted consulting help to add a higher level of expertise to their current accounting function, and do some important analysis on the amount of inventory that was building up unsold on its warehouse floor every month.
Action
MindShift Partners provided part-time consulting help around the edges to analyze margins, and made recommendations concerning product mix and SKU consolidation. We also analyzed inventory turns to reduce the amount of obsolete inventory that went unsold each month.
Result
The company realized significant gains in short-term cash flow from the greater inventory turns, and also greatly simplified its offering by paring down the SKUs available to its customers. The project had immediate and significant ROI, and paid for itself in a short amount of time.
