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Case Studies

Rather than give you a laundry list of the things we do, below are some actual client situations and how we handled them.

SITUATION

A utility company with a commodity trading division was trying to implement a documentation project required by the Sarbanes-Oxley law (SOX). The in-house audit staff was struggling with how to correctly implement the SOX requirements for the highly-complicated commodity trading business, spent a significant amount of time on it, but was not able to complete the project.

OUR SOLUTION

We analyzed the company’s trading procedures and systems, from front office through middle office and back office, and put the complete SOX documentation in place within two months.


SITUATION

A $7 billion international company was trying to install hedging and a hedging accounting system to move its derivative accounting from a manual process to an automated system. The in-house accounting team had spent more than six months on the project, but could not make it work and so all the calculations were still being done by hand on spreadsheets.

OUR SOLUTION

We picked up the project from where it was left. After a deep dive into their manual procedure and learning their system, we completed the conversion to the online platform in just two months. We then improved their existing process, reducing month-end closing from several days to under 5 hours.


SITUATION

A $50M US manufacturing company with operations in China, Canada and Europe was on the edge of bankruptcy (-2% EBITDA and $10M debt). The company was struggling to meet its payroll, utility and vendor payments, and vendors had stopped offering the company credit.

The accounting team was constantly working overtime, it could take 20 days or more to close their books, and numbers from various reports did not tie together. The company was in the process of being acquired and the internal audit team from the acquiring company rated the company’s accounting as an “F”, the lowest possible rating. The company’s accounting team in China was constantly in crisis with the local Chinese tax authorities and the foreign currency bureau. The China operation had constantly complained about the quality of the China accounting team.

OUR SOLUTION

We took over management of the US accounting and finance team. Within the first 2 months, we pulled the staff together so that it operated as a team, got them to follow procedures and got month-end closing under control. Within six months, closing time was reduced to 5 business days. We reduced overtime from excessive to a few days a month, and only during month-end closing. Team members started to take vacations and develop a work-life balance. We implemented a task rotation process so that every team member could perform every task in the department, solving the problem of people taking vacations or being off due to illness. All of this improved moral and productivity. We also streamlined the cash application process and reduced outstanding receivables from 70 days to 50 days almost immediately. We revised and improved internal processes, cleaned up a number of historical issues, improved the US finance team, and assisted with China Finance team. One year later, the company paid off its $10M debt and its credit rating improved. Two years later, the company’s EBITA had increased to 8%, the internal audit rating improved to "B" and the company started looking for businesses to acquire. The company president said that we had made a “revolutionary change” to the accounting and finance team.


SITUATION

A $billion company had major problems with its accounting team. Although the company had a sufficient cash position, the AP team wasn’t paying vendors correctly or on time, so vendors refused to sell to the company because of its payment problems. Monthly closing was highly problematic and headquarter management didn’t trust the financials they got. The accounting staff had significant overtime, working until midnight and even sleeping in the office during closing week. Also, turnover in some groups was as high as 50%.

OUR SOLUTION

We took over the controller position, analyzed the problems and updated the company’s procedures to correct them. Within three months the company was paying its vendors correctly and on time. Closings were improved along with accuracy and the numbers began to be trusted by headquarter management. The excessive overtime was reduced to a normal level and team members went home at reasonable time during closing. During the next nine months, historical problems in the AP system were cleaned up and we implemented various improvements in other accounting processes that eliminated unnecessary paperwork and automated the rest. Productivity across all teams (AP, Billing and GL and Reporting) improved 30~ 50%.

Together with the managers, we revitalized the staff by hiring qualified people and giving them coaching and training once they were on board. The AP team that was once known as the “problem team” was transformed into a respected talent pool that began supplying members to other finance groups throughout the company.


SITUATION

A large Chinese company opened a branch in US. The local accounting firm they hired made significant mistakes on their property tax filings, causing them overpay. In addition, the local accounting firm did not coordinate with the accountant at headquarters in China who did not understand US tax regulations regarding capital and revenues. This caused the company to misallocate funds and the US subsidiary had to pay income tax that it did not really owe. These mistakes added up to over $300,000. Meanwhile, the US branch was being audited by tax authorities from both countries, causing anxiety for management and draining management time and focus.

OUR SOLUTION

We took over all financial management of the US operation and worked with the IRS, the tax authorities in China, and the accountant at headquarters to resolve the situation. We recommended a course of action to the client which we implemented, and we educated the Chinese accountant on the relevant US tax regulations. Then we worked with the local property tax offices to fix the historical error caused by previous accounting firm. Based on the resolution we expect that the company will get back the approximately $150,000 that the company overpaid.

Just as important, since we are managing finance and accounting for the US office, management on both sides of the Pacific have peace of mind and are free to focus on marketing and sales.