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Manufacturing company teams up with Solaris to resolve accounting challenges, improving compliance and financial reporting with limited resources and a basic ERP system.
Manufacturing company faced several technical accounting challenges, including compliance with revenue recognition standards, capitalization of software development costs, and inventory costing for hardware production. Their understaffed accounting department, coupled with a basic ERP system, created hurdles in financial reporting and compliance, and internal control environment.
The Challenge: Strengthening Compliance and Addressing Technical Accounting Issues
The company faced significant challenges in their accounting processes, including unclear revenue recognition policies for customer contracts with multiple performance obligations. They lacked a proper framework for capitalizing software development costs, leading to all such costs being expensed. Inventory costing processes failed to allocate overhead appropriately. Finally, discrepancies between the GL and their capitalization table left equity misrepresented in their financial information.
The Solution: Comprehensive Analysis and Tailored Financial Reporting
Solaris conducted a thorough review of the company’s accounting policies and processes, addressing each issue with targeted solutions. For revenue recognition, Solaris provided an in-depth analysis of contracts and developed a clear, compliant framework. Solaris revamped inventory and software costing practices by identifying and quantifying costs eligible for capitalization. Additionally, Solaris reconciled the capitalization table to ensure equity accounts, and share-based compensation impacts were accurately represented.
"Solaris provided the technical expertise we needed to navigate complex accounting standards and improve the accuracy of our financial reporting. Their insights and solutions were invaluable in strengthening our compliance and preparing us for future growth.” - CFO, Manufacturing
The Impact: Enhanced Compliance and Accurate Financial Reporting
The company has a clear framework tailored for full compliance with accounting standards and improved financial reporting. They now have robust revenue recognition and inventory costing memorandums, including both quantitative and qualitative assessments, and their financial statements accurately reflect share capital. All prior deviations are quantified for internal analysis. These improvements reduced audit risks and strengthened their financial reporting foundation, positioning them for future growth and transparency.
Technical Accounting & Finance Transformation
With Solaris’ expertise, the company successfully addressed critical accounting challenges, enhanced their compliance with complex standards, and improved the accuracy of their financial reporting. These solutions positioned the company for greater financial transparency and audit readiness.
