Background
In a recent engagement, 8020 Consulting was brought in by a leading wine distributor to oversee their year-end audit and financial reporting process. The company faced a significant challenge when a key team member unexpectedly departed just as the annual audit was about to commence. Additionally, there were specific technical accounting issues, including the goodwill Step 0 approach to goodwill impairment testing and the application of the VIE (Variable Interest Entity) model in assessing acquired interests.
8020 Consulting’s Solution
To address the situation, 8020 deployed a highly skilled consultant with extensive experience in managing external audits. Leveraging their knowledge gained from working with 8020 and within the industry, the consultant quickly familiarized themselves with the unique circumstances and seamlessly integrated into the team. They took charge of managing both the company’s internal staff and the external audit team throughout the process. The consultants reviewed and analyzed appropriate accounting literature for goodwill impairment testing and assessment of VIE, establishing the company’s position and preparing a supporting memo for review by the auditors.
Outcome
Through collaborative efforts, 8020 Consulting and the company successfully completed the annual audit within bank deadlines, resulting in a clean opinion from the auditor and accurate financial statements. The consultant’s expertise in technical accounting played a crucial role, as they identified and prevented an $8 million write-off of goodwill and intangible assets, leading to substantial cost savings. This successful collaboration demonstrated 8020’s ability to quickly address unexpected challenges, provide skilled leadership and deliver strategic guidance – ultimately ensuring a smooth and efficient audit process while strengthening the company’s financial position.
