Saturday, March 6, 2010

End of the Busy Season? Not Really.


Less than six weeks from now, we’ll be officially ending our busy season. So we’re sort of feeling the urgency now (which is why I was not able to post anything for the past three weeks). Expect the long hours, less sleep – hours, more week-end work, tempers rising and the general chaos of trying to finish everything on time. Because, whether we like it or not, on April 15 (for those with December 31 year – end), its pass your papers (or in this case, audited financial statements) time.

So why the title then? I mean, if the busy season will end six weeks from now, why is the title a question rather than a fact?

Because, in my 8 years in a big auditing firm, I haven’t really experienced a honest-to-goodness April – 15 – end – of – busy – season kind of thing.

Not trying to frighten you or disillusion you (that is, assuming you are already looking forward to the end of the busy season) but that’s just how it is.

For one, we still have what we call ‘tentative’ accounts, or financial statements that could not be finalized on time for the April 15 deadline. There are really various reasons why this happens. One, of course, is because the client (it’s always the client, by the way) did not submit what we need to finish the financial statements on time. Another is because there are certain issues that we cannot agree with the client and we need more time to thresh everything out. Still another is because the client’s accounts and balances are so much in disarray that we need more time to analyze everything out before we can sign off on the financial statements.

Two, we still need to clean up our working papers, sign off on them and ‘archive’ them (or store them properly) for proper documentation and for the next year’s audit. And if you think this will not take any work, well, this is not always the case. You will need to really spend time cleaning up those working papers, especially if you were in such a hurry during the busy season that your working papers are not in good order (and I’m saying this in a kind manner by the way).

Three, you have a client or clients with a year ending other than December 31, then your busy season will definitely move towards the date of the actual deadline of this client or these clients. Lucky you if this is the only client you will deal with during that time. But what if you have a client with a March 31 year-end with a deadline in the middle of the year when you are already into the planning season for the next year?! Goodbye to your ‘slack’ season.

Four, you have a special job. This happened to me during my last year with the auditing firm. Instead of finishing everything by end of April, we still have to extend the busy season to June of that year because we were preparing for the IPO of one of our clients! I didn’t do any overnights during that busy season but in June, I certainly did them!

And those are just some of the reasons why your busy season can get extended after the April 15 deadline. I’m sorry if I rained on your parade but heck, that’s the reality for some of us. I don’t want to say for all either so if you don’t fall into this ‘some’ category, then you’re lucky. But if you’re one of those unlucky ones, better take a deep breath, gear up and prepare for a longer busy season. 

6 comments:

  1. I still don't fully grasp the morality of signing off on the financial statements at the deadline, even though there are numerous "tentative" accounts outstanding. If there are still issues that the auditor does not agree with, then how can the auditor give an unqualified opinion on the F/S?!

    I understand the practical necessity of signing off by the deadline, and the potentially severe consequences for failure to do so. But doesn't this practice defeat the whole purpose of why we have auditors in the first place -- to keep the public companies honest and make sure they are following the rules?

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  2. Just a small clarification Sardaukar. 'Tentative' accounts mean the financial statements are not signed off by the external auditor so there is no signed audit opinion yet. I agree that sometimes, there are severe consequences and actually this puts pressure on the auditors to sign off before the deadline. But then again, there are really some cases when the auditors refuse to sign off because the balances are not 'quite right' yet and they won't budge not even for the deadline. This is true for both public (though I've seen very few cases of tentative financial statements for public companies) and private companies (which are actually more prevalent).

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