A new owner gains confidence through GAAP compliance and improved inventory valuations

BerryDunn’s Commercial Practice Group partners with clients to provide insights that inform effective growth strategies, help them assess and manage risk, and optimize return strategies for better profitability.

Our team of experts worked with a new owner to remedy accounting and reporting deficiencies and to provide accurate financial data to make meaningful decisions.

The challenge

An acquirer of a precision machining company was concerned with the competency of the company’s accounting department, the reliability of the company’s financial information, and other issues, including:

The company’s ability to properly account for the acquisition under Generally Accepted Accounting Principles (GAAP).
The reliability of inventory data presented within the company’s enterprise resource system.
The reliability of the standard costs used to value inventories and make pricing decisions, which had resulted in unusual fluctuation of the company’s month-to-month gross profit.

The solution

BerryDunn assisted the company with accurate accounting for the acquisition, including understanding and electing certain private company options allowed under GAAP.

Our team gained a detailed understanding of the company’s current inventory process and procedures to identify deficiencies. From this analysis, BerryDunn designed a cycle count program and a system to properly calculate and evaluate the company’s standard rates for valuing inventories. These processes and procedures were designed to be easily implemented by the company while minimizing disruptions to operations.

BerryDunn trained the company’s accounting department on the cycle count process and the new standard cost system.

Outcomes

The new owner gained confidence in the company's accounting and inventory procedures and the company had an accurate initial balance sheet that properly accounted for the acquisition.

Additionally, the company’s enterprise resource system provided accurate inventory data, which improved purchasing and production decisions, and the company was able to properly value inventories to make pricing decisions and to present accurate financial results to internal and external stakeholders.

Learn more about how BerryDunn helps clients build actionable strategies for short- and long-term success, or contact a member of our team.