A m arketing a gency needed revenue accounting assistance:
A Case Study
The client’s chief financial officer and senior leadership were experiencing issues getting accurate, timely financial information due to the various revenue contracts and the volume of projectrelated revenue. The company was approaching their year-end reporting as well as their audit and needed to ensure that the revenue recognition methodology was accurately capturing the correct amounts of revenue in the appropriate periods. The projects and contracts needed to be reviewed for proper cutoff and to determine how much revenue was to be recognized, deferred, or unbilled at year end. Once the analysis was done for the year end, a routine process needed to be established for timely monthly revenue recognition on an ongoing basis.
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CLIENT:
Media group offering marketing, research, and data science.
CLIENT’S GOALS:
BPO - Outsourced Finance Operations, Revenue Recognition, Project Accounting, Period-End Close
OUR TEAM’S ROLE:
Citrin Cooperman’s team provided industry knowledge and best practices for revenue recognition, project - level accounting, and improved accuracy and timing of period-end close
TOOLS:
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Challenges Citrin Cooperman’s Approach
• Managing multiple projects with varying terms, deliverables, and contract length
• Lack of knowledge on ASC 606 and applying revenue recognition to project-based work
• Manual processing of period-end revenue resulting in errors and delay of close
• Lack of documentation of period-end processes and review procedures
• Cash flow issues related to timing of client invoicing versus vendor payments
• Reviewed contracts to identify key elements needed for revenue recognition
• Aligned revenue recognition with current GAAP standards to ensure accurate revenue amounts were recognized in the correct periods
• Created standard operating procedures (SOPs) documenting the period-end process and made recommendations for improvement
• Implemented process to compare revenue earned to client billings and vendor spending
NetSuite, HubSpot, MuleSoft
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Results
• Reported accurate year-end revenue for management’s review and forecasting
• Documentation of detailed processes and workpapers to be used in month-end close and audit support
• Reduced month-end close by 15 business days
• Improved cash flow by identifying projects that were severely underbilled
