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Today, many companies share research or technology to develop new products. For example, manufacturers might enter into a joint venture to conduct scientific research to design a new medical device. Or a watchdog group might work with a production company to create and distribute a documentary film.

The pandemic has presented numerous challenges for businesses, but it also taught us how to be resilient, cost-conscious and adaptable. Over the last few years, we’ve learned that remote working arrangements offer many benefits, including reducing the time and cost of performing many tasks. Here’s how these lessons translate to the work auditors do to prepare your company’s financial statements.

Transitioning from on-site to remote procedures

Traditionally, audit fieldwork has involved a team of auditors camping out for weeks (or even months) in one of the conference rooms at the headquarters of the company being audited. Now, thanks to technological advances — including cloud storage, smart devices and secure data-sharing platforms — many audit firms conduct certain auditing procedures remotely, rather than sending auditors on-site.

For example, drones and video-conferencing technology can be used to observe physical inventory counts, eliminating the expense of sending auditors to facilities that store inventory. For companies with multiple sites, performing this task in-person was costly and difficult to schedule, especially around the holidays.

In addition to saving time and audit fees, allowing auditors to work remotely improves the work-life balance for auditors and in-house accounting personnel. Your employees won’t need to stay glued to their desks for the duration of the audit, because they can respond to the auditor’s inquiries and document requests remotely.

Facilitating remote work

The transition to remote audits requires flexibility, including a willingness to embrace the technology needed to exchange, review and analyze relevant documents. You can assist the transition process by:

Being responsive to electronic requests. Auditors who are out of sight shouldn’t be out of mind. Answer all remote requests from your auditors in a timely manner. If a key employee will be on vacation or out of the office for an extended period, give the audit team the contact information for the key person’s backup.

Giving employees access to the requisite software. Sharing documents with remote auditors may require you to install specific software on employees’ computers. But your company’s policies may prohibit employees from downloading software without approval from the IT department.

Before remote auditors start their work, ask for a list of software and platforms that will be used to interact with in-house personnel. Give the appropriate employees access and authorization to share audit-related data from your company’s systems. Work with IT specialists to address any security concerns they may have with sharing data with the remote auditors.

Tracking audit progress. With less face-to-face time with your auditors, you’ll have fewer opportunities to receive updates on the team’s progress. Ask the engagement partner to explain how they’ll track the performance of their remote auditors, and how they plan to communicate the team’s progress to in-house accounting personnel.

Disclosure of contingent liabilities — such as those associated with pending litigation or government investigations — is a gray area in financial reporting. It’s important to keep investors and lenders informed of risks that may affect a company’s future performance. But companies also want to avoid alarming stakeholders with losses that are unlikely to occur or disclosing their litigation strategies.

In today’s volatile economy, many businesses and nonprofits have been required to write down the value of acquired goodwill on their balance sheets. Others are expected to follow suit — or report additional write-offs — in 2022. To the extent that goodwill is written off, it can’t be recovered in the future, even if the organization recovers. This makes impairment testing is a serious endeavor that usually requires input from your CPA to ensure accuracy, transparency, and timeliness.

Major events or transactions — such as a natural disaster, cyberattack, regulatory change, or the loss of a large business contract — may happen after the reporting period ends but before financial statements are issued. The decision of whether to report these so-called “subsequent events” is one of the gray areas in financial reporting. Here’s some guidance from the AICPA to help you decide.

Business transactions with related parties — such as relatives, parent companies, subsidiaries and affiliated entities — may sometimes happen at above or below market rates. If these transactions are not adequately disclosed, this could be misleading to the users of  your company’s financial statements, because undisclosed related-party transactions may skew the company’s true financial results.

Starting in fiscal year 2022, all entities — except nonprofit organizations in the scope of Topic 958, Not-for-Profit Entities, and employee benefit plans — must provide detailed disclosures about government assistance. Here are the details of the new rules.

In late January, a survey entitled “Audit Committee Practices Report: Common Threads Across Audit Committees” was published by Deloitte and the Center for Audit Quality, an affiliate of the American Institute of Certified Public Accountants. The survey analyzed 246 responses, including 86% of respondents who served on audit committees of public companies. Here are some key findings from that survey.

With the holidays and flu season just around the corner, many employees will be taking time off from their jobs for both vacations and illnesses. Business owners will need to be aware of the rules surrounding accrual, recognition, and measurement of these absences.

A contingency refers to a condition, situation, or set of circumstances where it is uncertain whether or not a gain or loss will occur in the future. The result of the current condition, situation, or set of circumstances, is unknown until future events occur (or do not occur). Contingencies are different from estimates, even though both involve a level of uncertainty. Calculating depreciation using an estimated useful life or amounts accrued for services received are not contingencies.