Accounting Policy Development

Written accounting policies serve multiple purposes. They provide clear guidance to the finance team on how to apply US GAAP to the company’s specific transactions, which supports consistency across reporting periods. They give auditors the documentation they need to understand and test the company’s accounting — and auditors are required to review them as part of their risk assessment procedures. For public companies, policies also underlie the disclosures in financial statement footnotes. Companies without well-documented policies are more likely to have audit findings, inconsistencies in reporting, and difficulties during due diligence.

As early as possible — ideally twelve to eighteen months before the target IPO date. Formalizing policies ahead of the audit ensures that the finance team is applying GAAP consistently, gives the PCAOB auditors the documentation they need to complete their risk assessment, and reduces the risk of audit adjustments that could affect the S-1 financial statements. Many accounting issues that result in restatements or audit delays in pre-IPO companies can be traced back to informal or nonexistent accounting policies.

Policies should be specific enough to guide the finance team’s accounting decisions without requiring judgment on every transaction — but not so prescriptive that they become inflexible. A good revenue recognition policy, for example, describes the company’s contract types, identifies the performance obligations in each type, explains how the transaction price is allocated, and describes when and how revenue is recognized. It is specific to the company’s actual business model, not a recitation of the standard.

Policies should be reviewed annually as part of the financial reporting cycle and updated whenever: a new accounting standard is adopted, the business model changes materially (new revenue streams, new financing structures, acquisitions), the company’s facts and circumstances change in a way that affects the accounting conclusions, or auditors identify a gap between the written policy and actual practice. Falling behind on policy updates is one of the most common sources of audit findings.

An accounting policy is a standing document that describes how the company applies GAAP to its recurring transactions and circumstances. A technical accounting memo is a one-time analysis that documents the accounting conclusion for a specific, typically non-recurring, transaction or event — an acquisition, a new instrument structure, a debt modification. The two are complementary: policies cover the routine accounting, and technical memos cover the specific judgments that fall outside the policy. Both are part of the documentation package auditors review.

Yes. We regularly work with foreign private issuers and companies with cross-border structures, including IFRS reporting, US GAAP reconciliations, and multi-entity consolidations for companies with domestic and international subsidiaries.

In most cases, we can begin within a few days of finalizing our agreement. Our onboarding process is straightforward — a brief discovery session, a clear statement of work, and secure access setup. We do not have lengthy intake procedures that delay the start of actual work.