The Situation
Strong operations, weak financial foundations
Despite strong operations, the finance function had evolved informally. Revenue was recognised inconsistently across projects, contract documentation was weak, and financial statements were prepared mainly for compliance rather than decision making. The business had never undergone a statutory audit and lacked the financial credibility required to engage larger corporate and government clients.
Our Approach
Audit readiness before the audit
We commenced with a focused audit readiness review and identified gaps against IFRS Accounting Standards and statutory requirements. Particular attention was given to long-term service contracts and project cost allocation. Our team provided live feedback to management which allowed them to standardise revenue recognition based on performance obligations, align project accounting with contractual milestones and improve documentation without over engineering controls.
The client designed a right sized control framework, introducing practical monthly closures, basic segregation of duties and management review procedures appropriate for an SME environment – all based on our management letter.
Outcome
A first audit that actually added value
The client successfully completed its first statutory audit with a number of findings which were then used to help improve the Financial Reporting Close Process (“FRCP”). Financial statements became more consistent, credible and predictable. The improved reporting supported larger tenders, enhanced stakeholder confidence and positioned the business for controlled growth.
Key takeaway
RAA Perspective
For services businesses, disciplined revenue recognition and simple controls significantly enhance credibility without compromising agility.