One way of reducing risk of a startup is minimizing its operating expenses. Opportunity cost of this option is quality of work could be compromised. For an e-commerce company targeting a listing, this is a delicate balancing act.
Recently an e-commerce company targeting a listing approached us with their problem. Being a start-up, the management requested the finance department of a related company to help them maintain their accounting records. Inevitably and understandably, the accounting records produced was grossly inaccurate. Although the management has established a new shared services centre that would greatly improve the quality of accounting work, the fledging accounting team would not be in a position to address prior year’s backlog accounting records while concurrently updating the current year’s accounting records.
RSMO put together a project team with accounting and auditing expertise to look into prior year’s accounts. Our project team members recommended more than 100 accounting adjustments, corrections to its chart of accounts, as well as advising them on appropriate accounting practices so that they could meet the requirements of applicable financial reporting standards.
We also sounded out to the management that it’s existing work culture whereby operations and accounting personnel operating under silo mentality need to be changed. Inter-departmental communications failure resulted in relevant information not being communicated to facilitate production of accurate and timely accounting records. We would like to think that the management found our recommendation relevant when re-designing their internal processes and writing up the service level agreement with their shared services centre. With this foundation in place, our client is in a much healthier position to its business objectives and aspiration to be listed in an overseas stock exchange.
For RSMO, it was also an opportunity to gain experience and insight into how e-commerce business was being conducted. We feel that such experience would help us serve our current and future clients better.
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