A private equity-owned, renewable energy firm had been struggling with staff turnover, an under-skilled accounting team, and insufficient historical accounting processes. Because of this, the company could not generate U.S. GAAP compliant financial statements and complete the annual external audit that was necessary to raise additional funding to fuel its growth. Stout’s integrated accounting advisory services stabilized the company’s accounting function, provided technical accounting support across various areas, delivered audited U.S. GAAP compliant financial statements, and established improved processes to enhance effectiveness of the accounting function going forward.

Interim Management

Stout’s Interim Management team was deployed to quickly stabilize the organization and address resource gaps in the accounting function. Stout provided an interim corporate controller who oversaw month-end close, balance sheet reconciliations, and overall financial statement remediation while managing and training the company’s accounting staff.

Accounting Advisory

Stout dedicated substantial resources to support the company’s efforts to remediate prior period financial statements and correct accounting errors. Stout’s team led a full review of every process impacting the financial statements and ensured the company was executing in accordance with U.S. GAAP, and ensured that proper documentation was being prepared and maintained for an external audit.

Specific work included:

• Review and corrections of cash and cash reconciliations
• Review of accounts receivables by customer, and recalculation of allowance for doubtful accounts based on an upgraded policy
• Full rebuild of the company’s Inventory, Accounts Payable, and Inventory Liability accounts, and Cost of Goods Sold (COGS) balance at a vendor level
• Review and corrections of the company’s fixed assets, prepaid asset balances, and other assets/liabilities
• Review of debt accounting and preparation of debt related audit documentation
• Full rebuild of the company’s intercompany balances and equity balances, and preparation of equity roll-forward and capitalization tables
• Review and correction of the classification of all expenses (COGS versus Selling, General and Administrative Expenses), employee departments, payroll expense, and Foreign Exchange gains/losses
• Preparation of financial statements of consolidated entities
• Preparation of all documentation necessary to support the audit and support for the company through the entire audit process

Technical Accounting

Stout leveraged technical accounting experts to assist with the purchase accounting for two separate acquisition transactions during the reporting periods. This included preparation of the closing and opening balance sheets, drafting of the documentation and accounting memos for the company’s internal use and in support of the audit, and preparation of required purchase accounting financial statement disclosures.

Stout’s technical accounting experts also led the implementation of the new lease accounting standard (ASC 842) and managed the ongoing reporting and reconciliation process. Stout provided a dedicated resource to compile and analyze all new and existing lease agreements, migrate data into a new leasing software (Trullion), and generate and reconcile the entries needed for the implementation on an ongoing basis.

Lastly, Stout’s technical accounting experts advised management, drafted memos, and prepared journal entries on a number of other accounting issues, including share-based compensation, consolidation of partially or fully owned entities, impairment of goodwill and intangible assets, accounting for capital raises, legal entity functional currencies, and hedge accounting.

As a result of the bolstering and remediation of the accounting function, the company was fully positioned to engage with prospective investors to raise capital and enable future growth plans along with the possibility of becoming a public company.

Financial Reporting

Stout leveraged prior experience with the company to efficiently deliver a variety of valuation services. This included purchase price allocation work across two separate acquisitions and valuation of the company’s various share classes to drive accounting and financial reporting.