Case Study: Balance Sheet Reconciliation and Intercompany Controls
Rebuilding Financial Accuracy for a Multinational Logistics Firm
Discover how we supported a decades-old logistics and manufacturing business through a deep financial clean-up, uncovering hidden risks, correcting intercompany misalignments, and laying the groundwork for reliable monthly reporting.
Financial Challenges
The Company—a U.S.-based third-party logistics, ecommerce, and manufacturing business—operated across borders with key vendor support from sister entities in Mexico. With over twenty years in operation, it had recently migrated from QuickBooks Desktop to QuickBooks Online. However, years of poor reconciliation practices, inflated asset balances, and unresolved intercompany discrepancies clouded the financial picture.
We were brought in to provide Controller and CFO-level consulting. The immediate priority: validate the 2021 balance sheet by building a fully reconciled financial package. Given the time that had passed and the complexity of inventory flows, we clarified early on that inventory accuracy could not be guaranteed—but every other account would be verified.
Our Approach
1
Account-by-Account Reconciliation
2
Intercompany Collaboration
3
Balance Sheet Normalization
This work prompted deeper cooperation across related-party entities. For the first time, intercompany balances were reviewed and confirmed by all parties—exposing issues such as incorrect pricing, misallocated shipping costs, and inflated revenues on one side that distorted COGS and gross margin on another.
Of the 149 balance sheet accounts reviewed, 85% required adjustments. See detailed metrics below:
| Balance Sheet | Initial Value | Net Value | Absolute Values | ||
|---|---|---|---|---|---|
| $ | $ | % | $ | % | |
| Assets | $15,525,000 | ($2,157,000) | -13.89% | $23,933,000 | 150.32% |
| Liabilities | $12,389,000 | ($2,683,000) | -21.66% | $4,065,000 | 32.79% |
| Equity | $3,135,000 | $526,000 | 16.78% | $526,000 | 16.78% |
The Results
After verifying the 2021 balance sheet, we turned our attention to the current period (July 2022). Thanks to improved communication and a now-familiar process, the July package was completed in half the time. We’re now working with the Company to make this financial reporting cadence a standard monthly practice.
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