Improving upstream accounting timing and accuracy
Superior CFO Advisory services supporting successful financial reporting
Private equity owners and management of an oil & gas company that leases working interests were experiencing delays and inconsistencies in its accounting. They came to Aventine Hill Partners for help.
We provided a CFO Advisory Partner who was an expert in the upstream oil and gas industry to step in as part-time Interim CFO with a focus on assessing the current problems and recommending corrective actions and improvements. The CFO consultant reviewed current processes for receiving Lease Operating Expense (LOE) statements from EnergyLink (formerly JIBLink), receiving production data and remittances from the operators, and loading these to the accounting system. Next, the procedures for preparing financial statements and Lease Operation Statements (LOS) were reviewed. There were both timing problems with receiving data and challenges with loading data into and extracting data from the accounting system.
- Master data gaps in the accounting system were identified and corrections made to allow for a more accurate posting of financial transactions.
- An Excel model used to prepare the financial statements was reviewed and updated to better integrate with the accounting system, allowing for more accurate and efficient reporting.
With a better structured accounting system, options for improving and adapting to timing challenges with the operators were evaluated. The trade-offs between accruing for certain data or waiting for actuals were reviewed and a path forward chosen.
An audit was in progress during the assessment and our CFO Advisor took a hands-on role in reviewing draft financial statements prepared by the Controller and preparing adjustments to correct for impacts from prior accounting process and system challenges. For other adjustments, a detailed action plan was provided that the Controller could execute.
Last, the CFO Advisor provided recommendations for improving the accounting organization. Options were presented for adding different types of roles to rebalance workload and ensure the proper expertise would be in place on an ongoing basis. Areas where training would improve the existing team's capabilities were also recommended.
By bringing in a part-time Interim CFO, the private equity owners and company management quickly and cost effectively regained an understanding of the financial results of the company. Improvements in processes and systems were made and a revised accounting organization defined that will result in the proper in-house expertise to sustain the improvements.
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