I’m a controller for a $60m professional services co. We are a subsidiary of a larger company who is PE backed.
I report directly to CFO - this is my first job in industry, I was previously an auditor. The only people above my boss are the CFOs at our parent company who I have no contact with.
My CFO asked me to make some year end adjustments that, IMO, are sketchy - so that we hit our projected EBITDA. Reversing negative adjustments to revenue, overaccruing receivables, under accruing liabilities etc. He always comes up with some weak rationale, think there is about $2m on our balance sheet that we can’t substantiate. As a former auditor I know what is good support and we don’t have it. Our EBITDA was around $15m (as we projected to the PE firm) when I think it should be $12-$13m - for reference.
The parent co is audited but we are one of many subs - one of the larger subs - but the overstated assets are not material to the consolidated FS (or so my boss thinks - as this is his rationale for these sketchy adjustments). My point back to him is that materiality goes out the window if there is a consequence that matters to someone by not hitting your projected EBITDA. I was not given a solid answer on what happened if we didn’t hit EBITDA, although I asked. My assumption is that his significant bonuses are tied to the result.
I’m hesitant to throw out the F word but it’s feeling pretty sketchy to me at this point. But with no prior exp in industry, I don’t know if I’m overreacting and it’s normal to mess with the numbers. My judgement could be clouded by the fact that I also really don’t like him as a person.
To cover my butt, I sent him an email and blind copied one of my peers with year end “passed adjustments” we need to make. He is the final decision maker but I didn’t want this coming back on me if the audit or corporate blows it up.
Thoughts? Am I too sensitive?
I report directly to CFO - this is my first job in industry, I was previously an auditor. The only people above my boss are the CFOs at our parent company who I have no contact with.
My CFO asked me to make some year end adjustments that, IMO, are sketchy - so that we hit our projected EBITDA. Reversing negative adjustments to revenue, overaccruing receivables, under accruing liabilities etc. He always comes up with some weak rationale, think there is about $2m on our balance sheet that we can’t substantiate. As a former auditor I know what is good support and we don’t have it. Our EBITDA was around $15m (as we projected to the PE firm) when I think it should be $12-$13m - for reference.
The parent co is audited but we are one of many subs - one of the larger subs - but the overstated assets are not material to the consolidated FS (or so my boss thinks - as this is his rationale for these sketchy adjustments). My point back to him is that materiality goes out the window if there is a consequence that matters to someone by not hitting your projected EBITDA. I was not given a solid answer on what happened if we didn’t hit EBITDA, although I asked. My assumption is that his significant bonuses are tied to the result.
I’m hesitant to throw out the F word but it’s feeling pretty sketchy to me at this point. But with no prior exp in industry, I don’t know if I’m overreacting and it’s normal to mess with the numbers. My judgement could be clouded by the fact that I also really don’t like him as a person.
To cover my butt, I sent him an email and blind copied one of my peers with year end “passed adjustments” we need to make. He is the final decision maker but I didn’t want this coming back on me if the audit or corporate blows it up.
Thoughts? Am I too sensitive?
