Horizon Advisors

Myth: “Materiality is just a numbers game.” Reality: Qualitative factors matter more than ever. As we move deeper into 2025, the SEC and PCAOB have made it clear: materiality isn't just about ticking quantitative thresholds—it's about what information a reasonable investor would consider important. This shift is especially relevant with increasing scrutiny on areas like: -Segment reporting -Non-GAAP measures -Climate and ESG disclosures We’re seeing more challenges to disclosures that, while numerically small, raise qualitative red flags—especially around consistency, transparency, and controls. If your financial reporting process still treats materiality as a static dollar threshold, now’s the time to reassess. A more nuanced, principles-based approach can: -Improve disclosure quality -Reduce SEC scrutiny -Build investor confidence Don't let outdated myths drive reporting decisions. #FinancialReporting #SECReporting #Materiality #ESGDisclosures #AccountingLeadership #FinanceStrategy #TechnicalAccounting Visit us at www.horizonadvisors.com

Q2 Close Tip: Reassess Segment Disclosures Consider the FASB’s new segment reporting standard (ASU 2023-07) during Q2 filing. Here’s what to prioritize now: -Review how your CODM (Chief Operating Decision Maker) currently uses financials—this drives disclosure. -Ensure disaggregated expense info is actually tracked—you can’t disclose what you don’t capture. -Evaluate whether internal changes (org structure, reporting lines) should trigger a reassessment of operating segments. Pro tip: Auditors and the SEC will be looking closely at consistency between MD&A, earnings calls, and your segment footnote. Make sure your story aligns across all fronts. #SegmentReporting #FASBUpdate #ASU202307 #SECReporting #Q2Close #FinancialReporting #TechnicalAccounting #CFOInsights Visit us at www.horizonadvisors.com.

SOX Compliance —It’s a Culture Shift. Too often, companies approach SOX implementation too late—or too lightly. Here’s a simple, step-by-step playbook for Internal Audit teams to get ahead of the curve and avoid the most common pitfalls: Start with Risk Don’t jump into controls. Begin with a top-down risk assessment tied to your financial reporting objectives. This sets the tone and scope. Define Roles Early Clarity beats cleanup. Who owns what? Internal audit, accounting, IT—ensure roles are defined before design begins. Design with Documentation in Mind Controls should be precise, testable, and clearly linked to risks. Avoid vague or manual-heavy processes that won’t scale. Involve IT from Day One Many deficiencies stem from access and change management gaps. If IT isn’t at the table early, you’re setting up for rework. Test Before Testing Perform a dry run. Too many teams skip walkthroughs or go straight to testing unproven controls. You want confidence, not guesswork. Keep the Board Informed SOX readiness is a governance issue. Regular updates—framed around risk, remediation, and cost—build trust and alignment. ✅ SOX doesn’t need to be painful. ✅ It does need to be intentional. If your team is heading toward SOX compliance—or feeling behind—it’s not too late to reset. Happy to share lessons learned from successful implementations that balanced rigor, efficiency, and cost. #SOXCompliance #InternalControls #FinancialReporting #TechnicalAccounting #SOX Visit us at www.horizonadvisors.com

Q2 2025 Financial Reporting: What’s Keeping Directors Up at Night? As Q2 filings approach, reporting leaders face a rapidly evolving landscape. Here are the top three common questions worth pondering: Are we fully ready for the FASB updates? This quarter brings ASU 2025‑03 (acquirer identification in VIE combinations) and ASU 2025‑04 (share‑based consideration to customers). These may seem narrow, but they can trigger shifts in transition planning, disclosure timing—and even audit scrutiny. How are we preparing for KPI & non‑GAAP standardization? In 2025, FASB is exploring formal definitions for metrics like EBITDA and R&D capitalization, and seeking comment on standard vs. industry‑specific models. If your team heavily leans on adjusted results, now is the time to evaluate consistency, reconciliation, and guardrails—and consider proactive disclosures before regulators do. What about geopolitical & trade volatility? From new US tariffs to unpredictability in tax policy, companies are grappling with uncertain exposures. Disclosure timing and segmentation may need fast thinking—especially in industries like manufacturing and tech. Have your segment teams already stress‑tested the impact of tariff swings? Key Takeaways for Q2 Success: Bring segment reporting and KPI standardization into your SOX and controls roadmap—don’t let them be afterthoughts. Build audit and SEC readiness for non‑GAAP standard updates by stressing reconciliations and definitions now. Get segment leaders aligned on geopolitical risk modeling; consider footnotes early. Curious where your peers stand—especially on embedding KPI definitions into internal reporting, or on stress‑testing tariff impacts across your P&L? Let’s connect and exchange approaches. Transparency in Q2 isn’t just compliance—it’s leadership. Visit us at www.horizonadvisors.com

In over 20 years in finance and accounting, we’ve seen recurring errors magnified by evolving rulemaking. As FASB sharpens its focus in 2025, here are two overlooked technical accounting risks in 2025 especially with evolving guidance and scrutiny ramping up: 1. Inconsistent Non-GAAP KPI Reporting As FASB explores standardizing EBITDA and other metrics, companies still disclose KPIs without reconciling adjustments—or change definitions quarter to quarter. -This erodes credibility with auditors and investors. 2. Intangibles: Capitalization vs. Expense Confusion With FASB revisiting how R&D and software development costs are handled, many still misapply thresholds—capitalizing too early or too late. -This can skew earnings and trigger restatements. Quick fix: Lock in a consistent KPI policy and audit your reconciliations Review your capitalization criteria before the next product launch Precision now saves rework later. #TechnicalAccounting #FASB #NonGAAP #IntangiblesAccounting #R&D #KPIReporting #SECCompliance Visit us at www.horizonadvisors.com

Myth: A clean SOX audit means our controls are solid. Not always. In 2024, over 140 public companies restated financials due to material errors—after receiving clean SOX 404 opinions. The myth: Compliance = effectiveness. The truth: Many SOX programs check boxes without catching real risks. Instead, CFOs and Internal Audit leaders should ask: Are our controls preventing real-world failures—or just passing tests? Is our SOX strategy aligned with business risk and change? Are we testing what matters most—or just what’s easy to document? A truly valuable SOX program does more than satisfy auditors—it protects your business. Visit us at https://lnkd.in/gP3tiQgs

Q2 US GAAP Focus: ASC 606 & Variable Consideration — Don’t Let the X-Factor Slip! With Q2 filings around the corner, pay close attention to variable consideration under ASC 606—especially in long-term B2B contracts. Did your team properly identify constraint triggers like: - Performance bonuses tied to milestones? - Clawbacks or price protection clauses? - Volume-based rebates that change mid-quarter? These factors may dramatically shift your transaction price and revenue deferral—impacting disclosures and even your effective tax rate. A mid‑quarter contract amendment could introduce retroactive adjustments—don't let it slip through the closing checklist. Quick Audit Run-Down: Re‑review contract schedules for newly triggered milestones. Confirm real-time tracking of performance obligations. Adjust your expected credit loss models tied to contract modifications. Unlocking clarity now could both streamline your Q2 close and generate an SEC comment-free filing. #USGAAP #ASC606 #FinancialReporting #Q2Close #RevenueRecognition #ThoughtLeadership Visit us at www.horizonadvisors.com

Acquired a Business? Here’s What to Get Right in the First 100 Days Post-acquisition, the clock starts ticking—fast. Whether it’s audit prep or SEC reporting, technical accounting for business combinations is one area you don’t want to wing. Here’s a step-by-step guide to getting it right: 1. Confirm the Accounting Acquirer It’s not always the legal buyer. Control, governance, and voting rights determine who consolidates whom. 2. Lock in the Acquisition Date The valuation of assets and liabilities hinges on this date—nail it down early. 3. Gather Projected Financials These drive the fair value of intangibles like customer relationships and developed technology—and ultimately the amount of goodwill. Work closely with management and valuation specialists here. 4. Begin Your Purchase Price Allocation (PPA) Inventory, intangibles, deferred revenue, earnouts—it all needs fair value treatment. The projections you just built? They’re key inputs. 5. Draft Opening Journal Entries Coordinate your Day 1 entries with your valuation. Don’t let subledger setup lag behind. 6. Engage Auditors Early Audit teams will scrutinize your projections and valuation assumptions. Loop them in now to prevent bottlenecks later. 7. Prepare Required Disclosures Deal terms, goodwill, contingent consideration—private or public, the disclosure requirements are not optional. Pro Tip: Robust financial projections are the foundation of a credible PPA. Without them, valuations get delayed—and goodwill becomes a guess. We’ve helped clients streamline post-acquisition accounting and get audit-ready fast—without burning cycles or budget. Need a checklist or a second set of eyes? Let’s talk. #BusinessCombinations #PurchasePriceAllocation #MergersAndAcquisitions #TechnicalAccounting #Goodwill #IntangibleAssets #FinancialReporting #ASC805 Visit us at: https://lnkd.in/gP3tiQgs

SOX Compliance: Scoping Isn’t Just Step One — It’s the Foundation One of the most common questions we hear in early SOX engagements is: “What exactly should be in scope?” It’s a fair question — and one with real consequences. Done right, SOX scoping aligns risks with materiality, business complexity, and control ownership. Done wrong, it leads to over-testing, missed risks, or inefficient use of resources. Key considerations during SOX scoping and planning: Entity and account-level materiality: Are we risk-ranking objectively or defaulting to “what we did last year”? Business changes: Have new systems, acquisitions, or process owners reshaped the risk landscape? IT systems and interfaces: Are we capturing in-scope applications, especially those involved in financial reporting and key spreadsheets? Third-party service providers: Are we relying on SOC reports or duplicating efforts? SOX isn’t one-size-fits-all. Tailored scoping ensures your compliance efforts are right-sized, risk-focused, and cost-effective. Big Four quality doesn't have to mean Big Four cost. With the right approach, your SOX program can be both efficient and audit-ready. #SOX #InternalControls #FinancialReporting #TechnicalAccounting #RiskManagement #CFO #AuditCommittee #ComplianceExcellence Visit us at https://lnkd.in/gP3tiQgs

Common Mistake: “If the numbers tie, the report is ready.” A clean trial balance and matching rollforwards are necessary—but they’re not sufficient. Financial reporting is as much about consistency and clarity as it is about accuracy. Here’s where we often see breakdowns: Cutoff errors – Late accruals added without revisiting final disclosures. Last-minute entries – Adjustments made, but not reflected across MD&A or segment footnotes. Narrative misalignment – Commentary in earnings calls or investor decks that doesn’t match the 10-Q. Tools like Workiva help close these gaps by linking data, disclosures, and narrative in real time—so when numbers move, the story moves with them. No more tracking edits across 15 spreadsheets or re-validating every section by hand. The best reporting teams don’t just close the books—they close the loop between data, process, and message. #FinancialReporting #TechnicalAccounting #Workiva #NarrativeControl #DisclosureManagement #SECReporting #AccountingLeadership #CloseTheLoop Visit us at https://lnkd.in/gP3tiQgs