CHAPTER 03
Enhancing Your Accounting System With GAAP Software and Training
Adopting accrual basis and other GAAP-compliant practices significantly increases the burden on your finance and accounting staff.
It’s hard to overstate how important it is to provide technical GAAP training to equip your team with the knowledge and skills they need to handle the transition.
Because GAAP and the surrounding guidance are constantly evolving, it’s also essential to provide continuing education that helps your team stay up-to-date with new developments.
Choosing the Right GAAP Software
GAAP accounting software is an essential tool for maintaining GAAP-compliant financial records, but some solutions are better suited for the task than others.
Beyond fundamental factors like pricing and quality of customer support, look for the following features to help find the right GAAP software for your needs.
Features to Look For When Choosing GAAP Software
Revenue recognition tools
ASC 606 compliance is consistently challenging when adopting GAAP. Look for tools that help with tracking performance obligations and allocating transaction prices.
Accrual accommodations
The accrual basis of accounting involves regularly recording receivables and payables to account for revenues and expenses. Choose software that automates this process.
GAAP statement generation
Your software should be capable of creating balance sheets, income statements, cash flow statements and other reports in accordance with GAAP presentation and disclosure requirements.
AR and AP automation
Look for features that streamline the accounts receivable (AR) and accounts payable (AP) functions to integrate payment processing into your accounting system.
Robust internal controls
Your software should have built-in controls – or the ability to customize some – to help prevent unauthorized access, detect fraud and protect data integrity.
Asset management
The ideal accounting solution should help you manage asset-related processes, such as recording GAAP-compliant depreciation schedules and tracking inventory values.
Audit trail support
Regular internal and external audits are common for businesses that follow GAAP, so your software should include tools to help facilitate them.
Flexible integrations
Accounting software is unlikely to meet all of your financial management needs, so it should be able to Integrate with related tools in your tech stack.
Cloud-based systems
Cloud-based solutions provide numerous benents, including increased data protection and the ability to access your softwars from anywhere, which increases collaborative capabilities.
Adopting GAAP-Compliant Accounting Practices
Switching from non-GAAP to GAAP-compliant accounting practices is often highly challenging, especially because the FASB doesn’t provide specific guidance on first-time adoption.
In many cases, it involves retroactively applying GAAP to many of your previous transactions. You may even need to restate financial statements. Navigate this complex process with these tips:
1. Ensure your books are clean before you start
Adopting GAAP-compliant accounting practices is challenging enough when your books are in good shape, but it’s nearly impossible with messy or inaccurate records.
2. Back up your data before the transition
Save a copy of your financial records and statements before making significant changes to your accounting system. You may want to refer back to them during or after the transition.
3. Make the switch sooner rather than later
The greater the volume and complexity of your historical transactions, the more challenging it becomes to convert to GAAP-compliant processes. Start early to minimize complications.
4. Know when to bring in outside assistance
Many SMBs lack the specific accounting expertise necessary to adopt GAAP-compliant practices. If that’s the case, be willing to invest in an external accounting expert capable of executing the process.
