Boom in late 10-K filings: CFOs may need ‘triage’ accounting

If CFOs were students, their grades would be taking a hit due to late homework. Sure, there have always been public companies missing their annual 10-K SEC deadlines. Since 2023, the number of companies filing Form NT (“non-timely”) 10-Ks has risen 40%, introducing risks and creating a need for new strategies.

The excuse for this late “homework”? In some cases, companies needed extensions to investigate “certain accounting practices and procedures,” as with ADM, whose CFO was shown the exit. We’ve also seen a surge in special-purpose acquisition companies (SPACs) — IPO workarounds that are now subject to stringent SEC rules — only half of which submit 10-Ks on time, thereby throwing the curve.

A more common excuse for late 10-Ks: talent shortfall. Tupperware is the latest to cite this reason. When there aren’t enough in-house accountants to dot the i’s and cross the t’s — even if they pull a few productive all-nighters — companies will miss deadlines.

Hello, rock. this is hard place

Unlike general labor rebounds elsewhere, accounting and finance posts continue to languish for want of talent. Retiring boomers, barriers to degrees and handsome fintech salaries all mean that it’s tricky to reel in skilled people. Lucky CFOs might be able to snatch up a few of the 9,000 accountants recently laid off from the Big 4, but that meager crowd can’t offset the 300,000 who left the field in the last two years.

To replenish the talent pipeline, some states want to ease degree credit requirements. Still, that’s a long game that won’t yield talent for several years. At the same time, the SEC is unlikely to soften its filing standards or lower financial penalties when investors demand transparency.

A bookish student might tolerate a “B” over an “A” for a few late homework assignments, but the costs are high for companies submitting late 10-Ks (or their quarterly cousins, the 10-Qs). Investors are in the dark, financial penalties mount, banking covenants may be violated, and stock prices might fall. In more dire cases, a company could face SEC deregistration, stock exchange delisting, and an inability to raise capital.

At the ready: team triage

So what’s a company to do, stuck between a talent shortfall and strict regulatory requirements? Many CFOs are turning to accounting “triage” agencies where seasoned experts assess and address high-need tasks during high-need periods. A skilled team organizes around standardized approaches, methods and processes to streamline and bring the company up to speed with accuracy and integrity.

Some real-world examples: We’ve seen a company hustle to an IPO before its finance department was fully prepared to meet regulatory requirements, resulting in financial restatements and delayed SEC filings. Elsewhere, a client was on the brink of delisting due to accounting challenges and resource constraints hampering its regulatory compliance. These companies needed prompt, attentive, experienced help and a triage team swooped in to help them make the grade. Better yet, the triage team built new-and-improved systems to forestall future problems.

Beyond 10-Ks: consider this

This trend toward accounting triage need not begin and end with 10-Ks. Teams can also help with M&A integration efforts, high-growth periods, divestiture, post-bankruptcy, new technologies and more. A few considerations for CFOs toying with triage:

• Assess and prepare. You may have a sense of your pain points but ask your staff to document them: bottlenecks, excessive variables and manual tasks that absorb time and introduce errors. Then find a triage team to carry you beyond the “current state” with a solid plan.
• Get the work done. Energize your department to work with a triage team. It could be two or 200 people, but all hands will make light work on Procure-to-Pay, Order-to-Cash, Fixed-Asset Accounting or Record-to-Report. You may also need specialists in A/R, A/P, fixed-asset accounting, intercompany accounting, technical accounting, financial reporting, FP&A or shared service.
• Build for lasting change. In the best cases, accounting triage helps with today’s “homework” and lays the groundwork for tomorrow’s assignments. Ask for a root-cause analysis and design processes (e.g., automation and AI) to build in continuous improvement.

In-a-pinch strategies

Our field must keep innovating for the training, recruitment and retention of fresh talent to fill accounting and finance roles. And we’ll all be watching headlines as the SEC rolls out, defends, and enforces regulations — including new ESG rules — around corporate reporting. In the meantime, CFOs would be wise to consider accounting triage solutions to hand in on-time, exacting homework to protect that admirable grade-point average.