Top Finance Challenges for the Second Half of 2024

By Brian Maloney, Audit & Assurance partner, Deloitte & Touche LLP

Talking Points

• At the start of 2024, several challenges loomed large for finance and accounting teams, including the SEC climate disclosure rule, Pillar Two global tax regulations, and the evolving initial public offering (IPO) market.
• With half the year now in the books, what are the latest updates on these pressing topics?
• This blog shares guidance and resources to provide insights as you navigate next steps.

Now that we’re halfway through 2024, what are the top finance and accounting challenges you should be thinking about for the rest of the year? In my mind, three stand out: the SEC climate disclosure rule, Pillar Two global tax regulations, and the evolving IPO market.

I wrote about these challenges at the beginning of the year. Let’s highlight what has changed and ways to address these changes. Perhaps the most promising development is that many companies have gotten started and are making progress on addressing these challenges. So, my first piece of advice is to ask yourself: Is your organization doing the same?

SEC climate disclosure rule and other environmental, social, and governance (ESG) frameworks

The SEC officially adopted its final climate disclosure rule on March 6. What’s the upshot for affected companies? Take a look at our Pulse blog on the final rule to understand its impact. As significant as it is, the new SEC rule is just one of several ESG reporting frameworks registrants must address for the second half of the year and into 2025. The EU’s Corporate Sustainability Reporting Directive (CSRD) and California’s climate disclosure acts arguably place greater burdens on many public companies.

Many companies that have performed gap analyses on these emerging climate frameworks have identified an over-estimation of their reporting readiness. As a result, some are now looking for outside support to develop a process and internal controls to track and disclose complete and accurate climate information. From identifying stakeholders through determining what is material, the process can take well north of 1,000 hours. The good news: The infrastructure you develop for one framework can serve as the foundation for the others—even though there are important differences requiring customization. Remember: This is a marathon, not a sprint. The key is to get started, and Deloitte’s new ESG SelfAssess™ tool is an excellent place to begin.

Pillar Two global tax rules

As expected, Pillar Two is shaping up to be an international tax juggernaut. Since it began rolling out in January, many affected companies—specifically entities with consolidated annual revenues of €750 million or more—have been taking steps to comply with its weighty provisions. If you haven’t started yet, see our latest Pillar Two thought piece for guidance on how to begin.

What are key areas you should focus on for the second half of the year? First, understand how your operations and data are aligned with the minimum tax requirements across the 135+ Pillar Two countries. Also, ask how transfer pricing strategies such as contract novation (moving contracts to subsidiaries in different countries) can help optimize the minimum 15% tax threshold and desired tax positions globally. I counsel clients that US GAAP matters in these transactions. Why? Because these accounting positions can be foundational to your Pillar Two taxation strategies.

Planning to go public? Timing it right

It’s a recurring theme over the past few years: Just when IPO activity begins to tick up, various economic factors arise to slow activity. Capital markets now appear resigned to the idea that meaningful declines in interest rates may not be on the near-term horizon. We are seeing an uptick in transaction activity, and more private companies seem poised to look past the Fed’s signals and test the IPO waters.

Taking your company public can take time and significant resources. My advice: Don’t wait. Private companies should generally allow from six to 18 months to prepare. Why such a wide window? So much has to happen—from ensuring you have the executive team, board, and policies in place, to transforming accounting and reporting processes to meet the rigors of public ownership. Your best move is to test your readiness with Deloitte’s IPO SelfAssess™ tool.

What role can Deloitte play?

You don’t have to tackle these challenges alone. I encourage you to reach out to me or my Deloitte colleagues as you plan your next steps with these challenges for the second half of the year.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.