BroadPeak Executive Forum

How to Simplify Accounting in One Year

A new federal advisory committee, headed by MFS chairman Robert Pozen, has one year to make recommendations to the SEC.

Sarah Johnson, CFO.com

June 28, 2007

The Securities and Exchange Commission has established a committee to figure out how to take complexity out of financial reporting. Headed by Robert Pozen, chairman of MFS Investment Management, the group will submit a report to the SEC by next August.

The advisory committee's tasks include looking at how accounting and reporting standards are set, and whether some of these rules create unnecessary cost for companies. The group's considerations will range from the minor — such as whether 10-Ks should include a simplified summary of a company's financial standing — to the major — such as how technology can improve the usability of financial reports. For example, companies' increased use of XBRL (extensible business reporting language) could lead to financial reports that can be drilled down via a few clicks on a computer, noted Robert Herz, chairman of the Financial Accounting Standards Board, during an SEC press conference on Wednesday. He envisions a financial report that allows investors to quickly move from top-line revenue numbers to the revenue and profit margin of one product within a few mouse clicks.

Read the entire article at CFO.com

Quick Quiz: What's a Reporting Entity?

In the small-business arena, where people often own or control a number of small businesses, the answer can get complicated pretty quickly.

Cheryl Rosen, CFO.com

June 25, 2007

Before you can translate words into another language, you have to be sure you understand what they mean in your own country. Even the English definitions of the most basic accounting terms — such as "reporting entity" — can be interpreted differently at small private businesses and at large public companies. Ideas that fit one group like a glove don't easily apply to another.

Such confusion was obvious at a discussion at Wednesday's meeting of the Financial Accounting Standards Board's Small Business Advisory Committee, where FASB's Ron Bossio asked for feedback on what a reporting entity might actually be. As part of their Joint Conceptual Framework Project, FASB and the International Accounting Standards Board (IASB) have been unearthing gaps between the ways different groups think about financial reporting. Their goal: to try to bridge those hiatuses in a way that will make future international decision-making easier. But first FASB must reconcile the differences between small- and big-company concepts at home.

   

The boards' current definition of a reporting entity is a "circumscribed area of economic interest that chooses to, or is required to, prepare general purpose external financial reports" and that "controls" the power and benefits of other entities, according to a handout circulated at the meeting. That seems straightforward enough when a group of companies is controlled by a Berkshire Hathaway or a General Electric, for example.

But in the small-business arena, where people often own or control a number of small businesses, things get complicated pretty quickly. "The brother-sister kind of relationship, where two entities are aligned, is pretty common in the small-business environment," said Bossio. Further complicating the issue are cases in which the parent is, well, a human parent, say one named John Smith, who owns Company A and Company B. Must Smith include the assets of the "parent" — his house and his car, for example — in a combined financial statement that also includes the accounts of his two businesses?

Read the entire article at CFO.com

Networking Can Be Like Money In The Bank

Many people seem to think of networking as something that they need to do only when they need something such as a new job, membership in a club or organization, or when they are trying to raise money for a pet charity. At the point that you need to ask for favors or help from others it is too late to start networking.  You should start networking before you ever need anything from anyone. 

Similarly, financial planners advise clients to get in the habit of saving a portion of their income every month rather than waiting until a crisis happens to scramble around and try to find some cash. Building a strong network and building a nest egg are very similar and very important habits that you should have.

I am an outgoing person who enjoys meeting new people. I am not afraid to call someone that I don't know well and invite them out for lunch to get acquainted. I have been building and maintaining friendships my whole life because I generally like to be around other people and I don't mind putting in the effort to stay in touch. (Staying in touch does not have to be a time consuming endeavor.)

My oldest friendship began when I was 8 years old and we are still great friends who have helped each other both personally and professionally. Even if you aren't an extrovert you can learn to build and maintain relationships with people that you meet along whatever path your life takes. And I think that it is important that you do that because you never know when you may need a helping hand, a referral, or some other form of help from another person.

Building up your savings account shields you from hardships you might face when the market turns down or if you are laid off. Building and maintaining good relationships with a variety of people makes many aspects of your personal and professional life a lot easier. It is much easier to ask for a favor from someone whom you know well and with whom you have built up a trusting relationship based on mutual favors, assistance, and kindness than it is to hope for the kindness of strangers. I don't know about you but I am less likely to go out of my way to help someone I barely know than I am to help someone I know, like, and trust.

A big part of building relationships is helping other people with the things that are most important to them. When I meet someone new I try to listen to their current interests, personal and professional goals, as well as any goals they say that their children/family members have. If I am able to assist with any of their interests or goals I usually offer my help right away. Most people are surprised and appreciative of unsolicited offers of assistance and many of my great business and personal relationships have begun in that manner. And, I feel great about helping someone.

I have never asked for favors from many of my friends or business contacts. But, the times that I have needed to ask for some kind of help I have felt perfectly comfortable requesting it because I likely started the relationship by putting favors/help/kindness in the "friendship bank". The truth is that I really enjoying meeting new people and learning about what makes them special or unique so I am never thinking to myself, "what might I need from this person later on?" The truth is that my network is directly responsible for my professional success (my professional network continues to refer me fantastic clients) and personal happiness (I met my husband through someone I know) and I am grateful every day for the friendships that I have spent a lifetime cultivating.

My advice to you is that if you haven't done so already start building up a friendship bank by doing kind things for others. Listen carefully to what your friends and acquaintances tell you they need and help them to achieve their goals and dreams. Make the effort to stay in touch with co-workers who leave the company and take new jobs. Stay in email contact with your college friends. You will feel great about yourself and you will maintain relationships that will make the good times in your personal and professional life even better and will help you through tough times in life.

Friendships are like money in the bank!

Paulson Not Budging on Small-Company 404 Extension

The Treasury Secretary's stance on internal-controls compliance seems to represent a subtle shift away from a strong preference for rolling back Sarbox.

David M. Katz, CFO.com

June 20, 2007

Pushed by a Congressman to stretch the deadline for small-company compliance with the Sarbanes-Oxley Act's internal-controls provision, Treasury Secretary Henry Paulson held firm on Wednesday to the current filing date of early 2008.

While acknowledging that the burden of Sarbox 404 compliance should fall "less and less" on small companies, Paulson said: "With regard to small business, they have a need also to have good control systems."

Testifying before the House Financial Services Committee, he said that after discussions with Public Company Accounting Oversight Board Chairman Mark Olson and Securities and Exchange Commission Chairman Christopher Cox, he was comfortable that recent rule changes by the PCAOB and SEC had adequately addressed the problems with earlier implementations of 404 and suggested that a change in the deadline wasn't needed.

Paulson's stance on 404 compliance at the hearing seemed to represent a subtle shift from what has heretofore seemed to be strong preference for rolling back Sarbox. Indeed, in response to a question at the hearing about what he thought were the major impediments to foreign countries listing on U.S. exchanges, he suggested that accounting changes under Sarbox were one of the key reasons for the flight of capital.

But the accounting changes are only one of a number of obstacles to competitiveness set up by the 2002 act. "When people say 'Sarbanes- Oxley," they are using that as code for a lot of things," Paulson observed, noting that Sarbox-mandated changes in board structures and alterations in governance requirements by the stock exchanges were included under that code, along with the accounting changes.

Read the entire article at CFO.com

The Art of Exiting Gracefully

You may have heard that Yahoo! CEO Terry Semel is stepping down from his post at the helm of the publicly traded search engine/email provider. Yahoo! has made it clear that his decision is voluntary and that he won't be given a severance package because he is sticking around in a non-executive role as Chairman of the Board of the company. What is interesting to me is the classy way that which both Yahoo and Semel are handling communication of this situation. I think we can all learn something from it.

Understand that Terry Semel, as leader of Yahoo!, has presided over a 30% drop in stock price during the last 18 months. Stockholders are not happy with his performance and they want him out. And for his part I would imagine that Mr. Semel is not too happy with the fact that his performance is seen as less than stellar. You don't become CEO of a publicly traded company if you aren't used to being considered a star in your field - to be told otherwise is probably a blow to Mr. Semel's ego. But, with all of that as background, both the company and the ousted executive realize the value of his graceful exit from his position.

If you read this blog or my Ultimate Resumes blog with any frequency you may have read some of my commentary on the Julie Roehm vs Wal Mart situation and the public mudslinging that has ensued. I think that, at this point, between the lawsuits, countersuits, and salacious allegations, both Wal Mart and Ms. Roehm have damaged their reputations. Will another corporation hire Julie Roehm? It will certainly be interesting to find out. Will Wal Mart have a more difficult time hiring talented executives from around the U.S. and convincing them to move to remote Bentonville, Arkansas after they publicly skewered their former SVP of Marketing? I would bet that they will. In other words, by not maneuvering her graceful exit, Ms. Roehm and Wal Mart both suffer financially and reputationally.

Both Terry Semel and Julie Roehm worked hard and built track records of achievement that enabled them to land high profile roles in their respective fields of expertise. Yahoo! investors were unhappy with Mr. Semel's performance and wanted him to step down from his role while in Ms. Roehm's case Wal Mart's senior management team felt she should leave the company. Both situations were probably stressful and difficult for the two executives who were being told that their performance was lacking. It's hard to be a told that you are a star one day and an under performer the next.

The key to exiting the situation with your pride and future employment options intact is to forget about getting even or making a public statement or making sure that the public knows "who is right and who is wrong. Of course the same statement is true for employers...take the high road instead of maligning a former employee. No good will come from public negativity and it costs the company and its shareholders money.

Learn from Terry Semel...a graceful exit from a job is more profitable and less stressful for all concerned. And remember that thanks to the Internet any public statements, lawsuits, or stories in which you are quoted or mentioned will be around forever.

Feds Drop Criminal Complaint Against Bristol

Federal prosecutors have ended their two-year deferred prosecution agreement since the pharmaceutical company has met their demands following its channel-stuffing scandal.

Stephen Taub, CFO.com

June 18, 2007

Federal prosecutors are dismissing their deferred prosecution agreement with Bristol-Myers Squibb two years after filing a criminal complaint against the company stemming from an accounting scandal.

U.S. Attorney Christopher Christie announced the dismissal would be official on Friday, saying the pharmaceutical company "has made significant and transformational changes in its compliance practices as a result of the DPA." On June 15, 2005, Bristol-Myers agreed to the Department of Justice's deferred prosecution terms with the understanding that, if it did so, the complaint would be absolved after 24 months.

In exchange for avoiding a full-fledged prosecution, companies agree to help federal investigators put together their case against alleged corporate criminals. They also admit to the wrongdoing and promise to implement reforms. One of the first test cases for DPAs began in 2004 with Computer Associates (the software giant now known as CA), which last month announced that all charges against it have been dismissed.

The U.S. Attorney's Office in New Jersey filed a complaint charging Bristol-Myers with conspiring to commit securities fraud. Prosecutors accused the company of using financial incentives to entice wholesalers to buy and hold greater quantities of prescription drugs than demand warranted. By the end of 2001, they said, this channel stuffing resulted in nearly $2 billion in excess inventory at the wholesalers.

The company agreed to pay restitution to people affected by the fraud, institute internal compliance measures — such as appointing a nonexecutive chairman to its board — and cooperate with the criminal investigation. The dismissal of the complaint means prosecutors are satisfied the company has fully complied with the terms of the DPA, Christie's office stated.

In a press release, Bristol-Myers said "its business operations are stronger today as a result of having embraced a culture of compliance."

In the case of CA, the company had agreed to the government's conditions, including changing its process for recognizing revenue, appointing an independent examiner, and creating a restitution fund for those affected when the company falsified financial records, resulting in a $3.3 billion fraud.

CFO.com

Avoiding the Employment Bait and Switch

The job sounds like a dream. You can't believe how lucky you are. So, you give notice at your current job to accept this wonderful dream job at which you know you will excel. Then you start the new job. And nothing is what you thought it would be.

Have you ever been in this situation? If you haven't consider yourself lucky because I have and it is awful. When I was in this situation I was miserable every day. I was on an emotional rollercoaster and angry with myself for giving up a good job for a horrible one. I have recently talked to a couple of people who have gone through this situation including a good friend of mine who is currently living this very nightmare. Those of us who have been through this have some advice for avoiding the corporate bait and switch.

Here are our tips:

1. Before accepting any job do lots of research. Research everything you can find out about the company. Research the people, the culture, and the company financial history and business relationships. Private companies are, of course, more difficult to research than public ones but use every resource you can find to get information about the company's future, business strategy, and culture. For information on what former employees have to say about companies try The Valult or WetFeet. 

2. Before accepting any job ask (demand if you have to) to meet all members of the management team as well as every single person you will be working with directly. Don't take no for an answer on this one. Meet every employee that you can and ask them all similar questions about the company so that you can compare answers.

3. No matter how small or unstructured the company, ask (demand if you have to) a written job description and organization chart. If they won't or can't give that information to you do not accept the job.

4. Ask the following questions of as many employees as you can:

What do you see as the biggest challenge to the company in terms of achieving increased growth/revenue?

Does the management team (or VC firm) have plans to sell the company or take it public? If so, what is the timeframe?

What do you (question directed to whatever employee/manager you are addressing) think is the single biggest challenge that I might face in my new role with the company?

Regarding the position that I have been offered, what do you see as the long term plan for this position?

What are the short term "must achieve" goals that I should start thinking about? What is the timeframe for achieving those goals.

Is the company currently working with or in negotiations with any consulting firms that might be doing work that overlaps my job? If yes, will I have any input into the selection of the firm or their assignment?

5. Do not take a pay cut, a title cut, or leave money on the table at your old employer without getting written assurance from the new employer that states exactly when you will be made whole by the firm. Trust me on this one. Companies don't respect what they don't have to pay for...no matter what they tell you when they are courting you.

6. If you are taking a job with a start up, particularly in the high-tech or bio-tech industries, consult with a labor attorney prior to accepting the job. Even if you are mid-level employee it can't hurt to talk to an attorney about the terms the company is offering you. If the attorney has suggestions about how to improve the offer, have your attorney talk to the company - don't worry about offending anyone either. Having an attorney negotiate for you only helps your credibility, it won't hurt it.

7. Starting Day 1 at your new job, keep a job diary! I have written about the importance of this before and I can't emphasize the importance of documenting what goes on at work in case you ever need to refer to it when creating a resume or consulting an attorney.

One thing I would add to this is that if you don't really like the people you meet at the company or if you feel uncomfortable around them for any reason, it probably won't get better if you go to work there. No matter how cool the technology they are selling or how great you think the business model is, people matter. And if you don't like the people you probably won't like the job.

If you have been through a similar situation and would like to offer advice to others please leave me a comment or drop me a note and I will update this post to include your thoughts. Or maybe I will do a separate post if there is enough information.

Be very careful about the jobs you accept because you are the only person who really wants to protect your interests - everyone else is busy protecting their own.

Originally posted on Ultimate Resumes Blog

Taming the Tribune's Tax Trouble

As it awaits a buyout led by Zell, Tribune Co. settles its long-running dispute over the tax-free reorganization its Times Mirror subsidiary tried to negotiate for a unit.

Stephen Taub, CFO.com

June 05, 2007

Tribune Co. said it reached a settlement in its appeal of the 2005 Tax Court decision that had disallowed the tax-free reorganization of Matthew Bender, a former legal-textbook-publishing unit of Tribune's Times Mirror subsidiary.

Under the proposed settlement, the Chicago-based media conglomerate will receive refunds of roughly $350 million in federal and state income taxes and interest that were previously paid both in the Matthew Bender transaction and a similar transaction completed by Times Mirror.

According to the Associated Press, Tribune had said at the time of the 2005 ruling that the case could cost it $1 billion unless it won on appeal.

Tribune acquired Times Mirror in June 2000, inheriting the tax dispute that dated back to 1998, when Times Mirror sought to reorganize the Matthew Bender division on a tax-free basis. At that time, a U.S. Tax Court had initially disallowed tax-free statusfor the deal.

The AP noted that the 2005 ruling had played a role in the rapid descent of Tribune’s stock price, and had led to its largest shareholders pressuring the company to put itself up for sale. In April, Tribune agreed to an $8.2 billion buyout led by Sam Zell.

Read the entire article at CFO.com

June 19 - BroadPeak - Adaptive Planning Webinar

Webcast Event    

Transform Your Planning In Just Weeks: Success Stories from CollabNet & Other Mid-Market Companies

    

Sponsored by Adaptive Planning

Date:	Tue, Jun 19, 2007
Time:	2:00 P.M. ET
Duration:	1  hour

Register here:

http://www.cfo.com/webcast.cfm?webcast=9171647&pcode=ADPL061907BP

        Summary    

The 2008 budgeting process is just around the corner. If you want to this year to be different from the past, you need to start planning now. Fortunately, it’s now easier than ever before to transform your budgeting and forecasting processes — it can be done in just weeks.

Learn how leading mid-market companies and nonprofit organizations such as AAA, CollabNet, Healthways, Med-Eng, and NASCO have been able to move beyond Excel in a matter of weeks and:

Decrease budgeting time by 67% while reducing errors

Enable monthly re-forecasting

Deeply involve BU managers in planning and reporting

Enable timely what-if analyses to support key decisions

Make Finance a value-added, strategic function

Join Craig Schiff, CEO of analyst firm BPM Partners; Tom Clark, Vice President, Finance at CollabNet; and Rob Hull, co-founder and CFO of Adaptive Planning, as they discuss “BPM 2.0,” exciting new approaches that are transforming the staid world of spreadsheet-based budgeting, forecasting, and reporting. In addition to examining the drivers of BPM 2.0, they will also review numerous real-world success stories from companies that have benefited from these key new techniques.

In particular, Tom Clark will share lessons learned from CollabNet’s BPM experience — how they moved from “breaking Excel” to improving the efficiency of their planning process by up to 40%, increasing the frequency of forecasting, and enabling previously impossible what-if analyses—all without installing any new software.