Office Max!

Shanghai has been a difficult origin for sometime now, but manageable. If you use allocated carriers for Shanghai and are having problems try opening it up to all your carriers. Spreading the volume around to your carrier base will reduces the risk of equipment availability and capacity constraints. While it may increase your overall landed costs from Shanghai, the increases should be negligible and there’s no accounting for peace of mind.

Mike Harmon presents Home Based Business Tips - Three Reasons to Outsource Your Businesses Accounting Needs posted at Basic Accounting, saying, “You are probably already using a program like Quickbooks or Microsoft Money to balance your business books. But I will reveal 3 reasons why getting a good book-keeper will make a world of difference in your business.”

I like to play with numbers. Good thing I switched my major to Accounting, right? In any case, what’s one of the most important numbers to any student? That’s right: their GPA.

If nothing changes, the liability for 2006-2007 under the current PAYGO system is $216,325,000 (see Table 2 on page 3 of the consultant’s report). According to new GASB accounting rules, “such liabilities need to be recognized on an accounting basis if not be pre-funded.”

It does not matter if you have a successful retail location, doing business on the internet will be like starting a whole new company. Offline advertising methods do not translate well to online marketing initiatives, and very few traditional retail models mesh very well with online commerce. The internet is a drastically different market than your mom-and-pop shop enjoys on Main St. in Anytown, USA- and there is a whole new set of marketing and promotion, customer service, and accounting rules to go with it.

Reality: You are playing Tetris.

Appearance: You are tapping away on calculator keys, helping out the accounting department.

So we’ve kind of decided that I’ll go on a course to learn how to use Sage (the accounting software) properly, then I’ll do the books while I’m at the garage on the two days I’m there at the moment. Should be plenty of time, I waste loads at the moment, and our current book-keeper does it in half a day a week, so no worries there. Then once a month if we need to, we’ll ask Russ to take the kids instead of being at the garage (hopefully a benefit of him being Grandpa as well as employee) and spend a day in the office together doing end of month stuff.

Development time costs money. That money should be tied back to a specific project or task. Free floating development costs are a black hole, and black holes are no longer acceptable. You can emply some kind of standard accounting tool to keep track of this, or you can invent your own. Trouble is, if you invent your own you are subject to an audit every year. Accountants probably won’t be very impressed with a homebrew system that works on index cards, and so using some kind of standard will save a lot of trouble. The change management tool vendors love this of course. Tying version control check-ins to requirements tools is the kind of stuff that cash cows are made of. Tool vendors are spreading the word.

Microsoft has a relatively new product out called Microsoft Office Small Business Account 2006. I think it’s been “officially” released now, though not too long ago it was in beta. This isn’t anything real important to me, except that I see them overtaking Intuit’s marketshare in this area, and basically beating the shit outta QuickBooks. That’s all, just wanted to mention that so that in the future I can say I predicted it. Move along now…

The emphasis on midsized businesses is interesting since the big news at the event is the launch of Microsoft Office Small Business Accounting 2006 and Microsoft Office Small Business Management Edition 2006.

But the question about the size of the Web came under intense debate last week after Yahoo announced at an Internet search engine conference in Santa Clara, California, that its search engine index - an accounting of the number of documents that can be located from its databases - had reached 19.2 billion.

By the late 1960’s the success of franchise companies like KFC and McDonalds were well known. KFC is credited with creating hundreds of millionaires through its franchise program, and McDonalds produced at least as many of the new wealthy. All this success legitimized franchising and fueled the fantasies of aspiring as well as existing entrepreneurs. Adding fuel to this fire was the growing impact franchising has on the U.S. economy, now accounting for over 40% of all retail sales.

After her presentation, she was asked about why stock options were so important to the growth of a company. Without getting into the technical accounting arguments on the merits of whether they are an expense or not, she talked about how they infuse a sense of ownership in the employee population. There have been studies done that show that companies that give stock options to all employees are more productive than those companies that do not. A company of "owners", she said, is more productive than a company of "renters." Which made me think of the current debate on social security and the "ownership society."

My short career as an MBA student crashed to a screeching halt last night.

There I was cruising along in the fast lane of MBA night classes, jamming to some tunes by They Might Be Giants and working on Multiple Choice problem number three of my Financial Accounting homework when I caught a glimpse of something out of the corner of my eye, like a deer jumping in front of my car at the moment before impact.

"When we see patterns of excessive compensation, that is usually an indicator that the board is not sufficiently independent," says Marshall. As a result of the board's coziness, he says, no one stepped in to challenge Krispy Kreme's move away from the fresh-doughnut model, and no one questioned the aggressive accounting for franchise buybacks. "It was a classic governance failure," sums up Marshall.

Overall, hiring for new graduates is up 13 percent over last year. And, according to the National Association of Colleges and Employers, accounting majors are in hot demand. In fact, four of the top 10 most sought-after majors are in accounting, finance or consulting.

Can we be sure that all of this was a result of SEO? No. There could have been product, seasonal and other effects that contributed. We think it's safe to say, however, that there was a significant increase that resulted directly from the SEO. The bottom line: search optimization has a real and measurable impact on traffic, conversions and revenue (or lead generation) improvement. Given that these clicks begin to approach "free" after amortizing the cost of SEO over time, the ROI for SEO is compelling. After accounting for both the long-term "free"...

A small law firm or accounting firm or ad agency is succeeding because they're good, not because they're big. So smart small companies are happy to hire them.

Accounting for Non-Accountants: "If you are a small business owner or manager, there will come a time when you have to dispose of an asset. You may sell, trade, or discard the asset but regardless how you dispose of it you must account for it on the company's books."

What will the rapid appointment of Congressman Chris Cox to succeed William Dondaldson as SEC chairman mean for mandatory stock options expensing? No one knows yet.

The US Supreme Court has unanimously overturned the conviction against accounting firm Arthur Andersen for shredding documents related to the Enron investigation.

The accrual method of accounting is the method by which revenues are recorded when earned, and expenses are recorded when they are incurred. A cash-basis method of accounting measures revenue when cash is received and expenses when they are paid. The accrual method must be used for financial statements to be considered prepared according to Generally Accepted Accounting Principles (GAAP). See my blog article Accrual vs. Cash for a detail explanation with sample journal entries.

Full accrual accounting can be tedious and time consuming so many people use a hybrid system. This means using a combination of accrual and cash basis methods when preparing financial statements. Most often, a business will record only Accounts Receivable and Accounts Payable accrual items. In addition, the only Accounts Payable items recorded will be Inventory purchases, since most of the other expenses of the business are paid within 30 days. The value of using the hybrid system is that your financial statements reflect all Revenue...

Either way, the point is that you can do it and there may be good reason to do so. You may have high receivables and low payables. This means you could be in for a double-whammy. You will have to report high income and low deductions. This means your taxes will be higher while not having received the cash to pay those taxes. Keep in mind though that you can’t switch back and forth each year from accrual to cash. Once you select the method of accounting for your tax return, you have to stick with it. Otherwise, you will have to have...

Alan Greenspan, the Federal Reserve chairman, said on Sunday that the Sarbanes-Oxley Act, the legislation introduced in 2002 to improve corporate governance, had been surprisingly successful.... Mr Greenspan said there was scope for fine-tuning of the legislation. But he sounded a very different note to some business lobbyists, and some Bush administration officials, who have warned of excessive compliance costs and of the potential impact of the legislation on corporate risk-taking."I am...

I recall being at a board meeting in 1998 and discussing the dot-com boom. My colleague, an executive at General Electric, tried to explain to me that it was all an illusion. He claimed that tried-and-true financial and valuation methods should be applied to those companies, not the bet-on-the-come "new accounting." I was convinced that times really had changed, and that those new companies were really worth what their stock prices indicated. Well we know who ended up being right. That conversation, and that...

A WSJ editorial roundup (free) on the problems of SOX 404, apropos of an SEC Roundtable on this issue, makes many of the points that are in the Sarbanes-Oxley archive of this blog, and in my writings on this subject cited in these posts:

--the extra burden on smaller companies

--resulting going dark and delisting by small and foreign companies

--the fact that the main beneficiaries are the big accounting firms (see my recent response to Gordon Smith noting this)

My mother is an accountant. In the process of becoming an accountant, my mother learned to divide the world into two kinds of people: People who get debits and credits, and people who don't. You can simplify this to: People who pass first semester accounting, and people who drop it.

No one fails first-semester accounting, except maybe the very, very lazy. You have to be really obstinate to fail Accounting Principles I, because what normally happens is, the people who've spent the first four weeks of the semester patiently explaining to their instructors that MY BANK DOESN'T DO IT THIS WAY, or (this was a personal favorite of mine) THE SMALL BUSINESS FOR WHICH I DO PENNY-ANTE BOOKKEEPING DOESN'T DO IT THIS WAY; the people inevitably concluding with the plaintive wail, "WHY ARE YOU DOING IT THIS WAY, WHEN THIS WAY IS SO CONFUSING!!!"--anyway, those people?

A new article by my friend Kim Krawiec explores the problems associated with the law's current emphasis on corporate internal control systems:

... any internal compliance-based organizational liability regime is likely to fail because courts and agencies lack sufficient information about the effectiveness of such structures. As a result, an internal compliance-based liability system encourages the implementation of largely cosmetic internal compliance structures that reduce legal liability without reducing the incidence of organizational misconduct. » How Broken is the U.S. Accounting Profession? from Conglomerate

A Bloomberg report describes the folly that is the Sarbanes-Oxley Act. SOX has caused companies to divert resources from consumer-serving operations into the installation of new computers and the hiring of additional accounting workers. SOX forced Yellow Roadway Corporation to hire 10 additional employees and 20 consultants to help write new accounting software. The extra $10 million it spent could have purchased 130 heavy duty truck cabs.

But in the last years of his papacy the Holy See was back in the red. In presenting the latest accounting, the chief of the Holy See's economic affairs office cited Europe's sluggish economic recovery, poor investment climate and the rising strength of the euro against the dollar.

But Equitable is suing Ernst & Young for 2.05 billion pounds ($3.9 billion), claiming that the accounting firm was negligent and in breach of duty when its signed off on its accounts without warning Equitable of the problems that led to the crisis. Equitable claims that had it known of its true position, it would have put the company up for sale in 1998.

Financial Management is not accounting. Accounting deals with the classification of income and outgo (expenses). Financial management is the diagnosis and operation of your finances. Excellent accounting is the first step in the process. Certainly, if your accounting is performed haphazardly then the financial management will be poor.

Cash Flow from Operations as a % of Cash Receipts from Customers – Net income can be distorted through the use of aggressive accounting methods such as recording unapproved changes orders as revenue that have little probability of collection or that hide cost overruns. Receivables that have little chance of collection may be kept on the books instead of written-off as bad debts. This results in higher net income on the income statement. However, there are fewer things that can be done to manipulate cash. That is why cash flows traditionally...

Gross profit margin should ideally be analyzed for trends since many varied factors, such as accounting methods can affect it. An increasing gross profit margin may indicate an expanding market with the promise of increased competition, or it may indicate effective use of job costs reduction efforts. A decreasing gross profit margin indicates a declining market, strong competition, or inefficient job management.

Accounting / Finances Less than 10%

Testifying before a Senate Banking Committee hearing today, Securities and Exchange Commission (SEC) Chairman William Donaldson today said the SEC will issue guidance on how to value stock options for expensing this month. No word on if the SEC is going to go the way of the Financial Accounting Standards Board (FASB) who basically punted on the valuation issue by saying that a company could use the Black/Scholes method, the binomial method or by consulting with your teenage nephew, Bucky, who by all accounts is a math whiz.

Senator Bob Bennett (R-UT), who, while a proponent of expensing, has questioned the FASB's logic on valuation was quoted in a leading DC policy publication as saying, ""What in the world kind of accounting standard is that, when FASB says, 'You have to expense [stock options] but we don't particularly care what value you put on them." Ummm, I'd like to be the first to second that.

–> One company uses RSS as a consulting billing awareness tool. The consultants create activity reports and the RSS feeds from the activity channels carry the billable information to the accounting staff for invoice preparation.

As this Irish businessmen notes, there are different options for accounting services. You can hire an accountant or use online services. At Office Max, you can buy accounting software like QuickBooks. Then you have to decide whether to do-it-yourself or bring in an accountant.

I must start taking more notice of the AdSense advertisements over there on the left hand side - I just noticed one for Teamwork Accounting - 'Online Accounting for a fixed fee per month'

Teamwork Accounting introduces service accounting to Ireland. An all-inclusive online service whereby internet technology is used to truly collaborate with clients.

Similar to Internet banking, Teamwork Accounting allows you to process all of your accounting and tax records in a simple, secure and efficient way over the internet. The information entered by you is immediately available to your designated Teamwork accountant, who can validate and if necessary correct the transactions. Based on the information entered, we will automatically process your VAT returns, year end accounts, tax return and any other relevant accounting and tax obligations which you might have.

Too late for this year but definitely a service to investigate for next year.