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XBRL words to the wise: get a move on!

My colleague Mary Allen observed in her December post that most companies are experiencing rude awakenings when they realize the incredible number of hours needed for XBRL tagging, and she cautioned against relying on a printer’s accounting expertise to get through the project.

As time goes by, her words are looking more and more wise.

With that said, here are a few observations that may help make your experience a little less stressful.

Allow enough time: Whether you’re just starting with block tagging or are in the process of detail tagging, build some cushion into your timeline for unexpected issues. Also, with Phase II filers going to detail tagging and Phase III filers starting block tagging, the printer’s bandwidth may be taxed and turnaround time may be longer than normal. Be sure to discuss your new timetable with key stakeholders such as your disclosure committee, audit committee and investor relations department.

Map to the taxonomy: The 2011 U.S. GAAP taxonomy was recently released, which added 1,800 new tags and deleted 500 old tags. Remapping the 2009 taxonomy to the 2011 taxonomy can be time consuming. This is also an opportunity to revisit some of the custom tags you may have used and change to a standard tag that is now included in the 2011 release. (Note that while March filers were allowed to use the 2009 taxonomy, we believe the SEC will be expecting June filers to use the 2011 taxonomy.)

 

 

Use best practices: No matter which taxonomy you use, it’s critical to really understand what rolls up into the line item components in your financial statements when choosing which tags to use. No printer knows your financials and footnotes like you do. Don’t just rely on the label title, look at the actual definition—it is key. A firm like RoseRyan will understand your financials and make appropriate choices.

Do your own research to identify your own tags independent of what your printer comes up with. It’s time consuming, but getting tags right the first time provides a strong foundation to move forward.

Start detail tagging early: As a rule of thumb, detail tagging will take three to five times the effort that block tagging takes. Start early! Companies are taking a fresh look at how they present certain disclosures and are making changes to streamline the XBRL process. For example, data previously reported in a text format may now be disclosed in a table, and data that was once disclosed in multiple footnotes may be consolidated so it’s only tagged once.

Common errors include using a custom tag when a standard tag will suffice or choosing tags that define your data too broadly or too narrowly. In particular, using custom tags dilutes the value of interactive data, which is to allow investors to quickly find information and accurately compare it to other companies or trends. To avoid too many custom tags, you might take a look at peer companies to see what tags they are using.

Resources constrained? If your head is spinning just thinking about all this, remember that RoseRyan is a phone call away. We have plenty of XBRL experience, and can help with as much, or as little, as you need—check out our XBRL services.

Got XBRL war stories? Submit a comment to this post and share your challenges and tips.

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New study looks at implications of Bay Area entrepreneurship

An exciting new study soon be released will benchmark the entrepreneurship policies of the Bay Area and provide a detailed review of entrepreneurship and its potential implications over the next one to five years. The San Francisco Bay Area Entrepreneurship Policy Benchmarking Overview will look at how the Bay Area compares to cities throughout the world and in the United States.

The project is being spearheaded by the Bay Area Council Economic Institute, a public-private partnership of business, labor, government and higher education that works to support the economic vitality and competitiveness of California and the Bay Area. Sean Randolph, the council’s president, is leading the effort; other participants include representatives from national laboratories, academic institutions, politics and corporations. I was honored to be nominated to the team based on my knowledge of cleantech and RoseRyan’s work with entrepreneurs.

I can’t mention specifics until the report is issued, most likely in the May/June timeframe, but I can tell you that the results will really illuminate the mindset and attitudes of entrepreneurs and what can be done to promote entrepreneurship throughout the region. The areas covered are comprehensive, including financing, legislation, skills, talent and technology.

As you can imagine, culture plays a big role in defining the competitiveness of our region. I can’t wait to share with you some of the key findings when the report is released.

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The good in the evil SOX narrative

I’ve been working in corporate governance, SOX compliance, for almost four years now and the most difficult task for any company has been the development of the SOX narrative.

The narrative is the framework for understanding how your controls fit into the business process.  Depending on your preference, this may take the form of a flowchart or a Word document. In companies new to SOX compliance, there is an eagerness to detail every step that they take in a process. They want to tell you everything that they do; but that isn’t the point of a narrative—that’s a desk procedure.

In my opinion, the narrative is the starting point for understanding your controls, whether they are key or nonkey. Key controls are the gatekeepers, the ones that keep your process in check and on track. For example: within your financial statement close process, a journal entry is supported by documentation and then reviewed and approved. The review and approval, which is by someone other than the preparer, is the key control. The approver is the one who verifies that the JE is properly supported, is a valid entry, is in compliance with company policy, and that the JE is affecting the appropriate accounts.

By documenting how your process works from a high level, the controls, or absence of controls, will stand out for you. You can determine which controls are the gatekeepers and what evidence there is that the control is in place.

Writing the narrative takes time and effort, and may often feel like a tooth extraction. But when it’s done correctly, it will save you time and money because you will be testing a smaller set of controls.

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Cleantech leaders under the radar

For the past two years I have received plenty of feedback regarding the Top 25 in Cleantech list. As you can imagine, the list is difficult to make (see my earlier post) and always generates a lot of buzz.

Since the list was published, people have alerted me to a few more interesting candidates to watch in 2011. These leaders may fly under the radar to outsiders, but they’re certainly well known to those that are in their particular niche. Perhaps they will make the list next year. They are:

Doug Bond, transportation services manager of Alameda County
Scott Elrod, vice president and director of Hardware Systems Laboratory, PARC
Vivek Joshi, Founder and CEO LumaSense
Mark Miller, CEO of MKThink, and founder and director of Project FROG
Sean Randolph, president and CEO of the Bay Area Council Economic Institute

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Insights from ‘Winners and Whiners’ book align with company values

I just finished reading Keith Cameron Smith’s book, The Top 10 Distinctions Between Winners and Whiners (Wiley, 2010). It’s an amusing list with some profound underlying truths. Some of my favorites:

Winners can have what they want. Whiners want what they cannot have. Winners work hard in pursuit of their passions. Exceptional performance takes hard work. Don’t expect success just by showing up—you have to work for it. Invest in lifelong learning.

Winners brighten a room by entering. Whiners brighten a room by leaving. Positive attitudes energize people. Doom and gloom sucks the life out of everyone around. Winners brighten a room by encouraging others, congratulating others and refusing to speak poorly of others.

Winners find a way. Whiners find an excuse. Vision empowers you to find a way, no matter what. Lack of vision causes you to find an excuse. Create solutions to overcome obstacles and be innovative.

Winners build friendships. Whiners destroy friendships. Understanding the perspectives and opinions of others builds trust. Maintain an open attitude and welcome diversity—it leads to stronger teams with multiple viewpoints and experiences.

I found myself really resonating with these observations and thinking about the challenging events of the past few years—watching businesses close, friends get laid off, the stock market plummet. I’ve noticed two distinct reactions. One is positive, looking at these times as an opportunity to invest in yourself, reinvent and re-energize. Another is a negative response of playing the victim, thinking it’s not my fault and life isn’t fair, and not taking any productive action. I’ve also noticed that many of the people who maintain a positive outlook create the means for continuous learning and see challenges where others see obstacles. They are the ones who come out on top.

So many of the lessons and distinctions between winners and whiners are nicely aligned with RoseRyan’s values. I have the great fortune to be championing our corporate values program, and I’ve been surprised by the number of people who are supportive and actively working for change. I’ve been amazed at what can happen when a group of people decide to make positive changes.

Smith’s book is a quick read, but worth the time to slow down a little and reflect, Can I be more like that? Or conversely, Do I get stuck on whining? I think we can all see a little of ourselves in the examples, and as we start out the new year, perhaps it’s a good time to take some of this to heart.

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Cleantech Top 25: the sausage-making behind the list

Creating the list of 2010 cleantech leaders was difficult due to the incredible diversity of industries within cleantech and the compelling stories that are developing. Although businesses in the sector— and certainly venture capitalists—are looking for the “Google of cleantech,” it’s more likely that we’ll see a broad range of companies achieve success at a more moderate rate.

In every instance when I asked industry participants who their top three people in cleantech were, they thought deeply, nodded, scratched their throat, deliberated some more, and eventually settled on three. Five minutes later they started to unveil a much longer list due to the incredible reach that cleantech has gained in the marketplace.

One big addition to the 2010 list is the inclusion of researchers at some key universities and laboratories. These institutions are unsung heroes who have a major impact on the policies, products and future of cleantech. They are quite accessible and willing to lend their expertise. Representatives of government, on the other hand, are fewer this year, since many of their policies are already in place and breeding success—good job, guys!

While I had a lot to sort through in identifying people who were most influential in 2010, one of the most difficult tasks was picking the people to watch in 2011. This list is gleaned from hundreds of potential candidates. Like last year’s list, it includes an eclectic mix of individuals who could certainly appear on the Top 25 list in future years.

I will be attending many cleantech events this year and hope to meet many of the movers and shakers. If I see you, make sure you’re ready for me to ask, “Who do you think the top three people in cleantech are?”

If you have any comments, submissions for future consideration or anything else that you would like to share, please let me know.

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2011 economic forecasts: be alert, stay flexible

I recently attended two economic forecast presentations that gave different sets of views on how—and how much—the economy will grow this year. Both were very interesting and provided lots of information, trends and predictions, but they were also different in some areas of emphasis and their level of optimism.

At the first event, hosted by Moss-Adams and Union Bank in San Francisco, Kei Matsuda, the chief economist at Union Bank, said he thinks that the growth rate for U.S. GDP will be 2.4 percent in 2011. At the second presentation, hosted by Comerica in Santa Clara, Mario Belotti from Santa Clara University and Rich Karlgaard from Forbes both think it will be 3.5–4.0 percent.

Karlgaard said that even though this sounds aggressive, the International Monetary Fund was predicting that it would be 1.5 percent as little as three months ago. He thinks that the recovery will be uneven, with certain industries, for example the tech market, growing much faster than others. He believes the IPO market will be up and VC spending will certainly exceed last year’s levels. He also predicted that the Dow would hit 14,000 and the S&P would be at 1,500. Then he said that oil may go to $100 per barrel, so I’m wondering how this rate of growth would be possible, with a brake on growth like $100 per barrel of oil?

The Union Bank economist reasoned was that the recovery seems to be moving in the right direction, but very slowly. Matsuda had three take-away points that summarized his remarks:

  • The “new normal” is not necessarily so. What happened in 2009 and 2010 is part of an economic cycle; corporate profits are up, and job growth is starting to return, although some jobs will not return.
  • Economic growth will accelerate in 2011, although there are factors that will slow this down, such as the European debt crisis, a weakened commercial real estate market and struggling state finances.
  • The housing market will stabilize with weak building starts but historically low interest rates.

In general, it seems that there is room to be cautiously optimistic, but we all need to get used to the fact that the world as we know it will continue to change and evolve, whether we like it or not. All you can do is stay flexible, be informed and look for opportunities.

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RoseRyan may have “cracked the code” of finance pro types, says CFO Magazine

Our Finance Pro Personality Quiz has tickled the funny bones of editors at CFO Magazine. “Normally we’d ignore it altogether,” says the article in the latest issue, “but, inadvertently, the firm may have cracked the code regarding the three basic types of finance pros.”

The article, titled “Putting the ‘Light’ in ‘Enlightenment’,” is featured in the Topline section of the magazine. It posits that finance pros can “satisfy their longing for self-knowledge” by taking the online quiz and provides a sampling of three questions.

We don’t know how much self-knowledge our quiz has dispensed, but we do know it’s been popular—it quadrupled traffic to roseryan.com during the first three days it was posted as our gift to clients, partners and others. And it has been one of the most popular website destinations for the entire month of January.

Best of all, it’s been really fun—to create and to take. If you haven’t found your type yet, take the quiz here.

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Strange comfort: someone, somewhere, is watching—and rating—your accounting policies

Forbes, in conjunction with a quantitative analysis firm called Audit Integrity, recently ranked the most trustworthy publicly traded companies in America. Audit Integrity uses a quantitative metric score to assess the risk of a company’s accounting policies and corporate governance practices that they call the Accounting and Governance Risk rating. The assessment uses data from income statements and balance sheets along with more than 100 qualitative factors to create the rating.

We all love lists, but is a single-risk measure a good thing? And, while I like to think that there are useful consolidated metrics that could be used for assessing risk, the synthesis and interpretation of metrics still requires an experienced hand and qualitative judgment.

But even so, I guess we can take strange comfort in knowing that someone, somewhere, is crunching our rev rec policy into a statistical model.

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What’s the big deal about blogging?

When RoseRyan made the decision to initiate a company blog and asked for volunteers, I found my hand going up of its own volition. After all, I knew something about blogging—I had watched Julie and Julia. Twice. Then, in a panic, I immediately did some research on blogs so I wouldn’t look entirely clueless. Did you know that blog stands for web log? As part of my preparation, I read all kinds of blogs and found they ran the gamut of technical communications to online diaries. Some were great sources of information and some were just embarrassing.

So what’s the big deal with blogs, and why do we do them? I have found that they are a great way to provide information and to communicate with those who are like minded; it’s a way for us to voice our opinions to this interconnected world. In this day and age of social  media (Facebook, Twitter, MySpace and LinkedIn) we have to continue to move with the times or be left behind.

More important, I think that for you, the reader, blogs not only provide information, they also provide a view into the company, or person, writing them. They provide you with a look at our collective brain, our interests and values, and insight into what makes us, and our company, who we are. Looking at the posts of my colleagues, I am impressed by the breadth of technical content, the willingness to share our knowledge and the ability to provide straight forward analysis of the accounting issues facing companies today. We blog about the joys of flexible work hours, the ability to provide solutions to our clients, and the reasons we would rather be consultants.

Our Gurus Unaudited blog clearly reflects who we are, both as people and as a company: communicators, problem solvers, analyzers of technical issues, and  a team that is there for our clients. The big deal about blogging is staying current, finding another way to make a connection, to show you who we are, and to provide you with answers about issues and about us. I can’t begin to assess what you think about blogs, but raising my hand to volunteer has certainly opened a whole new set of doors for me.

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