2014 will be a busy year for finance teams

It’s New Year’s Eve—as so many people do, I’ve taken the time to reflect on 2013 and look ahead to the next year.

2014 should be a good year—the economy is improving, a lot of bigger companies are preparing for growth once again, and things are going really well for early-stage companies. But it’s definitely not like the dot-com boom, as some are saying. The market may be picking up, but it’s doing it in hiccups—and many companies aren’t feeling it yet. Our clients are getting traction, but they’re working really hard to make progress.

We’ve been diligent at RoseRyan too—we’ve been following our own advice to invest during the down times. We’re seeing starts and stops and ups and downs in our clients’ business, and we’re putting things in place so when the market uptick goes full-on, we’ll be ready. We’ve expanded the management team, and we’re investing in our products and services, and making sure we have up-to-date tools and technology.

We are also investing in our consultants, deepening and expanding our bench strength so we have the right talent for our clients as well as the services they need. I feel confident that we’ll be able to tackle just about anything that comes our way.

And 2014 is looking to be a very busy year. Revenue recognition will have a huge impact on our clients (this train is coming whether we like it or not), and the new COSO framework is at the top of many to-do lists. The proposed changes to lease accounting are also potentially big, but it’s not on the near horizon.

Finally, private companies have the opportunity to simplify their accounting, but I think most companies looking to go public one day won’t take that route. It does make sense if a company has no desire to go public but needs audited financial statements.

I see three big challenges for CFOs, and they have nothing to do with rules. The first is the endemic talent shortage. It’s affecting everyone here in the Bay Area.

The second challenge is the ongoing shift from a portfolio of accounting and finance projects to also providing business savvy to the organization. What exactly does it mean to be a strategic CFO? A lot is written about this and discussed at conferences, but the piece that always gets overlooked is the need for a strategic team behind the CFO. Among other things, they need to understand analysis and provide the right information to all stakeholders—the SEC, the C suite, other departments, investors—in a way that resonates with them. CFOs get it, but I’m not sure the rest of the departments are there yet.

The third challenge is the pace of change. It’s not going to get better, and finance organizations need to keep up. I think that’s why the bigger companies struggle; they’re just not as nimble as smaller companies. 

I’d love to hear from you if you have ideas about how the CFO can meet the challenges facing finance organizations in 2014.

Happy New Year to you!

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Visions of carrots dance in volunteers’ heads

Usually this is a time of year for visions of sugar plums, but the RoseRyan crew at Second Harvest Food Bank had visions of carrots—and carrot recipes, like carrot ginger soup, honey-glazed carrots, carrot raisin salad and of course, carrot cake. It was the result of helping to pack more than 8,000 pounds (four tons!) of carrots during our annual volunteer event Dec. 11 at the San Jose–based food bank.

Last year, it was oranges. This year, one of our jobs was to break down 1,250-pound pallets of carrots into 25-pound boxes. Similar to last year, we constructed boxes, filled them with good carrots, weighed them to ensure they were approximately 25 pounds and stacked the boxes so they were ready to be distributed. To add a little extra fun, we competed among ourselves to see who could fill their box to exactly 25 pounds. Two of our volunteers, Sheila Manzano and Courtney Hunter, won bragging rights to this!

After packing carrots, a few of us sorted and labeled cans. This required digging through a huge box of unlabeled can goods, inspecting the code stamped on the can (for example, 42T was corn) and reconciling the code with a list identifying the contents. As accountants, reconciliations are right up our alley, so we completed this task in no time. Once we identified the can contents, we sorted and labeled them. The final task was to put them into boxes, then label and stack the boxes to be ready for distribution.

Our 13-member team effort is just a small part of the 310,000 hours that volunteers devote each year to keeping Second Harvest running, but it’s important—volunteers save the nonprofit more than $6.2 million in personnel costs. So far this year, Second Harvest has distributed 52 million pounds of nutritious food to people in need from Daly City to Gilroy. Since its inception in 1974, Second Harvest has become one of the largest food banks in the nation, providing food to an average of nearly a quarter of a million people each month. The organization also plays a leading role in promoting federal nutrition programs and educating families on how to make healthier food choices.

Whether it’s boxing carrots or labeling cans, we RoseRyan consultants look forward to helping Second Harvest every year, as it gives us the opportunity to catch up with each other, take a break to have some fun and make an important contribution to our community and the fight against hunger.

We wish you all the happiest of holidays!

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The Friday Cocktail: Year-End Cure

Whether you’re facing year-end close madness or recovering from it, this warm, nourishing wassail will mellow you out. A marriage of mulled cider and hot buttered rum, it’s perfect for a party or relaxing by the fire. For that toasty feeling without the buzz, make the rum-free version.

Wassail recipe (4 servings):

  • 6 oz good dark rum, such as Barbancourt 8
  • 4 half-inch slabs of compound butter (recipe below)
  • 5 cups mulled apple cider (recipe below)
  • For garnish: Orange peel, whole cloves, star anise, cinnamon sticks 

Make the compound butter: Mash together 2/3 cups unsalted butter and 1/3 cups brown sugar. Add ground cinnamon, allspice and star anise to taste. Mix well. Roll into a log on waxed paper. Refrigerate wrapped in the waxed paper until firm.

Make the mulled cider: To a 2-quart saucepan of apple cider, add whole cloves, a cinnamon stick, a star anise or two and the peel of an orange. Bring to a simmer. Remove from heat and steep for 30 minutes.

To make the wassail: Add butter, cider and rum to a saucepan and whisk over medium heat until butter is melted and cider is hot. Pour into 4 cups. Garnish each cup with a clove-studded orange peel, a star anise and a cinnamon stick.

Nonalcoholic recipe (4 servings):

  • 1 qt apple cider
  • 1/2 cup orange juice
  • 1 tbsp sugar
  • 1 tsp lemon juice
  • 1 long peel of orange studded with whole cloves
  • 3 star anise
  • 2 cinnamon sticks
  • 1 pinch ground ginger

In a 2-quart saucepan, combine all ingredients over medium heat and bring to a boil. Simmer for 20 minutes. Discard orange peel, cloves, cinnamon, and anise. Serve hot in heavy stemmed wine glasses.

Need other drinks for your holiday celebrations? Check out the rest of our recipes in the RoseRyan 20th Anniversary Cocktail Collection cocktail book. Every one of these drinks has its charms, thanks to the fine mixologists at the Bull Valley Roadhouse in Port Costa, California, who invented them.

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Sheila Manzano receives RoseRyan’s highest honor: the TrEAT Award

We are proud to announce that Sheila Manzano is the recipient of this year’s TrEAT Award. Now in its third year, the TrEAT Award honors a guru who best exemplifies our values (Trustworthy, Excel, Advocate and Team) throughout the year.

TrEAT Award recipients are chosen by the leadership team based on nominations from the entire staff. This year there were 28 nominees, and the team says making the final choice is one of the hardest decisions they make all year. The honoree may be singled out for contributions so over the top that we are stunned, or for quietly and consistently putting our values into action in small ways every day.

Sheila falls into both camps. She is amazing on a regular basis, in her work with clients and with colleagues, and puts her best foot forward in everyday actions. Sheila has calmed the waters of more than one client storm this year, and we are sure that she preserved the sanity of at least one frazzled project lead. She is unfailingly cheerful (and never, ever complains, at least to us), and she is always offering to provide extra help—she clocked more overtime than any of us this year.

Sheila not only delivers first-rate work for clients as a key member of our SOX team, but also serves as RoseRyan’s controller and administers our health benefits—for anyone else, that could be a full-time job in itself. She is tireless in her support for internal projects, too, such as a long-term strategic initiative and the Values Team. Sometimes, we’re not sure how she keeps her own sanity. 

Congratulations, Sheila, and thank you for living our values every day all year long.

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A single set of global accounting standards seems like a dream, but there’s a sliver of hope

During my time in public accounting in Canada and throughout my experience in the U.K., differences between various countries’ generally accepted accounting principles were often front and center. There were continual discussions of a shared GAAP around the world—a utopian world for accountants, auditors and investors alike.

Initially, given the seemingly insurmountable challenges of converging disparate approaches, I was among the skeptics who thought reconciling differences between GAAPs would take a lifetime. I knew international standards were in the works and had spent enough time reconciling Canadian to U.S. GAAP for SEC filings to see the complexities of converging standards. Over the years, my outlook for converged GAAP has grown more optimistic. The challenges (politics, prioritization, variances in application and enforceability, cost and so on) continue, but the need for an international approach is greater than ever. Canada adopted International Financial Reporting Standards (IFRS) for most public companies for financial years beginning Jan. 1, 2011, and companies whose securities are publicly traded in the U.S. have the option of using U.S. GAAP. Canada does not get the benefit of a single accounting system until U.S. GAAP and international GAAP converge.

Fast-forward to 2013, and it is a time for celebration. The FASB has voted to move forward with the long-awaited final revenue recognition standard. (For details, read Diana Gilbert’s How the New Revenue Recognition Rules Should Help Global Businesses.) Joint FASB-IASB standards are expected in the areas of financial instruments and leasing.

IFRS has been adopted by 14 of the G20 countries for all or most companies in their public capital markets. The U.S. permits, but does not require, IFRS for foreign issuers. Investors and other stakeholders still need to know if U.S. GAAP or IFRS has been adopted, depending on the capital market. This makes things very complex: investors need to reconcile adjustments and disclosures for investments and subsidiaries, but also account for local variations in interpretations, applications, enforceability and audits. When implementation of aligned revenue standards is complete, that will be real progress, as investors will have confidence that they are comparing apples with apples on the top line.

Will this progress continue? How long will it take? The revenue standard was 11 years in the making, and priorities constantly shift. However, there is a new model for collaboration going forward. In April 2013, the creation of the Accounting Standards Advisory Forum (ASAF) was announced. This group of national accounting standards boards (including FASB) and regional bodies with an interest in financial reporting will provide both technical advice and feedback to the IASB. The ASAF had its fourth meeting Dec. 5 and 6. The agenda items included the 2013 Lease Exposure Draft (IASB) and the 2013 FASB Accounting Standards Update. ASAF received over 600 comment letters, and there are some significant differences in opinion. Leases will need to be re-deliberated, and there is skepticism about the chances for agreement on a converged approach.

Still, I am hopeful that the new ASAF will be successful in improving alignment. FASB Chairman Russell G. Golden has outlined a vision for more common and comparable financial standards, which he describes as a “new, decentralized, multi-lateral model of international standard setting that is consistent with the goal of promoting greater convergence in global financial accounting standards.” It is going to take time to find the right model, and hopefully the next 10 years will be more successful than the past 10.

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Digital health: the new startup opportunity

A number of new trends are emerging against the backdrop of the Affordable Care Act (ACA)–mandated health insurance exchanges being rolled out. One is the creation of new businesses based on digital technologies that allow individuals to manage and improve their own health, and gives service providers the ability to deliver increased quality and efficiency at lower costs. These companies span from PracticeFusion (EHR), which addresses efficiency of operations, to Fitbit, which makes a wearable device that measures the wearer’s physical activity and health.

Digital health as an industry sector is not new; there has always been IT investment throughout the healthcare industry, and as in any business, healthcare’s administrative aspects have been serviced with increasing levels of technology. But digital health as an industry trend is just now receiving higher visibility, just outside the glaring spotlight of the ACA.

Statistics on the size of this industry are inevitably slanted depending on the perspective. But however you look at it, this new industry is large and growing quickly. Rock Health, a digital health incubator, estimates that the sector saw $1.4 billion in venture capital investment in 2012, up 46 percent over 2011. Investment at that level would represent about 5 percent of total venture capital investments in 2012—a significant number.

Growth areas in digital health include:

  • EHR, the digitization of health information
  • Access to information and remote monitoring of patients via smart phones and other mobile devices
  • Big Data: analytics and mining all that information
  • Efficiency and administration: improving operations, lowering the cost of delivery and increasing quality
  • Hardware sensors and wearable devices that enable wellness and improved monitoring and personal health. (Is Apple’s “one more thing” going to be a smart watch loaded with body sensors?)

From a practical point of view for finance professionals, digital health companies will often have a complex combination of hardware, software and services in their products—but that is not unusual for technology companies. Digital health companies will not pose the unique accounting challenges we experienced with the pharma and biotech life sciences companies. I believe the new digital health companies will operate with the B2C and B2B models we know and understand. The FDA recently issued final guidance on mobile medical apps that appears to support a hands-off approach to most apps. If you have an app on your phone that’s monitoring an insulin pump, rest assured the FDA is going to have a hand in it. But for many of the new digital health companies, financial operations will look familiar and the FDA will not be a gatekeeper.

We will wait and see how digital health as a sector unfolds. Undoubtedly, we will see failures as in any emerging sector opportunity, and we will see technology thrown at needs that don’t exist. But the macro trends are too large for digital health to not become an important part of the evolution of healthcare and the startup economy.

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The Friday Cocktail: 10K-O

Looking to stave off the chill of early winter? Try the 10K-O. This deeply smoky cocktail puts us in mind of a vision quest under a starry desert sky. (Drink a couple and you may have one, regardless of where you are.) Even if you don’t meet your spirit animal, at least you’ll feel ready to knock out any SEC requirement. For cooler heads, the 10K-O’s nonalcoholic mate provides a spicy ginger kick. 

Cocktail recipe:

  • 1½ oz Mezcal Vida*
  • ½ oz fresh-squeezed lime juice
  • 1 oz fresh-squeezed grapefruit juice
  • ½ oz honey syrup
  • shy ½ oz Luxardo maraschino liqueur*
  • Grapefruit peel

Shake all ingredients in a cocktail shaker and strain into a chilled coupe glass. Garnish with a grapefruit peel.

Nonalcoholic recipe:

  • 1 oz fresh-squeezed lime juice
  • ¾ oz simple syrup
  • Blenheim spicy ginger ale or Reed’s ginger beer
  • Lime wheel

Add lime juice and ¾ oz simple syrup to a cocktail shaker. Add ice and shake for 10 seconds. Strain over fresh ice and top with ginger ale. Garnish with the lime wheel. 

Check out the rest of our recipes in the RoseRyan 20th Anniversary Cocktail Collection cocktail book. Every one of these drinks has its charms, thanks to the fine mixologists at the Bull Valley Roadhouse in Port Costa, California, who invented them.

*These ingredients are available at BevMo and specialty shops.

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Bay Area leaders take top honors in Entrepreneur of the Year™ awards

Three Bay Area business leaders took home top national honors in Ernst & Young’s Entrepreneur Of The Year™ Awards program.

The national overall winner is Hamid Moghadam, CEO of Prologis; Tom Bedecarré, CEO of AKQA, was named top entrepreneur in the Media, Entertainment and Communications category, and Nicholas Woodman, CEO of GoPro, won in the Retail and Consumer Products category. EY announced the 11 national honorees Nov. 16 in Palm Springs; the list of winners is here.

These winners were chosen from a group of more than 250 outstanding entrepreneurs from across the country. It was a very strong showing for Northern California—direct evidence that the region continues to be an innovation engine that produces new companies, technologies and ideas.

All nominees, as in all the years that I have been involved with this program, are diverse. The companies these entrepreneurs lead are a mix of public, private, family-owned, nonprofit and women-owned businesses.

Many candidates are serial entrepreneurs and have made fortunes; even though many of them don’t have to work, they wouldn’t want to be doing anything else. What drives them and makes them so successful? Among the traits I’ve seen, a strong work ethic and family are most meaningful to these CEOs.

Some of the other common traits of these high-impact performers include:

  • They address business problems by being flexible and focusing on core strategies.
  • They recognize the value and strength of honest communication and transparency.
  • They have vision—and they stay focused on that vision.
  • All share a sense of action. As one said, “You can’t just talk your way out of situations, you need to take actions. That is what employees and customers are expecting.”
  • They take risks. Part of being a risk taker is having a strong belief in yourself, your ideas and the people you work with. This was evident with everyone. It’s easy to look back and say you took a risk and it worked, but what separates these folks from most is that they did take the risk.
  • They know how to attract and retain talent. This was a universal trait; it’s a key indicator of success for any business.

Much is said about the ripple effect of the work and efforts of these job creators, and I believe the world is watching them and the organizations they build. We do this not out of envy, but because they are the role models for what it takes to be successful in the 21st century.

They bring the best ideas to market, build the strongest teams and deliver the best products and services, and their companies energize the economy and promote stability and long-term growth. Recognizing these achievements is a key reason RoseRyan is proud to be a sponsor of the EY Entrepreneur Of The Year™ program, which is in its 27th year.

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The Friday Cocktail: Knock Your SOX Off

There are plenty of festive beverages in RoseRyan’s 20th Anniversary Cocktail Collection, but with Thanksgiving less than a week away, Knock Your SOX Off is a top choice. It’s a creamy, nog-like drink that actually could knock your socks off, but only if you have more than one—and one is perfection. It’s light and refreshing, yet warms you to your toes. Don’t like rye whiskey? Bourbon will do. The nonalcoholic version, which gets its heat from ginger, will also stave off the pain of compliance chores.

Cocktail recipe:

  • 1½ oz rye whiskey
  • ¾ oz fresh lemon juice
  • ½ oz grade B maple syrup
  • ¾ oz egg white (1 or 2 eggs)
  • dash of Angostura bitters

Shake all ingredients in a cocktail shaker without ice for about 10 seconds. Add 3-4 ice cubes and shake for another 10 seconds. Strain into a chilled coupe glass. 

Nonalcoholic version:

  • ½ oz apple juice
  • 1 whole egg
  • ½ oz whole milk
  • 1 scant teaspoon maple syrup
  • 1 scant teaspoon ginger syrup
  • 2 pinches each of nutmeg and cinnamon

Add ingredients to a cocktail shaker and shake for 10 seconds without ice. Add 1 ice cube and shake for 10 seconds. Strain over fresh ice and top with soda water.

Check out the rest of our recipes in the RoseRyan 20th Anniversary Cocktail Collection cocktail book. Every one of these drinks has its charms, thanks to the fine mixologists at the Bull Valley Roadhouse in Port Costa, California, who invented them.

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To stay relevant, finance pros must embrace change

For the past couple of years, emerging growth companies have been reaping the benefits of cloud computing. The momentum of small startup companies using innovative technology to make their business processes more efficient can be seen everywhere.

As a financial consultant specializing in emerging growth companies, I have been particularly amazed at the positive impacts that the “paperless” office and cloud computing are having on my clients every day. Gone are the gray stainless-steel filing cabinets packed with invoices, checks and receipts. My files are stored in the cloud and accessible from my computer wherever I go.

In an ever-constant quest for improvement, I’m continually changing and fine-tuning our accounting and finance processes. That includes turning to the myriad of cloud applications, such as Bill.com, Expensify and Right Networks, that provide high-speed, low-cost solutions. They make me, and my clients, more efficient and effective. Best of all, I can control and implement these applications myself—no need to rely on the IT department. And the tools can scale down to meet the needs of a startup company.

Having recently attended webinars and presentations by finance executives across a variety of industries, I think it’s clear that cloud technology is transforming the way accounting and finance must do business—but we seem to be the laggard adopters. Only 3 percent of our potential market is in the cloud, compared to a healthy 35 percent for sales and other services businesses, and about 20 percent in HR fields.

We cannot afford to ignore the time- and cost-saving benefits—not to mention the accuracy and convenience of, say, being able to compile original financial documents for financing due diligence or an audit at the click of a button.

It’s time for finance to embrace the change and deliver better, faster information to company executives. We need to take advantage of cloud technology if we are to shed the image of being the “work horse” department, and make full use of our analytical expertise and partner up with internal corporate functions to provide more meaningful and timely information that will impact the company’s bottom line.

We must be ready to re-educate, re-learn and re-invent the future.

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