With an ever increasing push for compliance and proper governance, accounting departments need to keep abreast of an ever-changing rules, laws and technology. We’ve rounded up some recent articles from across the Web that delve into some of the latest news and insights. (Feel free to tweet us, or follow us @CLARITYes_SGS to continue the conversation…)
Forget ROE or EBITDA — Meet COROA
A big challenge for investors is measuring a company’s true profitability. There are so many tricks to making the picture a little (or a lot!) rosier than the reality that even the official GAAP accounting numbers frequently need plenty of scrubbing to reveal the real picture. Now Jack Ciesielski, author of The Analyst’s Accounting Observer, has developed a fresh measure of profitability. For Ciesielski, it’s all about cash. “What’s more important in the world than cash?” he asks. “Why, it’s more cash, of course.” Find out why measuring operating cash flow as a percentage of total assets may be the new paramount metric. (A hat-tip to our @DanMcCue_SGS for this article.)
No Smooth Sailing for IFRS
As if tax wasn’t complicated enough in most jurisdictions, businesses must also contend with accounting standard rules that, internationally, are in a state of flux as countries harmonize their own rules with ever-evolving international standards at different speeds. Since April 2001, the International Accounting Standards Board (IASB), based in London, has been the body responsible for setting IASs, which are now known as International Financial Reporting Standards (IFRSs). In theory, IFRS leads to a situation where companies spend less time and effort complying with international accounting and financial reporting rules, regulators use fewer resources to uphold them and investors make better decisions as a result of them, they will clearly be of benefit. However, the situation as it stands is far from perfect. (There have been recent concerns about “reporting irregularities.”) For an in-depth backgrounder, this feature attempts to make sense of the current accounting standards situation, and the transition to global standards.
New (Conflicting) Views on Revenue
Over at CFO.com, David M. Katz reports on the sea of change for reporting revenue, noting that “CFOs will likely soon have a heads-down focus on the ways companies calculate the top lines of income statements.” The new proposed standards (which wouldn’t become effective for public companies until 2017 and for private companies a year later) could have a profound change on company’s debt covenants, bonuses, corporate taxes and many other areas of their organizations.
Tips for SMBs
While these tips were aimed at helping small business owners deal with year-end taxes, we found there was a lot of sage advice for the mid-market as well – take advantage of the cloud (consider SaaS tech), plan ahead, ask for help and monitor and measure. Good advice for all organizations!