The accountants' thread

Unfortunately, the latter.

Again, unfortunately, yes.

There's little available as yet analysing how this is going to affect lessors, and they've kind of ignored investment real estate so far, but it's pretty clear that the proposed methods are going to be very, very ugly.

I read a paper put together by KPMG for retailers that had some useful, concisely-presented info for landlords in the subleases section. I'll see if I can find it.

EDIT: Here. At section five.

You're not the only one. In theory, right-for-use is a fundamentally good principle for lease accounting (as an auditor I've always felt that the finance/operating lease distinction is a mite too arbitrary), but there's a reason why we've had the get-out-of-gaol-free card for so many years.

Also, the actual approach for lessors being proposed has a ton of problems. For background, take a look at PwC's response to the exposure draft (particularly the answer to 2a, on page 7):

http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175821983715&blobheader=application%2Fpdf

This is going to be a big 'ole mess for anyone who is substantially involved in leases - particularly lessors.

It kind of feels like the new rules have been put together in the interests of improving reporting by lessees, and everything else is just a secondary consideration.

Depending on how short the leases are it might be an idea to check with your auditor how material he regards any discounting to be, before you go to the hassle of doing it.

With a lot of provisions falling due within a couple of years, our clients don't bother to discount because of the hassle. We just do a back of the envelope calc at year end to make sure that the numbers aren't out too much and most of the time we let it slide.

Here's a question..

At what point in revenue does a small business need a CFO?

We are going to hit $10m in revenue this year, and the responsibilities of my office manager are stretched way too thin .

It depends more on your type of business and the work required than pure revenue. A CFO is one more overhead, so it's about whether you feel like your business is in a position where they can add value.

What do you see a CFO doing? Taking over month-end processes from your office manager? Or expanding your finance function and providing higher-level financial reporting to senior management?

If you can see the value that would be added by the latter then they may be a worthwhile addition.

If you just want to take pressure off your office manager as far as day-to-day bookkeeping and basic accounting goes, you might be better off just hiring an assistant accountant as a direct report. If you set up your processes and reviews and whatnot effectively, you can free up a lot of time for your office manager that way at a fraction of the cost.

One of my major bugbears is seeing SMEs paying qualified accountants hefty sums of money as 'CFO' and they spend all their time reconciling accounts and paying bills. Any idiot can reconcile a bank account. If you're going to pay for a CFO you want to be getting (and using) management accounting analysis that's going to add real value to your enterprise.

sorry to interrupt but need i remind anyone here that today (in the ubuesque 'pataphysical calendar) is your ilk's particular saints' day Les PALOTINS des PHYNANCES?

les palotins

i thought not. carry on!