Budgeting season – is it just finishing or just starting?
I’ve been doing a lot planning with clients for the last couple of months. I believe now is the time to really turn up the heat with nailing Q4 (as best as possible) for the next 30 days and keep those planning sessions active. Big businesses and small.
I’m talking about your financial models for next year – planned monthly P&L and balance sheet, personnel and capex plans, etc. If you’ve just completed the planning a) good job, and b) pull it back out and use as a working document. If you haven’t completed the process, it’s time to get your ass in gear.
‘Times are a changin’, and the world is moving fast – especially now days and there are a lot of opportunities out there, but we all need to be careful. The reporting mechanisms, however simple or complex, need to be in place, timely and accurate. It’s critical everyone understands the business’s strategy and the scorecard of how the business is performing – I always picture a football scoreboard.
With that said, I hope everyone has a strong rest of the year – as in a 10K running race, finish strong and feel good about the race. In your business – the race doesn’t end at 12/31, but it’s clearly a mile marker – so push yourself for the next 30 days – hit the mile marker strong and set yourself up for a great year in 2010.
Guess what? Budget season never ends. I don’t even like the term budget season – it’s planning and execution season and it goes 12 month a year. Get yours going now. If you need any help, let me know - it's the best part of the game.
Friday, November 27, 2009
Saturday, October 03, 2009
Surprise Late SEC Announcement re: SOX Compliance
Look at this announcement by the SEC released October 2nd. Count they have waited any longer. Small publics have another year. What's the guess, that many couldn't comply? My public clients were prepared.
/jon
Small Public Companies to Begin Providing Audited Assessment of Internal Controls Over Financial Reporting in Nine Months
FOR IMMEDIATE RELEASE
2009-213
Final Stage of Section 404 of Sarbanes-Oxley to Begin in June
Washington, D.C., Oct. 2, 2009 — The Securities and Exchange Commission today announced that the smallest publicly reporting companies will begin complying in nine months with the final portion of a key provision of a 2002 corporate governance law that requires companies to report to the public about the effectiveness of their internal control over financial reporting.
________________________________________
Additional Materials
Study on SOX Internal Controls
________________________________________
Under the provisions of Section 404 of the Sarbanes-Oxley Act, public companies and their independent auditors are each required to report to the public on the effectiveness of a company’s internal controls. The smallest public companies with a public float below $75 million have been given extra time to design, implement and document these internal controls before their auditors are required to attest to the effectiveness of these controls.
This extension of time will expire beginning with the annual reports of companies with fiscal years ending on or after June 15, 2010. This expiration date previously had been for fiscal years ending on or after Dec. 15, 2009. The extension was granted so that the SEC’s Office of Economic Analysis could complete a study of whether additional guidance provided to company managers and auditors in 2007 was effective in reducing the costs of compliance. Because the study was published less than three months before the December 15 deadline, the Commission determined that additional time is appropriate and reasonable so that small public companies and their auditors can better plan for the required auditor attestation.
While the reporting and auditor-attestation grew out of the 2002 law passed by Congress, all U.S. public companies have been required to maintain internal accounting controls since 1977.
“Since there will be no further Commission extensions, it is important for all public companies and their auditors to act with deliberate speed to move toward full Section 404 compliance,” said SEC Chairman Mary L. Schapiro.
# # #
/jon
Small Public Companies to Begin Providing Audited Assessment of Internal Controls Over Financial Reporting in Nine Months
FOR IMMEDIATE RELEASE
2009-213
Final Stage of Section 404 of Sarbanes-Oxley to Begin in June
Washington, D.C., Oct. 2, 2009 — The Securities and Exchange Commission today announced that the smallest publicly reporting companies will begin complying in nine months with the final portion of a key provision of a 2002 corporate governance law that requires companies to report to the public about the effectiveness of their internal control over financial reporting.
________________________________________
Additional Materials
Study on SOX Internal Controls
________________________________________
Under the provisions of Section 404 of the Sarbanes-Oxley Act, public companies and their independent auditors are each required to report to the public on the effectiveness of a company’s internal controls. The smallest public companies with a public float below $75 million have been given extra time to design, implement and document these internal controls before their auditors are required to attest to the effectiveness of these controls.
This extension of time will expire beginning with the annual reports of companies with fiscal years ending on or after June 15, 2010. This expiration date previously had been for fiscal years ending on or after Dec. 15, 2009. The extension was granted so that the SEC’s Office of Economic Analysis could complete a study of whether additional guidance provided to company managers and auditors in 2007 was effective in reducing the costs of compliance. Because the study was published less than three months before the December 15 deadline, the Commission determined that additional time is appropriate and reasonable so that small public companies and their auditors can better plan for the required auditor attestation.
While the reporting and auditor-attestation grew out of the 2002 law passed by Congress, all U.S. public companies have been required to maintain internal accounting controls since 1977.
“Since there will be no further Commission extensions, it is important for all public companies and their auditors to act with deliberate speed to move toward full Section 404 compliance,” said SEC Chairman Mary L. Schapiro.
# # #
Thursday, September 24, 2009
Performance Measures
KPI's and performance metrics have been used for years helping companies focus on goals and hold managers accountable. They are typically misused for a number of reasons.
They:
• Are not understood
• They are too complex
• They do not address strategy
For these reasons they are not effective.
Performance measures need to be carefully thought out - they need to drive profitability and strategy. They need to be simple, visible, and understood by the entire company.
Many companies don't address these correctly – most haven't thought them completely through - some companies have abstract measures that are not understood or can not be affected.
The key here is to look at the revenue areas and determine the simplest attributes of each category. Ensure the driving data is easy to obtain on a timely basis and someone owns the driver. People need to take full responsibility for their results. We make assumptions to develop targets for each driver and then measure actual performance. The assumptions need to be reviewed quarterly and adjusted based what we've learned over the previous quarter. This provides a powerful tool that drives results.
They:
• Are not understood
• They are too complex
• They do not address strategy
For these reasons they are not effective.
Performance measures need to be carefully thought out - they need to drive profitability and strategy. They need to be simple, visible, and understood by the entire company.
Many companies don't address these correctly – most haven't thought them completely through - some companies have abstract measures that are not understood or can not be affected.
The key here is to look at the revenue areas and determine the simplest attributes of each category. Ensure the driving data is easy to obtain on a timely basis and someone owns the driver. People need to take full responsibility for their results. We make assumptions to develop targets for each driver and then measure actual performance. The assumptions need to be reviewed quarterly and adjusted based what we've learned over the previous quarter. This provides a powerful tool that drives results.
It's Budget Season
The typical budgeting process used in today's smaller and midsized companies (all companies for that matter) is an exercise in futility. The process which should be extremely useful consumes significant company resources and has the potential to cause team friction limits business potential.
We should think in the terms of what is possible. Paint the picture - of what that possibility looks like. As in building a house - what the house looks like when it's done. They prepare the blueprint of the individual pieces that need to get done, by who, and when – with the objective to complete the house by end of the fiscal year.
We make assumptions along the way and as things change, we need to re-address those assumptions - quarterly, based on what we've learned along the way. The budgeting process becomes an operating plan that is constantly adjusted.
This now becomes a dynamic process and a powerful tool for strategic growth.
I like the rolling budget concept so as one quarter falls off, we add another quarter to the budget. Then the budget process is a continual process.
We should think in the terms of what is possible. Paint the picture - of what that possibility looks like. As in building a house - what the house looks like when it's done. They prepare the blueprint of the individual pieces that need to get done, by who, and when – with the objective to complete the house by end of the fiscal year.
We make assumptions along the way and as things change, we need to re-address those assumptions - quarterly, based on what we've learned along the way. The budgeting process becomes an operating plan that is constantly adjusted.
This now becomes a dynamic process and a powerful tool for strategic growth.
I like the rolling budget concept so as one quarter falls off, we add another quarter to the budget. Then the budget process is a continual process.
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