Not just finance, hobbies too ....

Author: Michael Page 3 of 7

https://www.linkedin.com/in/michael-potter-2689a94

Public company CFO.

Born in Montreal and currently living in the greater San Francisco area.

Dungeons and Dragons:Temple of Elemental Evil Board Game Review

This is a review of the board game version of Temple of Elemental Evil. There is an old module version for AD&D, the older pencil and paper RPG version, but this review is on the board game. The board game was released in 2015 along with the module Princes of the Apocalypse, an updated and new 5e take on the original Temple of Elemental Evil module. In an earlier post about business travel I mentioned www.meetup.com as a way to find an activity to pass time and this is a typical style of board game you may find at a meet-up.

This review is based on my playing experience with my teen age daughters, several sessions at the local board games meet-up (via www.meetup.com) and some solo play. The tldnr version of the review is that the game is good and fun and I recommend buying it (handy link at the bottom of the review).

toee game being played

(game in full swing)

Dungeons and Dragons:Temple of Elemental Evil (ToEE for the rest of this review) is a tile and miniatures dungeon exploration game using a cut-down version of the full D&D rules set. You can have up to 5 players with each player controlling a hero in one of five classes. Each hero is represented by their own plastic miniature and comes with a cardboard tile that lists the base abilities of the hero. The five classes are Fighter, Ranger, Cleric, Wizard and Rogue. The Ranger and the Wizard are represented by female miniatures and the cleric is somewhat indeterminate. The sex of the hero makes no difference in the game and all heroes are fully clothed and should be appropriate for people who dislike the stereotype of scantily clad females in the fantasy genre.

The miniatures (about 40 different ones counting the 5 heroes and all the monsters) are well done and detailed, but they are made of fairly soft and bendable plastic and my game arrived with two of them broken. They were easy to fix with a dab of modeling glue (anything that works well on plastic will be fine). I have seen pictures online where they have been painted up and for the most part they are in the same scale as is generally used in tabletop RPG playing, so the game is a fairly cheap source of miniatures if that is something you are looking for. The soft plastic can result in them bending a little (the doppelgänger monster seems to suffer the most from the problem) but they can be softened and reset using boiling water if you are so inclined.

herosmonsters

special monstersettin

 

 

 

 

 

 

(Hero miniatures, monsters, special monsters, detail)

I would rank the quality of the components to be pretty high. The tiles and many of the counters and tokens are well printed and thick. The colors are vibrant and they are well printed. The cards are good as well, but since Wizards of the Coast also does Magic the Gathering I would hope so. I used clear card protectors (actually illegal in Magic as small differences in the card back might be seen) so I could see the different card backs.

The storage in the box is so-so. The cards all do not fit once you put protectors on them and the miniatures basically are all tossed into a heap. You can put them back into their plastic baggies but that does not provide much protection. I bought extra bags to hold all the tokens.

ToEE is meant to be run as a campaign where the adventures are run in sequence and the characters you use have an opportunity to improve, but it does not have to be. There are 13 premade adventures. 3 of these are town adventures and 10 are dungeon adventures. Typically you have to either retrieve an item or make it to a specific tile or kill a specific monster to win. The game is a cooperative game, players cannot attack each other (with the exception of the very last adventure that introduces a traitor mechanic). You either win as a group or lose as a group. You lose if someone dies and there are no more resources left in the game to bring you back.

The game mechanics are pretty straightforward. Each turn is three phases which are basically your move, explore, and then run any villains or monsters that showed up and play out any encounters. During your turn, you can move and do one action. The move can be split up before and after your action.

tile stack

The heroes all have the same statistic categories and these are shared with the monsters as well (not all of them, some like surge are heroes only). The base statistics are armor class or AC, Hit Points or HP, Speed, and Surge Value. Each hero card also has a special ability unique to that hero and lists what extra abilities the hero could have (represented by cards). Your AC is how hard you are to hit, the roll on a D20 (twenty sided die), including any modifiers, has to be greater than or equal to your AC for you to be hit or for you to hit a monster (monsters also have AC). Your HP (and monsters’ HP) are how much damage can be taken. When you go to zero you die. Speed is how many squares you can move each turn (each tile is divided up into a grid) and Surge Value is how many HP of damage you heal if you play a surge token (generally limited to 2 in total and used your next turn after you die).  Surge tokens are the resource that bring players back after they die.

hero cardwizard

Each hero is modified by a choice of cards that the hero is equipped with. These are at-will, daily and utility action cards. The cards contain the rules for them. A typical at will card is a weapon or spell attack that will have an attack modifier, damage done, and perhaps other special rules written on the card. Some actions, like daily actions, can only be done once per game.

The goal of ToEE is to keep exploring. If you do not explore, you get an automatic encounter and almost all of them are bad and could damage your entire party. If you kill monsters, you can trade in 5 experience points worth of them to negate an encounter, but encounters are the built in clock to keep you pushing forward.

When you turn over a new tile, there are several consequences that could happen. Each dungeon tile has either a white or a black triangle. The triangles are used to indicate which edge is joined to the tile you just explored from and if there is an encounter created by the new tile. White triangle means no encounter, and black means there is an encounter.

regular tilespecial tile

There are symbols and sometimes names and other features on tiles. Unless the adventure you are playing says otherwise, name and special symbols such as cult symbols mean nothing. Little horse heads indicate monsters (0-3 per tile), Red X means place an upside down trap token there.

traps

Monsters are chosen by drawing cards from the monster deck and the cards have the monster statistics and rules. Each monster also has a miniature to be placed on the game board. Most of the miniatures are well done with good detail and a few are quite large. They certainly add to the flavor and fun of playing the game. Each monster is played by the player that brought it into play and only activates during that player’s turn. The monster cards contain the rules on how to play the monster.

monster and weaponencounter plus treasure

(monster card, hero equipment, encounter and treasure)

There is a lot of dice rolling in the game and there is only one D20 included with the game so I suggest that you toss a few more into the box if you have 3 or more players to speed the game up and reduce searching for where the die has gotten to. Like any game that relies on dice, players can get hot or cold streaks and that can swing the outcome of the game.

Each adventure takes about 45 minutes to play if you have three or more players plus about 5 minutes to set the game up. I was able to explain the basics to new players in about 5 minutes. With. A group of 5 brand new players, several that did not really get the mechanics for a few turns, we played an adventure in about 1.25 hours, but that is the longest we have gone. I played it twice in the regular board game meetup I go to and we won the first adventure and lost the second and the loss mainly was due to bad dice rolls and several very unfortunate encounters that was drawn. The bad dice rolls meant that we did not kill monsters and generate experience points that could be used to negate the encounters.

There is a story that goes with each adventure and the objectives tie to the story, but other than that the story is more flavor than anything else. The game can go for stretches of just killing monsters and gathering treasure.

I would not call it a very deep game, but there are tactical choices to be made. Depending on how well you did, additional (and harder or better) cards are added to the decks and 13 different adventures and 5 heroes to choose from does give it reasonable replay value.

I recommend the game and I think you get pretty good value for the money and most people that like fantasy games and don’t mind dice rolling would enjoy it. If you have a regular group you could play an adventure each session and your characters will advance and improve as you successfully complete each adventure. Because it is a fully cooperative game, it may also help when you have a mixed group with some competitive players and others that don’t play just to win.

Buy the game at Amazon.com

 

Collections

Last week I discussed Credit, today I will discuss the rest of the phrase Credit and Collection. Like the Credit process, how you run your collections process is important and deserves your attention. If you have a good credit process up front, you are probably OK on the reasonable expectation of collection criteria for revenue recognition, but you still need to collect the cash for your sales.

I will assume that you have a good credit process and you are selling to customers with reasonable credit. I will also assume that you have a good sales contract. In place, but I will discuss that in a little more detail. If your credit process is broken, you will have collection issues. That time two months ago when you caved in and said yes to make a quarter even though the customer had bed credit? This is where you face the music and have to deal with the consequences.

Your sales contract and/or invoice needs to make payment terms clear. I mean very clear and spelled out in proper terms. Incoterms or International Commercial Terms is well understood and often used in international commerce. Because these are well understood and legal interpretations are clear, I highly suggest that you use them. Make sure the terms are in the contract and either on the invoice or the invoice references the contract for payment terms. Be especially careful what the customer purchase order says. Many countries defer to the purchase order when settling disputes regardless of what the contract says unless the purchase order says otherwise. It almost can become an arms race where there is a contract, then you receive a “standard” purchase order back that does not reference the contract, then you send an order acknowledgment reaffirming that the order is accepted under contract or invoice terms. Every country is different, so I suggest you consult your lawyer here, but you do need to be careful.

I know it sounds pedantic and overly detailed for the new, strategic CFO, but every company needs cash and you are not going to be able to be strategic if you don’t collect well. Getting the contract done well, even if just contained in your standard invoice terms, is something that can be done well once up front and then just needs a little bit of maintenance and supervision going forward, something that your billing team can handle without much effort from you. I always check this process when I start a new CFO job (applies to Controller as well). If it is in good shape, then I manage on a exception basis. If it is in bad shape, I put a lot of attention to it very early.

One last tip that can help later is to try and preserve title until payment is actually received. You need to be careful about affecting revenue recognition as one criteria is title has to transfer, but a properly worded term and the expectation that you will be paid is normally sufficient. You also need to be sure that it is clear that they are responsible for losses and need to insure the goods.

The next step to good collections is to get your sales force engaged. Hopefully you are already doing all the basic things that build trust and relationship with the sales team (I find adult reviews of expense reports that allow for some discretion and paying them quickly once submitted really helps here.

You need the sales team engaged because they are the ones talking to the customer and doing the negotiations. So if you want something built in up-front, then the sales manager is the one that will do it. If you want a purchase order that resets terms caught, it will be the sales team that sees it first.

I know of two ways to get the sales force to help. The first is training. Take the time to train them in the standard payment terms the company uses and why they are important. Educate them on the main cash flow levers the company has and what the time based cost of money is for your company. Show them using examples just how much a bad debt costs the company. Show them how a side agreement can throw all the prep work and standard contracts out the window. Side agreements are import enough that I will do a blog entry just on them. If you spend time educating the sales force, you greatly increase the chance to get them on board and engaged.

However, this is just not enough. Sales people are very motivated by targets and pay associated with the targets. If their bonus is only based on making the sale, then they will not be motivated to put potential barriers in their own way by protecting the company. You absolutely should tie some of their bonus to eliminating bad debt and collecting the sale. The best way I have found to make sure they are motivated to keep following up with the customer is to only give them credit for bonus purposes when the payment is made. This is the simplest and most direct way to tie their behavior the the company’s hoped for result. More mature companies can also have metrics for bed debt and finding costs for the receivables the sales group creates, but no credit for bonus until collected is the most straightforward.

I get pushback at times from sales managers on this (I always try and stay engaged with the sales team as they are the best and earliest warning system for forecasting and customer feedback). Normally them complain that our harder terms are bad for their customers. My answer is simple, a “customer” that does not pay is not a customer. If I am being less polite to really make the point, I remind them that people that take things without paying are thieves.

I am sure that you have noticed that many of my blogs emphasize the up front process and usually I spend a lot of time explaining what I do to get it right. That is my natural instincts coupled with Six Sigma training. In a factory, the worst process to follow is to inspect quality in at the end and the best is to start with your suppliers so that you receive good quality parts. It is the same for Finance processes. One topic I did not cover here is billing, your invoices need to be perfect or whatever mistake is present will be used as an excuse not to pay, but I will discuss that another time.

I have noticed over the years that you should have very nice, persistent and organized people actually doing the collections. As funny as it is to joke about breaking people’s legs and all the other loan sharks collection methods, people do not like to pay mean, threatening counterparties. All you really can do is threaten to sue and in the USA that is not much of a threat. If there is either a cash flow issue or some form of quality dispute with the customer, they are not going to care about a lawsuit.

What actually works is polite and persistent follow-up. The customer will claim missing invoices, terms being different than what is in the contract, quality issues, moon phases, sun got in their eyes, vacation schedules of people who can sign cheques, pretty much any reason under the sun as a reason for delay in payment. Your collection team needs to document that they were told, efficiently follow-up internally for anything that is under your company’s control and then get back to the customer. They need to sound sympathetic and be very polite about identifying inconsistencies in what the A/P person at the other end is says. Quite often pure embarrassment at being caught in a lie (that is never specifically claimed by your collection staff) can cause the customer to pay.

If your team is polite and professional and keeps good records (CRM is best but a physical file works), you will get prioritized for payment. If there is a real issue, your collection team will find out because the people on. The other side will tell them because of the good relationship that has been built up. Your collections team should either work closely with the credit team or report to the same boss so that you get realtime feedback and can stop further sales if a customer suddenly turns bad. I don’t consider a company being protective of their own cash flow to be bad. If your invoice to them was incorrect then you gave them an excuse not to pay. Anything that you would do yourself needs to be responded to with polite but firm follow-up.

Finally, if a customer does not pay you need to take legal action. Your sales team will protest about relationship, but a customer that does not pay you has already broken their relationship. If you have credit insurance, your insurer may take over this process, otherwise you need to sue. The steps are always the same. First a legal warning letter then you file a claim. You need to get paid, not a future promise of payment after the legal warning letter as you need to move quickly.

By doing what I suggest in this blog, I have consistently been able to deliver industry leading collection statistics wherever I have worked. By spending the time to work more directly with the credit and collections team and build a rapport with the Sales team I have been able to keep everyone happily working towards the goal of getting cash into our bank faster.

Credit Control

I have done a few blogs on some of the more public tasks and CFO has, such as Investor Relations and Earnings Releases and SEC Reporting (where the results of the process are public). This blog is about a process that if everything goes well will remain private because there is no news to report.

One of the functions that normally reports to the CFO is Credit and Collections. I will discuss collections in another blog to come, this one will focus on credit control. The whole basis of credit control is balancing reducing losses from bad debts while not excessively curtailing the ability of your sales team to sell. There is a very natural conflict point here between Sales and Finance (or Treasury as credit control often is a Treasury function, but Treasury should report to the CFO). Sales is motivated and pressured to increase sales. Credit control is motivated and pressured to reduce losses. In both extremes, you can have either no revenue (all sales are denied) or maximum losses (sales are made to anyone regardless of their ability or desire to pay). Obviously no organization wants either extreme.

Before I detail out what I think is important about Credit Control, this is a reminder of why you need it. If you want to recognize revenue on an accrual basis (when the sale is made instead of when cash is collected), the SEC has listed the rolling four conditions that need to be met (SAB 101):

“The staff believes that revenue generally is realized or realizable and earned when all of the following criteria are met:

• Persuasive evidence of an arrangement exists,
• Delivery has occurred or services have been rendered,
• The seller’s price to the buyer is fixed or determinable, and,
• Collectibility is reasonably assured.”

https://www.sec.gov/interps/account/sab101.htm

The final bullet says that before you can recognize revenue, you need reasonable assurance that it is collectible. The SEC is not often as direct when giving guidance but the four points are very clear. Since then, accounting guidance has echoed those 4 points and all US auditors and most foreign ones use those points. Revenue recognition is a key problem that can lead to either missed quarters or restatements. It is something that a good CFO pays close attention to. It is very damaging to your reputation and the company’s reputation to get this wrong.

The first two things you need to do is to ensure that credit decisions come from a fact based process and that you have a good person with sound judgment leading the team. The two best sources I know of for credit information is Dun and Bradstreet and the credit insurance companies. The other is your company’s experience which is mainly saved by the credit and collection staff but might be in your CRM system as well.
One bad source of credit information is the personal relationship of the sales manager with someone at the client. From the beginning before the credit application goes in to. The. Very end when you do the final rejection as CFO, you will hear a story of what a good guy the client representative and how far back the sales manager goes with them. Sometimes the relationship goes all the way to the top, the sales manager knows their CEO. I have never seen a case where that so called “good relationship” turned a bad credit into a good one. Even if the relationship is real, if the client does go into bankruptcy, the judge can claw back payments made to your company in advance of other creditors. I also have noted that when business turns bad for a company, the CEO is more likely to lie and exploit their relationships than lower level employees.

What is important to know is what the D&B report says and what your collections team says if they have previous experience with them. For example, you may set 30 day terms and the D&B report says that they are often late. If your staff has previous experience with them, they may be able to tell you that they always pay no faster than 45 days but that payment always arrives then. That would indicate that their credit is OK but that you need your pricing to reflect being paid 15 days past your terms.

On average, your credit team should be saying no to cases where there is doubt that the client is trustworthy. If you have 20% gross margin, every bad debt write-off needs to be replaced with 5x the revenue to recover the cost. They cannot say no to everything that is doubtful and there should be some balance struck between an outright no and lower credit limits or a mix of letters of credit, bank guarantees and deposits and pure credit. A good sales manager should be good at negotiating, so they should be able to work something out.

You have to set the right tone with your staff. Some of their decisions will get appealed to you and I have found that the credit team is almost always right. There are times where there is some factor they did not consider, but if you did what I said was important – have a good fact based process and a good leader, then when they say no it normally is justified. Almost always I end up pushing the sales manager to go back and get more security from the potential client. Sometimes I approve the request, but always only when I know something that the team did not know.

A bad reason to approve credit that otherwise would not be approved is because you need it to make the quarter. You’ll just write it off a quarter or two and make that quarter worse plus have people question your judgment.

Credit insurance can help defray some of your risk. If you are exporting, make sure you look into what government supported insurance there is. Many countries have some sort of scheme to reduce risk and will let you recover 70% or more of any loss. Agencies like that also are good sources of credit information and proper practice for the country and maybe even to potential customer. In your home country, you will have to find credit insurance from one of the several that provide it.

When exporting and selling into emerging markets, you need to be very careful when you extend credit. If there is no good rule of law and now ability to enforce contracts or payments, you probably should be requiring an L/C or payment in advance. Many countries have a very bad reputation for paying companies from other countries and in many, you cannot win in court against the “home” advantage your customer has. If you do extend credit, be careful and build up the limit slowly as the customer proves them selves.

As CFO, you have better access to banks and market intelligence than your staff does. Make sure that you communicate with them. A recent example for me was a competitor that also bought our product off of us. I felt that their business model was OK but they were not being run properly and were a bankruptcy risk. I communicated it with our sales leader and our head of credit control. They decided to stop selling to the customer and several months later they did go under. Because I communicated my knowledge, we had no exposure to them.

I wish I was always that good. In one case an Indian customer wanted credit. They were listed in India and not very strong but most of our customers (construction companies) did not have great credit. I had been convinced that extending some credit was OK but our sales leader did not get a good feeling from meeting them in person. He stopped the sale and one of our competitors extended credit and sold to them instead. That company went under and paid no one.

Finally, we were trying to do more business in China where my company’s factories were located. We had a potential customer that was public in China and had a market cap much higher than ours. Typically you get paid by bankers’ acceptances/notes inside China. In this case, the customer offered commercial notes. They were current on their debt and their balance sheet seemed ok. We made a large sale to them and they did not pay the commercial notes off, defaulted on their bonds (pretty much the first in China) and went under. It was an expensive lesson, and we did not makes that mistake again.

And please don’t forget to have your contracts, even your standard sales contracts, reviewed by a lawyer. A poorly written contract can turn a calculated risk into an unexpected disaster.

Business Entertainment

Once I made it to the CFO rank, the offers from potential vendors for business entertainment significantly increased. This is something that happens as a matter of course with the position and it brings its own challenges with it. You also will do more entertainment for potential clients or lenders. Again, an area that you need to be careful with, especially with the FCPA and other rules to be followed (UK anti-bribery Act as an example, but most countries have their own rules. The rules on the books in China, for example, are quite strict).

I have one basic rule about accepting business entertainment. If it could influence my decision to purchase something, then I decline. The two different ways that could happen is excessive cost or something illegal. If it would be embarrassing to have the entertainment public, then it can be used to influence you.

I have a few other rules of thumb, but not influencing my decision is the main one.

When it comes to meals and bottles of wine that I would have, if the restaurant is a place I would go to and the wine is what I would feel comfortable paying for if I was personally paying for the meal, then I am ok with it. I will only accept sporting event tickets if the giver is coming with me. If the person wants to give tickets and not be there, I usually suggest that they be given to lower level staff and I would not take them. I just make it plain that I am passing the tickets on so the staff know it is coming from me.

If I get a gift basket that has food and wine that is too expensive, I just share it with people at the office. You can always send it back if it is really over the top, but it is not so easy and can be considered to be quite insulting in some countries.

All of the above is, of course, if the company policy allows it at all. I have influence over the rules and they should never be ridiculously tight (some places like Walmart have famously tough rules there), but you do need rules with fairly low limits to discourage undue influence.

It is very hard in countries like China to avoid receiving and giving gifts. Because you are likely to be governed by the FCPA, you need to be very careful to ensure you know who is receiving the gift and if they are a government officer. This is quite tricky as the government runs or owns many companies and parts of the economy. The local bank branch manager may be considered to be a government official. Same thing for hospital administrators and other businesses. Even if you think you are following the FCPA, the actual written laws in China are very strict. They are generally not enforced, unless the government decides that they now will enforce them. So make sure this is well understood and controlled.

Business entertainment does serve a vital purpose in that it allows you to spend time with key vendors like your bankers outside of formal meetings at your offices (or theirs). If you are going to be relying on their advice and work, it certainly is important that you get more information than just a rehearsed pitch in your office. A meal gives you a lot more time to get to know them and what you learn outside the office can give you some clues on if you should use or trust them. If you are reasonable and careful in the entertainment you accept, you also are sending a signal to them that it is the results and their cost that matters, not if they can get yiu Super Bowl tickets.

Business entertainment does not only have to be with external vendors. You can take your staff or key people in other departments out as well. At times you can break an internal impasse by taking the discussions out of the office. Obviously you should not abuse this (policies like the most senior person pays helps to reduce abuse), but the occasional meal with people from inside your company can help a lot more than another meeting reviewing a spreadsheet. Sporting events are harder to justify, but some beers and cheap bleacher seats at a baseball game are not expensive and a good way to reinforce the workplace bonds. Business entertainment also gives you a chance to relax the formal chain of command that many feel pressured to follow inside the office. I have received quite a few good suggestions from my staff over a meal after work. Suggestions that were not forthcoming inside a work conference room.

If you are entertaining internal staff, you need to make sure it is in a fair and professional atmosphere that does not exclude your staff of the opposite gender. Usually, I prefer a larger, mixed group in that case as it can reduce gossip, but if you treat everyone with respect and as fellow employees, not dating material, your reputation will be good and there will be less need to have public “chaperones”.

I do tend to watch how much I drink when I am out at a business entertainment event. I don’t drink that much anyways, but as the CFO you need to set an example. As fun as it may appear at the time, getting drunk just isn’t wise and you risk others drinking to excess with you and then later getting behind the wheel in a car. You are responsible for your company, do not forget that you are responsible for your staff as well.

That is not to say that you should not drink at all. Some countries like Korea, Japan and China seem to feature drinking a lot as part of the expectation of a business meal. Regardless of expectations, I always have been careful to not overdo it. You also need to be more careful when fighting jet lag as drinking really does not help and may make it worse.

Email Addresses

Like most CFO’s, I work with outside consultants, some that run their own shops. Far too often I get emailed by them from their personal email and the email itself if not reflective of the professionalism they are supposed to project. Sccrmom86 is probably descriptive of something, and I assume the 86 is your year of birth, but when you are proposing to do $50K of IT services, I bet you can do better.

I acknowledge that this is often just a matter of taste. Every once and a while, I get a comment about my Hotmail email address. One of the main reasons why I use it instead of Gmail is that it is not blocked in China and Gmail is. Some people seem to think that Hotmail is some form of “inferior” email, which I find quaint. This is partially from the viral release method that Google used and partially because Hotmail was one of the first mass public email systems. When it first came out, the web-based HTML (HoTMaiL was how they spelled their name) that was not connected to an ISP was new and bold. But because it is from an older time before the more modern Internet and because it was used by spammers and neophytes to the web, it gained an aura around it. Not quite as bad as .aol.com, but something that triggers a reaction.

I have been using a Hotmail address since 1997. I am not 100% sure if that is before or after Microsoft bought them that year.. My very first internet email address was on Genie and I can find it in the very early 1990’s via Google search. I had an @home address and a Comcast address. I had moved and lost access to my internet provider email address and that is why I decided that I wanted an address that did not link to an ISP and that is why I picked hotmail.

Google ran a very clever campaign when they introduced gmail – it was invite only at the start and each user received a limited number of invites, so it was rare to get one. The actual email system was quite robust compared to most out there because it incorporated Google search. This created extra hype around having a .gmail.com address even though it was just an address. Like Beverly Hills or other famous places to live, gmail.com took on an extra cachet. Now, of course, anyone can get a gmail.com address and Google gains so many emails to mine and search in return for providing the “free” service. Google has built a big business hosting email for companies, many no longer own their own servers, it is done by Google.

I have a Gmail address and was in the process of switching over to it as my main email with my Hotmail being used to sign up for things on the web (to steer spam that way) when Google stood firm against the Chinese government and started to get blocked by them. Today, if you do not turn on a VPN, it is hard to get Gmail inside China.

I also had discovered something interesting. I had used my Hotmail address for years to sign up for every drawing or other registration that was out there. I had thought that the email would get flooded by spam and what I have discovered is that Hotmail has a very good background system to filter out the spam. I had to use my Hotmail email address as my personal one inside China if I wanted to consistently receive emails when they were sent instead of time shifted to when I turned a VPN on. Microsoft has also rebranded Hotmail to Outlook.com to match with their email client.

What this experience taught me is to disregard the immediate reaction I feel towards the domain. Silly or inappropriate addresses still trigger a reaction, but the domain not so much. AOL.com means that the person used dial-up Internet and maybe was the real person behind Sleepless in Seattle (you got mail). Dial-up means they were early to using the Internet and have a long history behind them.

It also has caused me to recognize the power of brands and their reputation. The fact that the domain name in an email address, which is a pretty pedantic item, can still cause an emotional reaction is a sign of the power of branding and the importance of your reputation.

Finally, I much prefer emails from businesses that tie into the name of the person. It makes it much easier to remember and use than initials or some description. You can tag your title and address in the signature block of your emails, no need to make it part of the actual address. If your address is just your initials, it might be shorter but it makes it harder to remember.

All of this advice is for business related emails. Personal email addresses are different and can and should reflect your personality. Be careful if you use several aliases that actually go into your personal email box, as you don’t want to accidentally send out a personal email address to a business contact. Also be aware that applying for a job is not personal and I suggest using a more professional email address.

How to say goodbye

“We’re gonna teach ‘em how to
Say goodbye!” – Hamilton “One Last Time”

Every CFO job has its beginning and every CFO job has its ending. There are important things to consider when starting in a new role, but often little thought is given to how to end your role when you move on to your next job.

There are two circumstances in which you leave your job – voluntarily and involuntarily. As a fact of life, better opportunities may come along and you may decide to take them. Or you may simply decide to retire or take a break. Or maybe personal or family issues will come up and you can no longer do the job in the way you think it should be done. All of these will result in you leaving your job.

Another simple fact of life as a CFO is that you are vulnerable. If there is a change of control there is a high chance you will be let go. If the CEO changes, you can easily be let go. If any one of the thousand mistakes that could happen in your financial statements happens and you do not catch it before it goes public, you probably will be let go. If the business struggles and targets are missed and your boss is under pressure to do something, you can get let go.

No matter what, leaving is one of the main reasons why you have an employment contract. Your rights and pay over termination should be well spelled out. Norms different by country and industry, but you can probably find example employment agreements in SEC filings around the time the CFO was hired and you probably should have a lawyer review your agreement and they can give you advice.

Leaving is always emotional. Even if leaving on your own terms, you may feel that you are owed something more. If you are being let go, it takes a will of iron not to let emotions get to you and even then you are probably just masking your feelings. You need to let that emotion go. You are a businessperson, and you have a responsibility to all the employees in the company.

Now if you discover fraud or some egregious issue and after you out the problem they fire you, then maybe you can sue. The unfortunate fact is that even if you win, you are unlikely to be hired by another company. The CFO is supposed to protect the company, not sue it. If you are getting what is in your contract, then you don’t really deserve something else, and you need to be mature and accept it.

In my career, I was only impacted in a way that was not mutual once, and that was via a CEO change. The CEO needs to have the CFO they want, the partnership is too important and that is why the contract exists.

Normally you are leaving on your own terms because you want to, but you still have a responsibility to where you are leaving. You do not want to do it poorly and hurt the staff that has been loyally working for you. You don’t want to hurt the company as it only reflects back on you.

Give your boss as much warning and time as is reasonable. It can be dangerous to tell them before you have accepted another offer, but be fair about your start date. If you are just wanting to step down and pursue other things, then you may even be able to set a date further into the future with the provision that if they find someone sooner they bridge your pay until the original agreed upon day.

Be positive in your discussions with your staff. Many of them may be emotional about you leaving. You are still their CFO, even if you are emotional you need to tell them to think with their heads and give it a few months and judge on the new CFO, not their feelings for you. You would not want to start a new job and then have your new staff quit immediately. Of course, they are all adults and can make their own decisions, but try not to inflame their feelings. I have tried to model the excellent bosses I worked for early in my career and genuinely care about my staff, even if I have high performance expectations. Make sure you say a proper goodbye, you never know when your paths might cross again.

Wrap up and hand over the projects you are working on. Clean out your office so the new CFO does not move into a mess.

When talking to outside investors and the press, be professional and positive. Even if they are letting you go, there is no advantage to disparaging your old place you worked as it reflects poorly on you. It is easier when you are leaving on your own terms, but make sure you praise your staff and their ability to execute. They are the people that actually were doing the work for you, so it is right that you express gratitude when you leave. Reassure outside investors that the business is as strong and valuable as the company has been expressing. The CFO leaving does cause some concern and if there is no real cause for alarm make sure that message is delivered.

Finally, leave on the best terms you can with your former boss. There are a bunch of selfish reasons to do that, like good reference responses in the future, but this is another place where you should reflect on the opportunity you were given. They trusted you enough to hire you and you probably worked long and hard on key projects together. You faced investors as a team and answered your Board’s tough questions. I don’t think it will be hard to say thank you.

Saying goodbye is hard. I hope I don’t have to do it many more times in my career.

Playoff Hockey

Anyone on my Facebook or wechat feed knows that I am a long time ice hockey fan.  I grew up in Montreal and have been a Montreal Canadiens (Habs) fan all my life.  I live near San Jose and also cheer for the San Jose Sharks as my local team.  I have quite a few acquaintances that are not Canadian or from areas where hockey is popular and I thought that I would write this blog entry to talk about why I love hockey and play-off hockey in particular.

Like many professional sports, the hockey season is divided into a preseason, regular season and playoffs format.  The intensity and quality of play varies.  The preseason games are the most random.  The players are coming off a several month layoff and the team management tries out new, younger players.  Other than the players trying out, there is no real incentive to play extremely hard and win.  For a true fan of the team and the game, getting to see the prospects play and the chance to evaluate them is fun.  For someone newer to the game I have a hard time recommending that you pay any attention to the preseason games at all.

The regular season is long – 82 games.  The entire purpose of the regular season is to narrow down the 30 teams to 16 for the playoffs.  These games actually count for something.  Any individual game may not make as much a difference, but the points scored by the players do count for their statistics and the hunt for playoffs spots makes some games at the end of the season even more intense.  Teams play the teams in their own division more often than teams in the other divisions.  The additional games help build intensity and rivalries as hockey is a physical game that allows for one player to body check (hit) other players.

Regular season games are much more entertaining than preseason games because they do matter.  You can see emotions from prior seasons carried over and new emotions grow from the current games.  For the teams that are further away, you at least get to see them for a game and may only see them again playing against your team in the Stanley Cup finals.  For someone like me that has moved across the continent, the Habs only play the Sharks twice a year so if I want to see them close to my current home I can only see them once.  So even if that game is not particularly important to either team, it is important to me and I try and attend the game if possible.

If you are new to hockey and want to see a game live, in the arena, regular season games are much less expensive to get tickets for and you can often find tickets available or find tickets via a brokerage service like Stubhub.com or Ticketmaster’s resale service.  The selection of available seats is better and you will have a better chance to pick where you sit.  My general recommendation is to sit around the blue line where the team you will be cheering will be attacking twice.  You want to sit further away from the ice rather than closer.  The closer you sit to the ice, the harder it is to follow the game if you are not used to it.  The seats also go down in price the further you are from the ice.  You probably do not want to sit as high up as you can as the players will seem a lot smaller, but seats in the top section near the bottom (closer to the ice) of that section can be quite good.  The other advantage to sitting further away is that it is easier to see play in all corners.  If you sit close to the ice you’ll have difficulty in seeing into every corner.

Most regular season games are played hard by each team and you’ll see the regular players, the “top talent” in the games because they do count.  If you watch the game live, you’ll also get to see what the fans are like, how loud they are, what players get cheered for more and how they feel about the team them are playing against.  In my case, the Habs are a very popular team that has been around since the National Hockey League started, so no matter where I am when I go see them play, there will be other fans like me wearing their jersey and cheering them on.  I really like the fans in the “Shark Tank”.  They are excellent hockey fans and are good proof that even a team in California can attract a local and knowledgeable fan base.

Once the regular season is over and the playoffs begin, the intensity rises to an even higher level.  Everything is reset.  Other than home ice advantage, the regular season results no longer matter.  Each series is best of seven (need to win 4 games and the series ends once 4 games are won by one team).  The regular season overtime rules are no longer used.  In the regular season, overtime is a maximum of 5 minutes and 3 on 3 hockey with a shoot-out afterwards if a goal is not scored.  In playoff hockey, the overtime is 20 minutes, 5 on 5 hockey, and the game continues with as many overtime periods as needed until a goal is scored.  In hockey, a “golden goal” rule is used and the team that scores the first goal in overtime wins the game.

With the best of seven format, your team is playing the other team over and over and the first few sets of matches are with teams you have already played a lot during the season.  With a higher emotional level, and the higher intensity of play, each team will hit the other more and harder.  That means players will remember from game to game who hit them and if a hit was questionable or illegal under the rules, it will reflect in an emotional response.  There are plenty of cases where the lowest ranked team (ranked 8 as the 16 are divided in half by league) have beaten the top rated team in the playoffs.  There are also plenty of cases where a team that is behind 0-3 in a series has come back and won 4-3.  A game 7 is usually the most intense as the whole series rests on one game.

One tradition for hockey players is to stop shaving during the playoffs.  So as a team goes deeper and deeper into the playoffs, beards get longer.  Hockey is very physical and players often get hit in the face.  The deeper the team goes into the playoffs, the more damage you can see on the faces of your team’s players.  Hockey players are always tough and play injured, but the playoffs bring this out even more.  I have seen countless cases where a player is cut on their face and needs multiple stiches to close the cut but they do not miss a shift.

Another great tradition in hockey is at the conclusion of the series, as intense and as nasty as the games might have been, the players all line-up and shake each other’s hands.  The losers congratulate the winners and wish them luck the next round.  They do not forget and some of the emotion will carry over to the next season, but they are sportsmen and end the series with a handshake.

I am a hockey fan and I think it is a fun sport to watch, but even if you are not as interested, playoffs hockey is special.  If you have never seen a playoff game before, try and watch a game on TV and see if you like it.  You might even find yourself writing your team’s name as a status update when they win like I do.

Work / Life Balance

I wish I had better news, but if you are wanting to be a CFO of any sort of larger company, it will be next to impossible to maintain any sort of reasonable work/life balance. It actually does get better in the sense that you have more control over your schedule and can plan around important family dates, but that really does not help as much as you would hope it would.

The primary accounting schedule that focuses on quarter ends is the same even as CFO. Your intensive work is delayed about a week from earlier in your career as you probably are not directly involved in the preparation of the first draft of the numbers, but once they are available you will be reviewing them and working on the earnings release. This also activates the forecast refresh cycle as you try and dial in the guidance you will release with the earnings release.

The quarter end crunch tends to be even more condensed because of prepping for the Board meeting. You will be a key presenter at the meeting and quite often you are explaining proposed company action with the need for aboard approval. As much as you may think that you are saving time by not preparing the raw numbers, reviewing them to ensure there are no errors and preparing the explanations and message is actually more time consuming and you also need the fairly final numbers before you can close it off which means you get even more crunched by any delays.

The quarterly reporting cycle in intense, but at least it happens with the same timing from year to year. If you are just having a normal year, the only other time pressure that will push your work over the top is travel. Very often you will fly on a weekend day so you can arrive on or before the Monday start of your work week. Phone calls and emails help, but you’ll be traveling to your major sites at least once a year to meet your staff there and do business reviews. You’ll also be traveling for investor relation events and non-deal roadshows. These are more instances where you will have an illusion of control over timing but actually less ability to control it than you would like.

You have to plan travel around your quarterly earnings releases and Board meetings, so the window is more condensed. Although you can pick and choose which IR events you attend, there will be major events that you really should be at with fixed dates so you do not have as much flexibility on them. Major overseas travel takes even more time on planes and causes jet lag issues as well. You are likely to be less effective in the first few days you are back and often that means going to bed earlier which takes away family time.

Again, this is somewhat manageable as you can usually control the dates of internal meetings and move them to a time that is more convenient for you. It still takes time for the travel and the follow-up, but if there is an important birthday or school event, you can plan around it.

The other time requirement is staff coaching and development. I personally never encourage too much socializing in the office and I think that professional relationships can be damaged if overdone, but you absolutely need to spend some time getting to know your staff. So even if you are home, you can be sure that there will be so,e evenings where you get home later because of this.

The real time devourers are M&A activity and capital market deals and other major financings. There is no escaping the central position for the CFO in those deals, and you have little control over when they happen. Capital market deals normally happen after you report and before it is too close to the next reporting period. So that spacing between the major reporting deadlines can be eaten up by a deal. If your company is active in the capital markets (one deal a year), then you can expect to lose a lot of personal time in one quarter. Again, you are not the junior associate lawyer, the manager at the auditor firm or the junior investment bankers that really get slammed with the detail work, but you will still be quite busy, as the documentation gets more final you will be the go to person for most final decisions and you’ll probably be running the deal. If the deal is a rated deal, then the rating companies are going to want to hear from the CFO and probably meet them in person. That means you.

Major financings like in the project world or bank debt also take a lot of the CFO’s time. They also tend to require more internal effort as the division of labor is quite different for those types of deals than one driven by an investment bank. So you are not quite so tied to the markets and probably do not have to do a deal roadshow but you will have to do a lot more review of the internal work performed.

The final and uncontrollable work demand that is likely to swing your balance quite a bit towards work is M&A activity. Even if you are the acquirer, you will not have that much control over when it starts and once the process is kicked off, you will likely be the center of it. You not only need to do due diligence, you probably will have to raise funds in a financing as well. So you will not only have to run the buying process, you will be running the funding process as well. M&A always has extra time pressure and you have to expect the unexpected. As a public company CFO you will be filing SEC documents as well if the purchase is large, so that is another task on your shoulder.

On top of all these additional activities, you will have your day job of leadership and managing the areas you are in charge of and where the company needs your attention.

You will not have good work life balance, but you need to manage it to make the most of the opportunities you do have. You need to be able to prioritize, schedule and take more add=vantage of the friend and family time you do have.

I have emphasized the importance of communication in many of my blog posts and it is even more important outside of work. You need to know what is coming up with your family and friends and you have to know what is important. When traveling, Facebook and similar social media (I recommend keeping a smaller and more personal friends list while serving as a CFO) can be used to keep up with the activities of your social circle and to let people know where you are and what is going on with you. It does sound a little sad, but you cannot spend as much time chit chatting to catch up, so social media can be helpful.

You also need to have frank conversations with your family about what is coming up or happening with work. They can also work with you to move around some activities so you can be there.

Finally, you will have to make a choice about some friends. You will only have so much time you can spend and you will be spending it a lot with your family. Maybe use this process to shed some friends that have turned out to be a negative source of energy for you. I also find that friends that also are as busy as you are more understanding.

As I said when I started, I wish I had better news, but you will struggle with this your whole career and you will not be alone.

Situational Awareness – Zion National Park

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Part of traveling on business is knowing what is around where you are going.   You spend hours on planes getting from place to place and it is a waste to not take advantage of the travels you do take.  Las Vegas is a perfect example.  It is a constant destination for business travel.   If you do think of a side trek out of Vegas, you usually would think of the Grand Canyon (which is well worth a trip).  However, only 3 hours drive north of Las Vegas is one of the highest rated national Parks in the USA – Zion National Park. If you don’t do a little research in advance, you probably will enjoy Vegas and the casinos and other entertainment, but you might miss a chance to visit a truly unique and beautiful National Park.

I’ll cover the logistics on getting there first.  Rent a car and drive 3 hours north on Interstate 15.  You’ll go from Nevada to Arizona and end up in Utah.  Drive past St. George Utah and take the exit for Rt 9 – Hurricane.  Continue through Hurricane to Springdale, Utah and you are at the part entrance.  It costs $30 per car for one week admission to the park.  Make sure you check the weather.  It can rain or snow there, so make sure you have the right outer clothes and at least shoes you can walk in.  There is a very nice hiking train called the River Walk that is paved the whole way, so you can enjoy the park without needed hiking gear.  If you are a good rock climber, the canyon walls are home to some very tough climbs.

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The park is set in Zion Canyon with the Virgin River still slowly cutting the canyon deeper.  There is a wide variety of hikes available, from easy to more difficult.  Some are along the canyon floor and others snake upwards using switchbacks and walks besides sheer cliff sides.

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I recently visited and did two different hikes over two days.  The first day I did the Emerald Pools trail.  This trail is moderate in difficulty with some fairly steep sections and some is scrambling along rocks.  There are three pools you can see and several waterfalls you can walk under.  The second day I did the Riverwalk trail which goes along the bank of the Virgin River and is paved.  I saw several people being pushed on wheel chairs on that trail.  It was not a tough walk, but walking along the canyon floor resulted in spectacular views.  There are even tougher and longer trails available that involve going cross country, but these require a special permit.

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I think the pictures I have been interspersing into the post tell the story far better than more words could.  I have provided two links below, one to the Wikipedia and one to the National Park site.  I hope that you can not only enjoy this park but that you remember to do a little more research next time you travel and see what else there is to do around where you are going.

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https://en.wikipedia.org/wiki/Zion_National_Park

https://www.nps.gov/zion/index.htm

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Annual Reports – SEC filings

I started long enough ago that an annual report used to mean the nice marketing annual summary with pictures and a letter to the shareholder and the financials summarized with some graphs and commentary.  Very few companies do that anymore as the Internet allows for a much more direct and continuous medium for communication.  Today, the annual report means the SEC filing – the 10-K or the 20-F (for foreign private issuers).  I have prepared and filed both and there is not much difference between them.

The annual report as filed with the SEC has several main sections.  These are the business description, the risk factors, the management discussion and analysis and the financial statements themselves (which includes the auditor’s report).  As the CFO, you are the person most responsible for the accuracy of the annual report and when you sign and file it, you will be taking significant personal responsibility should it be wrong.  In a larger company you probably will not be preparing the bulk of the report yourself, but you will be reading every page and making changes where relevant.

As an individual shareholder, if you consider yourself to be a fundamental investor, you really should read the annual reports of the companies you invest in or want to invest in.  You don’t have to read every page in detail looking for errors like the CFO has to, but I recommend at least skimming through all the sections.  As I give advice throughout this blog entry to my fellow CFOs, I’ll also have an aside or two on how individual investors can use the information as well.

My first CFO advice is that there are no copyrights on other filings.  WWW.SEC.GOV has the filings from other companies, both in your industry and outside of it.  If you want to see how others word common accounting items or risk factors, you can find it there.  Do not be ashamed to steal shamelessly.  My second CFO advice is that the annual report is not just a required disclosure document, it is a marketing document as well.  It is your chance to clearly explain your strategy, what risks you face, and to clearly present your financial results and what information you think is needed.  You need to get the SEC and legal details right, but the annual report is going to be incorporated by reference into any capital market deal you do and will be read by the counterparts in any private deal you propose, so you might as well get it right.

A typical division of effort of the 4 sections is this:  1) Business section is senior management, investor relations and maybe the marketing department. 2) Risk factors is Legal with senior management review  and 3) and 4) MD&A and Financial statements are Finance, mainly the Controller.   You’ll be project managing the preparation and you’ll do the final quality control but you should have a fair amount of help on this.  In a smaller company you can expect to do a lot of this yourself, but this is a company filling and your boss and other senior management should help somewhat.  You should have prior year filings to act as the template for this year.  Even if this is your first annual report, you should have the S-1 from the IPO to be the starter for the annual report.

I came up to CFO from a Corporate Controller role, and I had previous experience at preparing the financial statement part of the annual report plus some experience in the business section in previous jobs.  So reviewing the report as CFO came naturally to me, but all CFOs should pay a lot of attention to the report.  It is easy to delegate the report down to your reporting staff and there are outside lawyers and accountants that review the report as well.  This makes it even easier to assume that all is well with the report.  However, the outside parties tend to be ignorant of the business conditions you are operating under and they will not necessarily have only your interest at heart when they word certain sections.  In particular they will be very conservative on sections like the liquidity section.  Make sure you are comfortable with the wording.

What I do when I review the annual report is sign and date the front page and then initial each page even if I make no other changes.  I handwrite edits unless they are long in which case I type up a rider.  Version control is important and I find that handwritten edits make it easier for my controller to maintain control of the master copy.  The signed report and initialed pages and handwritten comments are also good proof that the report was reviewed.  Some lawyers want all working copies to be destroyed after the annual report is filed, but I think they are good to keep in case there are questions later.

When I review all sections, I look for grammar and spacing or missing words mistakes.  Even with a lot of eyes looking at it, it is surprising what will slip through.  I try and read important sections backwards one by one as that helps isolate words and aids in proofreading.

I also review for meaning and to ensure the English is smooth and natural. Even in the USA, many people on your staff might speak English as a second language.  It is quite possible that people reading this blog speak English as a second language.  If you don’t consider yourself to be very strong, have a native speaker read the business section and see if they have any suggestions.  We circulate the business section within the different functional areas to see if they have any suggested changes.  Usually we get a good edit or two just by doing that.

The risk section is useful in two ways.  First is the ranking process.  You should have the most serious and relevant risks first in your list and they should be listed in descending order of importance.  The very act of ranking risks often leads to additional risks being identified and included.  The second value to the risk section as it gives you a list of threats that you need to ensure you have countermeasures to.  Look at the top risks that you and the management team think are the most serious and ask if you have any countermeasures in place.  If you cannot think of a credible solution to reduce or eliminate the main risks identified in your filing, then you have a critical issue that needs to be addressed by the management team.

As an individual investor, the business section can be interesting, but the descriptions tend to be somewhat top level.  You usually can find employment numbers, including by function and some geographic and segment information on their business, but I normally do not get all that much purely from the business section.  If you are brand new to the company or the industry it certainly helps.  One test that I do when looking at a new company is ask myself if I understand what they are selling and what their strategy and strengths are.  If I can’t articulate it after reading the business section then I need to test my assumption that I understand their business well enough to invest long term in them.

The risk factors are more interesting to me.  The can be boring legal boilerplate, but the order the company lists the risks and the way it is worded can provide valuable clues.  What is extra valuable are new risks added compared to the prior years and/or changes in risk order.  This is the section where management is trying to warn you about what might go wrong.  It is pretty much the only section where what might go wrong is discussed.  I find it valuable to weigh how likely the risks are and what a reasonably prepared management team can do to prevent the problems.  If the risk seems likely and there is not much that can be done about it, then I worry about investing.  I also try and think of what risks are not listed.  If I can come up with some that are reasonable and management does not address them in the risk factors, then I worry.

I find the MD&A section the least useful.  For years the SEC has tried to make it better, including insisting on more detail and better use of plain English, but almost all MD&A are a dry recitation of this year versus last year with one or two top level reasons given for the change.  The liquidity section can be interesting, and this is an area that I try and watch my outside service providers closely.  They like to make it sound conservative and more risky than it actually is.  I have worked at companies with large cash balances and virtually no conceivable liquidity risks and the auditors are still trying to change the language to something that implies that there are real risks of a crisis.  If you are working for a company that needs access to the debt market and the capital markets, then you don’t want an overly conservative section here.  Obviously you need to accurately portray your true situation, but the auditors stress test going concern assuming lots of bad things that are unlikely to happen occur, and then want to reflect those tests in the liquidity section.  Those risks belong in the risk section, not in MD&A.  The commercial paper market crashing like in 2008/2009 is a risk, not something that needs to be discussed in detail in the liquidity section, for example.

As an individual investor, I find MD&A to be dry and not that useful as well.  If I am trying to build a top level model, then sometimes I can find explanations of one time items to exclude, but normally I just skim read that area and check to see if there are any time bombs in the liquidity section.  I don’t find income statement models all that useful as an investor and tend to concentrate on the balance sheet and the cash flow statements anyways.

The last section is the financial statements and if there is any section that is the “CFO” section, this is it.  The three main areas here are the auditor’s report, the financial statement tables and the notes to the financial statements.  Sometimes Sarbanes-Oxley matters as well, but only if there are a failure.

The audit report is simple.  Either it is a standard report or there is a big issue.  If the auditors have to modify their report, then there is a problem.  If your auditors tell you that they have to modify their standard report, then you know you have a major problem.

The financial tables should be the same as and your earnings release, albeit more detailed.  They were already checked by the auditors before they were released.  It is not unknown to have something change but it is a little embarrassing.  It has never happened to me so I am not 100% sure what I would do if it did happen.  When I have seen it happen, it is either a subsequent event that accrues back to the already reported quarter or a balance sheet reclass from long term to short term.

The notes to the financial statements are where the real detail is.  You need to describe your main accounting policies and then give a fair amount of detail, including segment reporting, for the different balance sheet and income statement accounts.  The rules for segment reporting are straight forward, if management runs the business as different segments and uses internal reports that do it and the numbers are material, then you need to segment report.

I think the income tax note is the one that can cause the most issues, especially the disclosure on uncertain tax positions.  Make sure you have the right technical help here and try not to paint a target on your back with your disclosure.

As a CFO, this is just another technical section and I mainly worry about getting the accounting and disclosure right.  I do focus on the actual wording, but a lot can be found in other filings and is dictated by GAAP anyways.  As an individual investor, the notes are a goldmine of information.  All the detail that is glossed over in the earnings releases and calls is there.  If there is a “smoking gun”, the notes will have it.  Read that section very carefully.

As a closing note, I have written something 2-3 times a week for the past few months.  I had a few people message me and ask about last week.  One key skill in being a successful CFO is balance.  My youngest daughter was home from school last week and I spent it with her.  I should be on schedule again for a while at least.

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