The announcement earlier today by the U.S. Securities and Exchange Commission that James (Jim) Schnurr has been appointed as the new Chief Accountant critical juncture for the U.S.as regulator continues to deal with the fallout of the 2008 credit crisis as well as a string of outstanding issues, such as accounting convergence and the rise of cybercrime.
Schnurr joins the SEC and takes on the accounting reigns as the regulator continues to struggle with complex financial crisis enforcement cases — such as the Bank of America case settled last week – that are still in process of being fleshed out.
Further, there is some uncertainty in some corners as to which way the SEC may turn on how to treat the use of International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB) in the U.S.; that is, by U.S. registrants. And, there are always a myriad of registrant issues and ongoing oversight of U.S. Financial Accounting Standards Board (FASB) standard-setting matters as it winds down the convergence agenda and moves on its own projects.
Q: Should I employ an accountant full time for my small business or only use them when I need them?
A: During my career, I have seen many companies fail because they did fully understand their “numbers.” In my view, establishing an open and honest relationship with an accountant who will provide analysis and feedback is a critical part of any successful business. That said, whether a business should hire an accountant in-house or outsource the function is largely dependent upon the stage of the business. At ff Venture Capital, we invest in seed and early stage companies that typically do not have accounting as one of their core competencies. Accordingly, we provide outsourced accounting services (at our cost) to a large part of our portfolio. Some of our other early-stage portfolio companies outsource their accounting function to accountants specializing in such companies. Very few do the work themselves. In all cases, the services should include payroll, accounts payable, billing and collections, sales and use tax compliance, financial modeling and strategic advice `– all key to a company’s success. Over time, though, we expect our portfolio companies to outgrow their outsourced solution and to bring the accounting function in-house.