With an SEC deadline coming near, Softrax CEO Robert O'Connor says technology executives must take the initiative on reporting honest revenue results--or suffer the wrath of public opinion and investors.
The line between honest accounting mistakes and intentional financial fraud is gone. In many ways, it doesn't matter what the reality is, what counts is perception. If we stumble in reporting revenue, we'll be penalized by shareholders as severely as if our numbers had been deliberately misstated.
|Greed, arrogance, and a hangover from the executive excesses of the 1990s have touched every CEO's and CFO's reputation, even if indirectly.|
From a well-respected, dynamic and strong leadership role in American business culture, high-tech has assumed the role of the underdog. Our technology sectors are in crisis. The names, reputations and livelihoods of America's high-tech companies and their executives are on the line.
The full faith and confidence of the investing public needs to be restored, because so many of our organizations are publicly traded and rely on the financial backing of our shareholders to make rapid-fire product development--a necessity in the world of high-tech--a reality. High-tech is also one of the areas in which America preserves global competitive advantage, bringing business to the States that is critical for our country.
That CEOs and CFOs would not take action now is unthinkable. By August 14, the CEOs and CFOs of the top 947 public companies will have to pledge personal accountability for the accuracy and lawfulness of their companies' financial statements. And it's highly likely the SEC will push through the same requirement for the next 15,000. Private companies would logically come after that, not as governed by the SEC, but held accountable by their own investors.
Add this to the complexity already at play of operating within the current SEC and FASB regulations developed for high-tech companies, that control revenue recognition (especially for multielement contracts), and the tech sector has another big challenge ahead of itself. The risk for error inherent in business processes dealing with thousands of different revenue sources, recognition schedules and customer agreements will be magnified. We need to make sure to do it right, because very soon, it will be personal as well as operational.
So what are we waiting for? This isn't something that can be delegated, and it can't be ignored. And it isn't just about doing the right thing for our operations; it's about doing the right thing for our employees, our shareholders and our families.
|We have to be the loudest, most urgent, most decisive voices in our boardrooms while tackling head-on the volatile and complex revenue compliance issues.|
As corporate leaders of one of the world's single most valuable industries, we must make it a personal and business imperative to achieve accurate financial and revenue reporting. We have to be the loudest, most urgent, most decisive voices in our boardrooms while tackling head-on the volatile and complex revenue compliance issues.
Some chief executives are implementing tighter and stricter systems to ensure their numbers are indisputable. Changing auditors, creating new oversight committees--these are important steps. But if they are relying on existing financial and accounting systems supplemented by manual spreadsheets, they are missing critical pieces. Without specific revenue management systems, they are still leaving themselves open to too much risk.
As a technology company CEO, many of your colleagues are making revenue recognition compliance their top priority. Commit yourself to the same goal. Now is our time to work together, step forward and rally.