Financial Advisory Blog

Armanino’s Financial Advisory blog is your source for thought leadership around cloud ERP and accounting solutions and integrations. Supported by the Cloud Accounting Institute and numerous experts in cloud, finance, reporting, integration, compliance, and technology, Armanino’s Financial Advisory blog features must-read content on what’s happening in the finance industry, case studies, white papers, and much more.

July 25, 2019

Three Ways to Fail at Change Management

Posted by Judy Clarke

Many companies have a culture of closing deals and providing great customer service. But typically, there’s zero focus on improving their own internal systems, until a process breakdown occurs. Once a company is broken, the rush is on to implement a software solution to fix all the problems. But this never works without engagement throughout the entire organization—which requires Change Management.

The majority of change initiatives fail, according to McKinsey, Bain, Gartner, Harvard Business Review and others. But leadership teams that embrace their pivotal role in operational and organizational change management do much better. Those teams, says Willis Towers Watson, are 2.5 times more likely to outperform their peers.

So, what should or shouldn’t you do? Here are three common change management mistakes we see, and how to avoid them.

Change Management

Failure Strategy #1:
Don’t involve stakeholders with the selection of a new system until the purchase has been made.
On the implementation side of our practice, the project kickoff meeting is sometimes the first time stakeholders have heard any details about the new system that was selected to solve all their problems. Not surprisingly, being kept in the dark often leads to resentment and even project sabotage. If employees refuse to engage and adopt, the chance of a successful project is compromised. It’s much harder to get stakeholders back on track once this happens. They feel left out and disrespected. 

What you SHOULD do:
We find discovery workshops with all stakeholders work well to expose all the current-state pain points and gain early buy-in. Knowledge from the day-to-day operations team members has great value and will improve the selection process. This approach will also identify “project champions” who can become power users of the new system.

Failure Strategy #2:
After the requirements meetings, don’t communicate the status of the project to all stakeholders.
  Shock the finance sponsor after the timeline slips. Surprise the area leads with an email saying they need to redo all the data conversion next week, every evening after 5pm.

What you SHOULD do:  
A weekly project newsletter is an excellent communication tool to keep the entire team up to date. There can be links to training sessions, upcoming timelines, accomplishments, staff recognition, etc. The regular cadence will reduce fear and doubt and show the team the project is moving forward.

Regular team check-in meetings are also helpful.  We recommend surveying users just after key milestones to gauge user sentiment and get valuable feedback on what is working and what needs improvement. To track trends, have some control questions that you repeat in every survey, such as “Will the change have a positive impact on the company?” 

Failure Strategy #3:
Require all area leads to train their team members, with no support.
Don’t give the leads any help preparing materials, or even determine whether they have training skills.

What you SHOULD do:  
Okay, this is a hot button for me. The “train the trainer” approach is a means to lower a services estimate, and it seldom succeeds. The expectation that a key employee can fully participate in a major project, continue their day job and prepare comprehensive training materials is not realistic. Add in the fact that most people do not have training skills, and it becomes ridiculous. 

We have seen this approach work if time is added to the project for us to help the appointed trainers prepare their materials and hold practice training sessions. A culture of trust must exist so that leads feel comfortable asking for a consultant to train with them if they feel overwhelmed. 

More to Come

There are many more ways to fail—or alternatively, to succeed—at managing change. I will share three more in my next post. Change management is my passion, so feel free to reach out with any questions or suggestions!

October 2, 2020

Management Dashboards Done Right

Posted by John Kogan

Management Dashboards Done Right

Data. There’s too much of it. So, on its own, data isn’t all that helpful. Great finance organizations use people, process and technology to turn data into useful, easily consumed, actionable insight.

The dashboard is one such tool. Some call it a financial dashboard, but that’s too constraining. The best dashboards combine financial and operating information such as sales per square foot, cost per web conversion, customer churn and more. The core idea is to determine what information is important enough to track over time, though not necessarily forever; gather it using people, process and technology; and turn that data into actionable information.

Think of the progression of data as follows:

Data ▻Information ▻Insight ▻Action ▻Results

Breaking Down the Data

Whether financial in nature or not, a truly dizzying array of data is available at companies of all sizes. That data can come from point-of-sale systems, ERP, pure financial platforms, CRM, marketing automation, web servers and more. Every platform and app is built to churn out volumes of data. Herein lies the problem: even a small company can generate millions of data points every day, and that’s too much to consume en masse.

There are nearly infinite means of analysis available to modern companies, but when finance does its job well, it’s not just providing siloed analyses, it’s providing holistic information that drives insight. The job of a dashboard is to provide easily digestible information that people at any level can use for decision-making over time. That last bit, “over time,” is important to recognize so that you include information that has meaning over more than just the current day. The idea is that movement of the metrics over time is actionable and important. Without intent of action, your dashboard won’t matter.

Design counts. If it’s nothing but a field of numbers, nothing will stick out to the reader, they won’t internalize what’s important, and the motivation to use the dashboard will decrease. Access also matters. If the people who should see it can’t find it, they won’t use it.

Selecting a Dashboard Platform

As always, technology can help. There are many dashboard platforms out there, some standalone and others integrated with financial, business intelligence and reporting platforms. Choose carefully and integrate your chosen platform into every system you deem a reasonable source of data.

Your end goal is positive results. People, process and technology should come together to drive you from data to results. As you architect your right solution, keep this squarely in mind. You should also architect for the next three to five years of operations, as your product, delivery, data sources and many systems will change over that time.

Reducing mountains of data to useful, actionable insight is one of finance’s key jobs. Management dashboards help cut through the clutter of everyday data, focusing those who need it on the key information they that helps them run the business optimally. That’s finance done right.To learn more, visit our FP&A page to see how our experts can help your organizations.

July 21, 2020

July 2020 Minimum Wage Changes Take Effect

Posted by Jenn McCabe

Minimum Wage

Despite COVID-19 disruption, scheduled July minimum wage rate increases were not postponed.  There was an average increase of just under $1/hour across all affected jurisdictions.  Check your records to ensure these increases, particularly the city/county increases, were processed.

Minimum wage increases will have an impact on your salaried staff, too.  Minimum salary (exempt) pay thresholds are a product of the minimum wage.

The following changes were effective July 1, 2020.

Statewide minimum wage increases in:

  • Maryland
  • Illinois
  • Oregon
  • Washington DC
  • Nevada

At least 38 city/county minimum wage increases, including:

  • Los Angeles
  • San Francisco
  • Chicago
  • Cook County, IL
  • Minneapolis
  • Saint Paul
  • Montgomery County, MD

Stay on your toes for future increases:  payroll changes can happen quarterly!   

Missed the July deadline? We can help. Don’t hesitate to reach out to our experts. And for more information on navigating the “new normal,” visit our COVID-19 resource center.

March 30, 2020

Reforecasting for Sudden Changes Using Adaptive Insights

Posted by Reena Driver

During these unpredictable times, you might have to switch around your normal processes. We’ve been hearing from our clients about the need to do quick forecasts in Adaptive Insights. Here are some step-by-step instructions with screen shots to show you reforecasting for Sudden Changes for your business.

  1. Roll Out a Live Forecast Version
    • Confirm you are copying from the correct Original Budget Version.
    • Select the boxes for: Copy All Data, Copy Formulas, Copy Splits, Copy Modeled Rows and Copy Audit Trail History.
    • Update the Start of Plan setting to pull in Actuals through the prior month.
    • Review the user access settings.
      • Does this version need to be hidden for certain users?
Reforecasting for Sudden Changes Using Adaptive Insights
  • Update Input Sheets
    • Review and update the Personnel Sheet for Headcount impact and updates to Personnel Assumptions (i.e. merit and bonus attainment assumptions).
Update Input Sheets
Reforecasting for Sudden Changes Using Adaptive Insights
  • Review marketing, conference and event budgets — looking at the impact of cancelled events and tradeshows as it relates to both Revenue Pipeline and Operating Expenses.
  • High-Level Adjustments: set up custom or assumption accounts to hold management increase/decrease % adjustments to incorporate into current modeled or cube formulas.
High-Level Adjustments
  • Review Impact of New Forecast Version.
Review Impact of New Forecast Version.
  • Utilize Weekly Forecasting
    • Always keep Live Forecast open as working forecast.
    • At the start of each week, clone this version and rename the previous Live Forecast to [Date] – Flash and name the new version Live Forecast.
Review Impact of New Forecast Version.

Have questions or need some help? Don’t hesitate to reach out to our experts. For more information on how to keep your business running through disruption, visit our COVID-19 Resource Center.

May 28, 2019

Equity Management Experts Demystify Complex Accounting & Administrative Issues

Posted by Scott Schwartz


With evermore complex equity instruments in use today, compliant and accurate equity management processes are difficult to create and maintain. Armanino’s experts have been invited to various equity events and conferences over the coming months to share their knowledge.

San Diego NASPP: Chapter Meeting, May 28th, 2019

Key Issues Surrounding Accounting for Performance Grants

Scott and Armanino Senior Manager Laura Verri will be delving into detail about performance grants, which have become popular as a method for companies to align individual interests with company goals. Scott and Laura will describe the key mistakes to avoid when rolling out performance awards, demonstrate how to optimize your processes, and show what to look for when evaluating the specific valuation and expense issues related to performance awards. Finally, they will discuss how to deal with any changes/modifications made during performance periods.

27th Annual NASPP Conference, September 16th – 18th, 2019

Scott and Laura are also teaming up for two presentations at the annual NASPP Conference.

Making Your Equity Plan Audit-Ready -25 Minute Arena Session

The first presentation features our client Amy Ruschell, the Director of Accounting Operations at Five9.  Amy, Laura, and Scott will walk attendees through how accounting and administration can partner together, so they can focus on what matters and stay audit-ready throughout the year.

Top 5 Gotchas for Stock-Based Expense Errors – 60 Minute Panel

Lydia Terrill, Global Equity Manager at Vocera Communications and client of the firm, is teaming up with Scott and Laura for the second presentation. Together, they will provide an interactive session focused on the accounting for stock-based compensation from both the client’s and Armanino’s perspectives. The session will focus on practical and tactical solutions that clients can utilize regardless of the software platform they use.

More details on this conference can be found here:

Click here to register

December 2, 2017

Part 2 Blockchain & Cryptocurrencies: 4 Ways It Will Change How We Do Business

Posted by Andries Verschelden

Blockchain and Cryptocurrencies 1Cryptocurrencies and blockchain have emerged as an exciting alternative to regular money. (We covered the basics here if you need a refresher.) But, this technology could be much more than an alternative currency. It also has the potential to revolutionize the way we do business. Here are four areas where we may see big changes in the near future.

  1. Transfer of information

Blockchain uses a shared, decentralized ledger stored on a number of nodes (computers). This shared ledger makes it much easier to transfer not just funds, but also private information between users. Take your medical records, for example. If medical records were stored on a decentralized database, all different medical professionals, regardless of their organization, could update your medical file.  Since the information is encrypted, it would remain private even as it’s updated by different medical providers. Compare that to now, where hospitals have different databases and even store information on paper files.

  1. Supply chain tracking

Blockchain could also improve supply chain management. All parts of a transaction, from start to finish, could be recorded and easily reviewed if there’s a problem. For example, imagine that Walmart sells some contaminated pork. Their supply chain has multiple layers, with potentially dozens of companies in each part of the process, and may reach to another country. A pig might be raised outside Shanghai, processed at a plant in Hong Kong, shipped to California, then trucked to a U.S. store.

Under the current system, Walmart must work backwards, through the records of each company in the supply chain, to find the source of the outbreak. If one part of the chain has faulty records, Walmart may never identify the source of the problem. On the other hand, if everything was recorded on a decentralized blockchain, Walmart could immediately review the history and know that it is uncompromised. Each time the pork went through part of the supply chain, it would be recorded on the public ledger. Walmart could quickly review the blockchain to see exactly where the contaminated pork originated and remove the faulty supplier.

  1. Accounting

Maintaining accounting records on a decentralized blockchain could speed up the financial reporting process and reduce errors. Under the current system, every time companies record a transaction, such as an inventory purchase, all subledgers of the parties involved need to update their individual accounts on their accounting system. Internally we can reconcile subledgers to ensure the transaction is properly recorded, and externally we can also verify the information is accurate and reliable (the auditor).

If we could have the different parties involved work off the same decentralized database, we would be able to ensure a transaction is recorded correctly throughout the ecosystem without needing reconciliation or external validation. Transactions would automatically balance out through the code in the blockchain, and there would be virtually no chance of error in recording the transaction.

  1. Smart contracts

In our current electronic payments system, if you fill an order, you need the help of a trusted third party to ensure you will receive your funds. Even if the purchaser pays by credit card or direct deposit, there still needs to be a third party to process the transaction, which slows things down and adds an extra cost. With cryptocurrency and blockchain, you can set up a smart contract, where payment goes out immediately once the customer receives your goods (assuming this can be validated electronically).

Watch for more uses

When the internet was introduced, it took years before it became a common part of doing business. It’s quite possible that we’re at the same point with cryptocurrencies and blockchain today. Watch out for these potential applications―and more―as the world gets better at using this exciting new technology.

Find more helpful insights from Armanino’s Outsourced Finance & Accounting team.

March 24, 2017

409A Valuations & Equity Management: The Need for Forward Thinking

Posted by Armanino Financial Advisory Team

409A ValuationsThe process of developing a business to ultimate enterprise success includes anticipating and avoiding potential future road blocks through the development of high quality, supportable and defensible procedures as early in the business life cycle as possible. One critical factor in developing such a process for ultimate business success―whether defined by efficient audits, or, even better, a highly successful sale or IPO scenario―is completing quality 409A valuations and managing equity accounting with proven partners in the field.

As with any other component of the financial management process, 409A valuations and equity management require a great deal of attention to detail and proven effective judgement. In order to avoid problems when you least want them―such as when going through an audit, securing equity financing, or nearing public or private liquidity events―a successful approach will include utilizing the expertise of specialists in their respective fields in order to avoid common pitfalls. Various pitfalls due to a lack of quality valuation and equity management processes include expensive and time-consuming restating of financial statements, inefficient use of resources, and the potential impact on timing and pricing of equity transactions.

Here are some ways improperly handled valuation and equity accounting can impact you and your firm:

  1. Tax cost for you/your firm’s employees. If improperly priced options are issued, it may result in a future tax liability for employees who receive equity compensation. A lack of sound valuation and accounting can result in potentially large unexpected tax bills for employees who were granted options at below market value. Depending on the size of the mispricing, these tax bills can be significant to recipients.
  2. Potential acquisition red flags. In the acquisition process, acquiring parties will be on the lookout for items that could create unexpected costs and/or tax liabilities. A lack of sound valuation and equity accounting can create both real expenses in the due diligence process and perceptions of potential red flags as the acquirer considers the terms of its offer. When a potential sale is on the table, equity valuation and accounting red flags can result in significant costs and delays, as well as affecting bids that acquirers may make.
  3. IPO delays and/or missed windows. When a company nears a potential IPO and begins issuing public financial statements, the level of review increases substantially, both in terms of oversight via audit partners and the U.S. Securities and Exchange Commission (SEC). Improper valuations and poor equity management practices in the years preceding an IPO can result in costly, and sometimes fatal, delays in the IPO process.

When the time comes to potentially secure a sale or IPO liquidity event for the company you have devoted your time, energy and effort into building, it should be an extremely exciting period for you both professionally and personally. However, not having your valuation and equity management “ducks in a row” can cause unnecessary challenges for potential investors and/or acquirers, as well as auditors. At such times, when your company most needs you to be a strategic visionary, the last thing you want is to be stuck cleaning up unnecessary accounting issues that may have been avoided with proper planning and forward-looking resource allocation in earlier stages.

While there may be certain shortcuts that can be taken along the way in these areas, failing to think strategically and with a long-term vision, and not accessing expert resources at early stages, can create eventual real costs, resource bottlenecks and unnecessary delays, and may result in arduous review and cleanup work when you would least like to be dealing with such challenges.

Instead of putting off “the process” until later stages, it is a sound strategic investment to look ahead and engage quality professional advisory and value-added services early on. Such expertise can assist you in developing a sound process that can help you and your business navigate effectively and efficiently to and through a successful, rewarding and exciting liquidity event.

Forward thinking early on often makes a big difference.

Contact the Armanino CFO Advisory team to discuss 409A valuations and equity management options.

November 11, 2014

Six Benefits of Outsourced Equity Management

Posted by Armanino Financial Advisory Team

There are many good reasons for outsourced equity management. Here are the top six ways outsourcing can benefit your organization.

  1. Tax-Related Expertise: As exciting as tax law is, the depth of the subject can be a bit daunting. By outsourcing the management of your organization’s equity issuances, you can depend on a specialist to focus on the nuances and proper treatment of your tax reporting. This will help ensure your company files in a timely and accurate manner.
  2. Accurate Expense: A transition from manual expense calculations to a system-based calculation will often lead to the discovery of inaccurate historical expense. The process of converting to systematic stock-based compensation expense reporting provides you the opportunity to not only mirror historical data and assumptions, but more importantly, also allows you to reassess past expenses and make corrections. This leads to the third benefit – a new perspective.
  3. New Perspective: A common accounting mistake is depending on previously established processes to calculate/assess current expense. Things change from year to year, and so must the valuation of equity. Allowing a fresh pair of eyes to review, value and calculate expense will help keep details up to date.
  4. Time Management: Utilizing a specialist allows your organization to focus on more pressing day-to-day operations. Third-party management teams tend to invest more in research and methodology development to enhance services, so your organization reaps these benefits without spending time or money on additional research and education.
  5. Cost Efficiency: Though there are initial costs with outsourcing equity management, the financial benefits of outsourcing are proven quickly. You save tremendous resources by eliminating the need to train internal staff on management systems and negating the need to keep up with the constant changes in tax treatment.
  6. Peace of Mind: Outsourcing provides the comfort of knowing that all equity-related work will be done on time and accurately. Investing in outsourced equity management to improve operational efficiency helps avoid unnecessary expenses and fines associated with missed reporting deadlines.

Check out Armanino’s equity management solutions including EASi, a cloud equity administration solution.

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