have an accountant help us set up our books #350

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chadwhitacre opened this Issue Sep 28, 2015 · 16 comments

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chadwhitacre commented Sep 28, 2015

Reticketed from #308.

Questions:

  • Where does the processing fee buffer show up on the balance sheet? Escrow:Fee Buffer
  • At what point should we stop making changes to parts of our books?
  • How'd we do with the $1.50 first payout?
  • How do we account for escrow changes over time? Income statement? Cashflow? A dedicated report? Income statement.
  • Opening balance, or owner's equity?
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chadwhitacre Sep 28, 2015

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We'll need to come up with some policies, published on Inside Gratipay, for recording financial transactions and reconciling with our bank accounts. I'm not going to worry about that for this ticket. I've reticketed having an account review our books as #350, let's pick up with that there.

#308 (comment)

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chadwhitacre commented Sep 28, 2015

We'll need to come up with some policies, published on Inside Gratipay, for recording financial transactions and reconciling with our bank accounts. I'm not going to worry about that for this ticket. I've reticketed having an account review our books as #350, let's pick up with that there.

#308 (comment)

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chadwhitacre Dec 22, 2015

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Perhaps Jim Johnson from KDC would be good for a first pass (#72 (comment)).

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chadwhitacre commented Dec 22, 2015

Perhaps Jim Johnson from KDC would be good for a first pass (#72 (comment)).

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chadwhitacre Jan 12, 2016

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Bringing over from #390 (comment):

To: CPA
Subject: meeting to review Gratipay's books

Greetings and Happy New Year!

We've done a lot of work on Gratipay's books since the last time you and I talked, back in September. I think we've now got a pretty good system in place, and we're close to reconciling our first month—June, 2012. We're aiming to be fully caught up in Q3, after which I'd like to talk about our first audit.

Before then, though, I'd appreciate a meeting to make sure we're on the right track with how we've got the books set up. Wednesdays and Thursdays are best for me, but I can make most days work. Can you fit us in anytime soon?

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chadwhitacre commented Jan 12, 2016

Bringing over from #390 (comment):

To: CPA
Subject: meeting to review Gratipay's books

Greetings and Happy New Year!

We've done a lot of work on Gratipay's books since the last time you and I talked, back in September. I think we've now got a pretty good system in place, and we're close to reconciling our first month—June, 2012. We're aiming to be fully caught up in Q3, after which I'd like to talk about our first audit.

Before then, though, I'd appreciate a meeting to make sure we're on the right track with how we've got the books set up. Wednesdays and Thursdays are best for me, but I can make most days work. Can you fit us in anytime soon?

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chadwhitacre Jan 12, 2016

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We're looking at Thursday morning, January 28.

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chadwhitacre commented Jan 12, 2016

We're looking at Thursday morning, January 28.

@chadwhitacre chadwhitacre referenced this issue Jan 12, 2016

Merged

make a framework for financial reporting #390

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chadwhitacre Jan 13, 2016

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@kaguillera and I are planning to meet with the CPA at 8am on the 28th. Yesssssssss.

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chadwhitacre commented Jan 13, 2016

@kaguillera and I are planning to meet with the CPA at 8am on the 28th. Yesssssssss.

@chadwhitacre chadwhitacre referenced this issue Jan 26, 2016

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chadwhitacre Jan 27, 2016

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Pinged Peter to make sure we're still on for tomorrow. @kaguillera and I are figuring out bus schedules ...

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chadwhitacre commented Jan 27, 2016

Pinged Peter to make sure we're still on for tomorrow. @kaguillera and I are figuring out bus schedules ...

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chadwhitacre Jan 27, 2016

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Meeting is confirmed.

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chadwhitacre commented Jan 27, 2016

Meeting is confirmed.

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chadwhitacre Jan 28, 2016

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Okay! Good meeting. Let's summarize ...

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chadwhitacre commented Jan 28, 2016

Okay! Good meeting. Let's summarize ...

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chadwhitacre Jan 28, 2016

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The escrow shouldn't be on the income statement, it should get its own column/report: gratipay/finances#8.

The fee buffer also shouldn't be on the income statement: gratipay/finances#9.

It's fine to roll our own accounting system based on Ledger and GitHub. The U.S. Government certifies the accounting systems of its contractors, and it has certified spreadsheet-based systems before. GitHub's change management through commit history and PR commenting and workflow is "audit-friendly." "As long as it balances," we're fine. In addition to the balance sheet and income statement, the other reports we're likely to need are cash flow, account detail, and eventually aging reports.

We should always include an amount in the line items in our dat files; we shouldn't depend on ledger's implicit balancing of transactions. "Otherwise this is a good ledger." ✌️ It's okay to fudge the dates somewhat for the sake of grouping related items together.

Retained earnings (or accumulated deficit, for a loss) is for past years' activity. We should be posting income and expenses against Equity:Current Activity: gratipay/finances#10.

CPAs provide three services related to books:

  • compilation—preparing financial statements
  • review—negative affirmation, "We did not find anything" wrong.
  • audit—positive affirmation

Wilke provides an estimate but bills hourly. Audits run 2-3x the time/cost of a review. To perform a review/audit, they need the balance sheet/income statement, and source data (it's okay that we don't have source data for Samurai because the amounts were small—"not material"). We can schedule a review/audit anytime during the year. Tax season is obviously busiest, easier to schedule other times of year. Driven by the demands of those requiring the reporting (regulated entities may have 90 or 120 days after close of year).

We adopted a policy for when to allow editing files; README update in gratipay/finances#11.

The $1.50 payout could've been a loan from Chad to Gratipay if it had been repaid immediately. Since it wasn't, an owner investment is fine.

Okay!

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chadwhitacre commented Jan 28, 2016

The escrow shouldn't be on the income statement, it should get its own column/report: gratipay/finances#8.

The fee buffer also shouldn't be on the income statement: gratipay/finances#9.

It's fine to roll our own accounting system based on Ledger and GitHub. The U.S. Government certifies the accounting systems of its contractors, and it has certified spreadsheet-based systems before. GitHub's change management through commit history and PR commenting and workflow is "audit-friendly." "As long as it balances," we're fine. In addition to the balance sheet and income statement, the other reports we're likely to need are cash flow, account detail, and eventually aging reports.

We should always include an amount in the line items in our dat files; we shouldn't depend on ledger's implicit balancing of transactions. "Otherwise this is a good ledger." ✌️ It's okay to fudge the dates somewhat for the sake of grouping related items together.

Retained earnings (or accumulated deficit, for a loss) is for past years' activity. We should be posting income and expenses against Equity:Current Activity: gratipay/finances#10.

CPAs provide three services related to books:

  • compilation—preparing financial statements
  • review—negative affirmation, "We did not find anything" wrong.
  • audit—positive affirmation

Wilke provides an estimate but bills hourly. Audits run 2-3x the time/cost of a review. To perform a review/audit, they need the balance sheet/income statement, and source data (it's okay that we don't have source data for Samurai because the amounts were small—"not material"). We can schedule a review/audit anytime during the year. Tax season is obviously busiest, easier to schedule other times of year. Driven by the demands of those requiring the reporting (regulated entities may have 90 or 120 days after close of year).

We adopted a policy for when to allow editing files; README update in gratipay/finances#11.

The $1.50 payout could've been a loan from Chad to Gratipay if it had been repaid immediately. Since it wasn't, an owner investment is fine.

Okay!

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chadwhitacre Jan 28, 2016

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In general, @kaguillera and I had the impression that Peter was pleased with what he saw. "This is an excellent month-closing process," he said of our PR approach. "[T]his is a good ledger," of our dat files. "These annotations here [referring to comments in the dat file] will be valuable not only for outside auditors, but for you internally when you go back and look at this a year from now." "What I like about GitHub is that it gives you a nice audit trail, something that QuickBooks only recently added." 💃

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chadwhitacre commented Jan 28, 2016

In general, @kaguillera and I had the impression that Peter was pleased with what he saw. "This is an excellent month-closing process," he said of our PR approach. "[T]his is a good ledger," of our dat files. "These annotations here [referring to comments in the dat file] will be valuable not only for outside auditors, but for you internally when you go back and look at this a year from now." "What I like about GitHub is that it gives you a nice audit trail, something that QuickBooks only recently added." 💃

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chadwhitacre Jan 28, 2016

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Am I missing anything, @kaguillera?

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chadwhitacre commented Jan 28, 2016

Am I missing anything, @kaguillera?

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chadwhitacre Jan 28, 2016

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@kaguillera Ready to close this when you are. :)

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chadwhitacre commented Jan 28, 2016

@kaguillera Ready to close this when you are. :)

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kaguillera Jan 28, 2016

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LGTM. This can be closed. 👍 For now at least.

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kaguillera commented Jan 28, 2016

LGTM. This can be closed. 👍 For now at least.

@kaguillera kaguillera closed this Jan 28, 2016

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chadwhitacre commented Jan 28, 2016

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chadwhitacre Jan 28, 2016

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Oh! One thing I forgot to mention: we'll be able to schedule a review/audit once we are all caught up with the books (gratipay/finances#3).

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chadwhitacre commented Jan 28, 2016

Oh! One thing I forgot to mention: we'll be able to schedule a review/audit once we are all caught up with the books (gratipay/finances#3).

@chadwhitacre chadwhitacre changed the title from have an accountant review our books to have an accountant look over our books Jan 28, 2016

@chadwhitacre chadwhitacre changed the title from have an accountant look over our books to have an accountant help us set up our books Jan 28, 2016

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chadwhitacre Feb 18, 2016

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The bill came to $266, and we had $250 in a retainer. I got a bill for $16 and sent a check today.

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chadwhitacre commented Feb 18, 2016

The bill came to $266, and we had $250 in a retainer. I got a bill for $16 and sent a check today.

@chadwhitacre chadwhitacre referenced this issue in gratipay/finances Jan 16, 2017

Merged

Port to Beancount #35

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