Data management strategies

On 14th October 2009, I will be presenting at CPA Congress in Melbourne to the topic ‘Data Management Strategies’.  Apparently CPA Australia didn’t like my originally suggested title ‘The devil is in the detail – which is why the Lord of the Nine Hells should never be your DBA’, which I blogged about earlier.  I think the new title is rather bland, don’t you.

The session overview is below:

Micheal Axelsen FCPA Director
Applied Insights Pty Ltd

As accountants, we prepare the information that a business uses to make its important decisions. Sometimes though, the data we use seems to be impossible to track down – and when we do find it, who knows whether it’s actually useful or not?

In this entertaining presentation, Micheal looks at some of the practical pitfalls and case studies of working with data – from rampant spreadsheets to the DBA nightmare – that Micheal has seen, with practical advice you can use to help your business escape its database nightmare.

Anyway, it promises to be fun, although it would have been much more fun if I could have brought theology into the debate of DBAs vs rational people.

Image from Flickr User Lessio. Some Rights Reserved.

The devil is in the detail – which is why the Lord of the Nine Hells should never be your DBA

Maybe he knows where the bodies are buried...CPA Australia have asked me to present at their conference in Melbourne in October. They didn’t want to do Carbon Pollution Reduction Scheme – that’s already been well-covered apparently. I did suggest that I could relate some case studies from the field about data governance – you know, how to get databases right and so on. I decided that I would try for the entertainment factor – after all, I have seen quite a few fun things in my time, and embellishment never hurt 🙂 – and so I have written an outline for ‘The devil is in the detail – which is why the Lord of the Nine Hells should never be your database administrator’.

Seminar overview:

A successful business knows about its business environment to deliver consistently good services or products to its customers at a reasonable price. Accountants prepare the information that provides the feedback to the business on how it is travelling.

Unfortunately, getting that information right is quite a trick! Some of the information is locked away in limbo; we know it exists but how do we get to it? And no, ‘it’s in the database’ is not really all that helpful. Is the information we rely on actually all that accurate?

In this entertaining presentation, Micheal Axelsen explores the steps and some of the pitfalls you can take to achieve good governance of your data so that the information you prepare for the business is as right as you can get it (and meets compliance requirements!).

On this journey we take a look at some of the practical pitfalls and case studies of working with data that Micheal has seen in fifteen years of working and consulting to industry and commerce, with practical advice you can use to help your business escape its database hell.

Short overview:

As accountants, we prepare the information that a business uses to make its important decisions. Sometimes, though, the data we use seems to be impossible to track down – and when we do find it, who knows whether it’s actually useful or not?

In this entertaining presentation, Micheal looks at some of the practical pitfalls and case studies of working with data – from rampant spreadsheets to the DBA from Hell – that Micheal has seen, with practical advice you can use to help your business escape its database hell.

Does anyone care to leave feedback for me? Would you go to such a session? Or is it trying too hard to try and make databases entertaining… Still, this stuff is what I live for – which is a sad indictment of the times, I suppose, or at least of my sense of humour.

Image from Flickr User Lessio. Some Rights Reserved.

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An introduction to the Carbon Emissions Reporting regime in Australia

This is a blog post from a CPA Australia Carbon Emissions Reporting Discussion Group meeting – the inaugural meeting – that I attended on 18th November 2008.  Danny Power from PwC is the convenor. 

There will be an election of office-bearers at the end of the next meeting.  The topics under discussion are going to be quite broad-ranging.  Danny is linking it to the sustainability reporting issues, and Danny seems to think the label might change later.  However, Carbon Emissions Reporting is the current label for the group – thinks we might need to break into several discussion groups at some point (I’m not sure about that – see how popular it is).  There were about 40 people in attendance at this first meeting, though, which is always a good sign. 

Why did Danny set up the discussion group?

  • Compliance issues
  • The accountant’s role as a business advisor and in managing the reporting systems
  • Impacts for all organisations whether direct or indirect
  • “The Science” – still seems controversial, and if you’re going to report on it you need a working knowledge of what the processes are and how it works. 
  • Possibly the most important – to create a support and peer group for each other.

Schemes, coverage, compliance and impacts

This section of the presentation was given by Mick Zeljko of the Climate Change Team of PricewaterhouseCoopers. 

The finance function of most companies will be generally involved it seems in managing the reporting process, which is a substantial – very substantial – part of the new CPRS. 
Emissions Schemes

Current programs:

  • Mandatory Renewable Energy Target (MRET)
  • NSW Greenhouse Gas Abatement Scheme (GGAS)
  • Qld Gas Electricity Scheme (GECS)
  • Greenhouse Challenge Plus
  • Energy Efficiency Opportunities

The scope of these current programs is fairly limited and tend to be industry-specific.  There is a general feeling that perhaps people have been a little bit lax about the current programs, and it’s been pretty relaxed with the result that there has not been a lot of accuracy in the numbers that are currently being reported.  Probably a lot of companies don’t really have a lot of confidence in their reporting schemes. 

New Schemes:

  • National Greenhouse and Energy Reporting System (NGERS)
  • Carbon Pollution Reduction Scheme (CPRS)

NGERS will cover a lot less companies than those that are affected by ETS.  Types of gasses – six Kyoto gasses – CO2 and Methane and so on.  All measured in terms of CO2 equivalency – for example, methane is 20 times stronger than CO2, so 1 tonne of emitted methane is 20 CO2 Tonne Equivalents.

The NGERS does get down to 200 terajoules and 50 kilotonnes in 2010.  ETS will require only 25KT in 2010 so it is a little disconnected from NGERS – you can probably expect that the two programs will come into alignment. 

The Emission Trading Scheme (ETS) is now officially called CPRS – Carbon Pollution Reduction Scheme.  The feeling is that it sounds better to be reducing carbon pollution than trading the rights to emit pollution.  The scheme generally caps Australia’s emissions, and then identifies industries subject to the cap.  These industries are then allocated permits and at the end of the year have to have permits to cover what they emitted or pay a substantive fine.  If you don’t have the permits, you have to go buy them from someone who does.  This is the essence of the ‘cap and trade’ system.  

Under the scheme:

  • Government allocates or auctions permits up to the cap annually.
  • Companies compete on the market to acquire required permits.
  • Permits can be traded at market prices between firms and third parties.
  • Scheme requires robust monitoring, reporting and assurance of data.
  • Transitional assistance measures are included
  • A number of elements are yet to be finalised
    • Including emissions target trajectories, penalties for non-compliance and complementary measures for non-covered sectors. 

A green paper was released in July.  Everyone affected is throwing a submission at the government.  The government is aiming to have draft legislation ready by the end of the year.  There remains a whole bunch of stuff that is yet to be finalised, particularly emissions trajectories.  We don’t know what the limits will be yet though – what the targets will be. 

Covered sectors:

  • Stationary energy
  • Industrial processes
  • Fugitive emissions (e.g. mining and landfill)
  • Waste
  • Transport
  • Reforestation (opt-in – gets you credits)
  • Agriculture may come in later, around 2015.

Liability generally relies upon the emitter.  Generally it is upstream supply liability.

Emissions covered include:  Scope 1 (i.e. direct for example emissions from a generator) emissions only.  Contrast with NGERS which includes Scope 2 (e.g. indirect such as a factory’s use of electricity) across all 6 Kyoto Greenhouses. 

Threshold

  • Direct emissions of 25,000 tonnes of CO2e (Carbon Equivalents). 

The affected businesses will need to be collecting up systems, processes and governance to get NGERS into place. 

I wonder what the definition of an entity (i.e. a ‘business’ will be in the covered industry?). 

The first NGERS reporting period has commenced, those these systems etc will need to be in place from the point of view of affected NGERS entities.  CPRS Green Paper submissions are now closed.  The draft legislation is due out in early September, and they seem to want to have the legislation in place by the end of the year.  The Government wants to set medium-term national trajectories soon, and are aiming for a 1 July 2010 start.  These trajectories will affect how many permits are available – they will not determine who is affected by CPRS. 
We in Australia will have two full reporting periods and  given thethen full trading will commence under CPRS.  Unless it doesn’t  current financial crisis. 

Under NGERS – compliance is about registering and reporting.  Penalties apply for corporations and CEOs.

Project Definition

There are a a whole lot of rules and legislation around wh`o effectively owns the emissions.  A big mining site will have a lot of issues just working out what are we reporting on.

Systems Implementation

  • Collect greenhouse and energy data
  • Calculate greenhouse and energy data – there is a measurement determination that tells you how you work out how much CO2 you emit.  There are proxy things in place. 
  • Got to have good storage of records for any audit down the track.

Maybe I have a large IT bent, but I can see that this is going to be a problem for anybody seeking to implement Greenhouse Gas Reporting Systems and implement it through the accounting information system.  Or even if they don’t. 

Clearly it will have an impact upon reporting processes, and who does it – and I suspect this job will often fall to the finance function. 

Reporting

  • Register with GEDO
  • Prepare and submit data using OSCAR.  (See Greenhouse Challenge Plus).
  • There will be a lot of internal reporting as well particularly for companies that are CPRS-liable. 

Governance

  • Need a whole lot of things covering all of this to make sure it keeps ticking along. 

Companies will have to be NGERS compliance at a minimum. 

Assurance – large emitters (>125KT CO2) will require third party assurance of the information prior to submission.  Beyond these core issues we don’t know much around how it is taxed and so on.  The draft legislation hasn’t come out yet.  There are thousands of submissions being put in place.

If you are liable there are serious financial implications and also some compliance costs.  Indirect impacts will result in price increases it seems – which will be the main issue for SME’s. 
Indirect impacts are going to be increasing on just about everyone.  Transport and logistics – may see a complete change in the competitive position between transport for example.  For instance you will need to reconsider where you get your services from e.g. road vs rail.

Need to do a risk assessment now.  Carbon due diligence.  Green paper submissions were a big thing a little while ago.

Strategic Response – can do a lot of stuff now.  There are opportunities for new services and products – carbon market planning and financial advice.

CPRS Accounting Issues:

  • Permits acquired to satisfy obligation = intangibles
  • Permits acquired for trading = inventory
  • Measurement choices available
  • Impact of CPRS on impairment calculations
  • Accounting disclosures which may be required.
  • How to account for forward purchase agreements of carbon pollution permits
  • Broadly – what impact will the acquisition, trading, hedging and surrender of carbon plollution permits on reporting.
  • Tax treatment?  Still yet to be decided. 

We also noted in the presentation that cashflow issues exist potentially for people that have to buy permits up front. 

There will be another meeting in February, probably, of the Discussion Group.  It was a very interesting discussion and it will be interesting to see where these compliance issues around the Carbon Emission Emissions Reporting processes take us.  And as we can see above – there are assurance implications (although supposedly only for >125KT emitters?).

More notices as events warrant.

Friendly business

The business of accounting is business. Nobody said that, but it’s true nonetheless. Accounting is a profession that is definitely not about counting beans and wearing cardigans these days. CPA Australia members are core parts of every aspect of Australian business life, and so it is unsurprising that they are often among the first to identify new business issues as they arise and they are the ones given to advises for business improvement. For example, an issue noted recently is the potential impact that online social networking has upon business, and if you work from home in your business, you will need to learn how to take home pay for this. These websites allow friends to chat, share photographs, videos, and to discuss their work, lives, loves, wins and losses. At last count, there were more than six million Australians with profiles on Facebook and MySpace.

It is hardly a business issue that Australians have friends. Mateship is an Australian tradition, whether on the Kokoda track or on Facebook. The issue is that, as our world becomes more connected, it is increasingly difficult to separate personal lives from the world of ‘work’. Private actions now take place in very public places, with search engines voyeuristically distributing these activities for the entire world to see. Consider the recent YouTube ‘star’ who made negative comments about his employer. Once, those excruciating videos would have tormented only his unfortunate immediate family. YouTube provides the conduit to a whole new audience. Questionable tastes in humour cross organisational hierarchies though. There may be regrets for the partner of a consulting firm whose photo was posted online by a member of his staff, complete with Hitler moustache, swastika, and a Nazi salute. Not perhaps the look his professional profile is looking for.

Business owners must cross the generational and digital divide to become digital citizens so as not to be caught unawares, like the new owner of a motor dealership who was unaware of a web comment telling prospective customers to ‘avoid [the dealership] like the plague’. Three years on, that advice is still there and is prominently displayed when new customers Google the dealership. Twitter, a relatively new social networking service, allows users to post ‘microblogs’ from their mobile phone. Comments damaging a business’s online reputation are regularly made there – at one store, while still in the store, a customer ‘tweeted’ to her 789 ‘followers’ about the bad service received.

It is not all negative. Delight the digital citizens and your business will benefit. Robert Scoble, a particularly notorious blogger, mentioned a new book he was reading in a single tweet. With over 34,000 followers, it seems people took note, and the book quickly scaled the heights of the Amazon best seller list.

A generation has matured with the internet at their fingertips. This is a different world than the old world of football, kangaroos, meat pies and Holden cars. Your customers use the internet to inform their opinions. A business can take some steps to present itself in the best light possible, but actively manipulating information is unwise. The punishment for chicanery and ‘bad behaviour’ online is unpleasant, caustic and swift. Transparency and honesty are necessary in the digital world. The actions of an over-zealous employee can quickly ensure that a business is condemned to the scrapheap of irrelevance – consider the very public example of the software developer 2Clix who brought legal action against Whirlpool to have negative comments taken down from its forums.

Increasingly, ‘personal’ and ‘work’ lives collide. People need to be a little more circumspect when posting material online. Activities are often publicly available and can be seen by anyone – an audience perhaps not originally considered. Recruiters increasingly Google a candidate’s name to see what can be discovered. Personal information can be used for identity theft, and likewise corporate information on personal profiles can be used for ‘social engineering’ scams to defraud the business.

Is this an accounting issue? Probably not. Is it a business issue? Definitely, and accountants fundamentally are about business. CPA Congress in Melbourne this year includes a workshop to help people understand how they can use online social networking tools without causing great grief and how a business can respond to the business challenge of online social networking in a positive way. For those few people that are natural digital denizens, the workshop will discuss tactics they already know. For others, there will be hints and tips that will save them time, money and a poor online reputation.

The social networking phenomenon is here to stay and will continue to grow. Businesses must understand the impact of social networking upon the business, and monitor their ‘internet footprint’. Individuals must understand acceptable behaviour when living out their digital life. Simply ‘banning’ or ‘ignoring’ online social networking is rarely helpful. A sensible and informed approach is important, with an awareness of the potential risks and problems.

Social networking: sometimes, it’s about business.

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Online social networking: do accountants play this game?

The question was asked on the CPA Congress blog, ‘Can accountants really add business value using these type of approaches ? I am sceptical about all of this?’.

See the original post here: Online Social Networking.

This is how I personally would respond to this question – you may take issue with what I’m saying, so feel free to drop me a comment below. I’m probably wrong, people are always telling me that.

Thanks for your comment. I think I see a couple of aspects to your question here. I may though have misunderstood the question – so please let me know if I’m wrong. I think you’re focusing on the policy approach in your question?

In addition to the policy approach, the workshop does also talk about some practical etiquette in online social networking (in fact, a chunk of the workshop is around this – half of it is on how to act in a social networking environment, and the other half is how the business responds, the Best Live Casinos UK are popular and stable on online sites and it keeps growing with time, networking now can be seen anywhere online. Since an alarmingly large number of accountants do seem to have friends, they do seem to use online social networking as well . A misstep in this space can result in a fairly tragic career-limiting move. So I think all accountants would profit from doing this part of the workshop.

Regarding the policy approach, the first aspect I see is whether accountants should be in the role of developing policies & procedures around social networking. As a general rule inside the business, I suppose you’re correct that pure accountants don’t get involved in this sort of thing. However, I would say that CPAs are a broad church and many members are not so much pure accountants as general managers (I’m sure I saw a stat on that somewhere). So – certainly not all CPAs, but some, would be/could be/should be involved in developing a response, or at least understand what the issues involved are. Since the CPAs tag line is ‘We mean business’, if social networking is a business issue then CPAs should be across it.

Secondly, I’d also suggest that there is still a fair bit to be learnt in all levels of business as to the potential impact of online social networking on businesses – it’s still an emerging business issue, and awareness is still low. So there’s a contribution to be made if someone wants to find out more about social networking and what they should be doing about it (the actual result after the workshop might very well be: nothing).

The third aspect of your question seems to be is whether ‘these types of approaches’ (perhaps in the hands only of accountants?) add business value. There are two aspects to the approach I’ve put out there – ‘policies & procedures’ and the ‘AS/NZS 4360:2004’. Policies and procedures are probably necessary if you’re going to have any type of ability to monitor behaviour in a legal manner, so I think the end result has to be a policy & procedure framework. That’s a generally accepted business approach. As for AS/NZS 4360, that is a fairly formal tool to adopt, but when you distil business down to its absolutely purest of essence, it is the value that the business gets and the risk you have to take to get it. 4360 provides a framework for risk, so we might as well use it as a starting point to work out what’s appropriate for the business – establish what we want, identify risks, estimate risk level, evaluate the risks and treat the risks. It is formal, but in my experience lawyers like ‘formal’ when you’re in court defending some action you’ve taken.

You’re right to be sceptical – this is an emerging area still, and I’d certainly not claim that all accountants should be undertaking this role inside a business. Or even that they should all come to the workshop. But I’d suggest most accountants need to be aware of the issues involved in online social networking at least, and at the worst someone walks out thinking ‘yep, I’ll flag this to the HR guys’.

Thanks: Micheal Axelsen

Hmmm.  I do dribble on don’t I?