Re: AdminRest: Finances and Accounting
2004-11-17 14:52:41
From my read, there are several different aspects.
The description of the sources of funds and the directing of "deposits" is
probably over-constrained. I would hope that there is not a requirement
specified by these documents for an actual IASA bank account. I doubt that
the document needs to mandate quarterly transfers.
At the same time, the IASA / IAD are intended to have reasonable discretion
(with ISOC review and approval on a budgetary level) of how money is spent
to support activities. If the funds are not earmarked at the ISOC level
for IETF / IASA use, then it gets complicated to create the desired flexiblity.
My guess is that we are indeed giving up the ability for ISOC to
transparently cover "bumps" in exchange for greater control and visibility
to the actual state of the funds. I would expect after a bit that this
would actually help ISOC, as it would make explicit if the IASA / IAD are
not doing a good job planning.
Yours,
Joel M. Halpern
Not on of the document maintainers
but someone trying to understand what it will turn out to mean.
At 07:55 PM 11/17/2004, Fred Baker wrote:
A question for those maintaining the document?
There is a fair bit of change in section five, regarding IASA funding. In
a nutshell, it now says:
- IETF has three revenue streams:
* IETF meeting fees
* Donations of various kinds designated to the IETF
* ISOC funding derived from other sources
- the first two get deposited in the IASA checkbook
- the third gets deposited in quarterly lump payments
- there is an intent to have built up enough money for the IASA to run for
six months without receiving a dime, over a period of three years.
All that sounds good on the surface, but it differs rather markedly from
current ISOC accounting practice, and it seems to over-constrain the
problem and its solution. Someone who knows more about accounting than I
do will mention the difference between a cash accounting scheme and an
accrual accounting scheme, the latter being more usual in corporate accounting.
IETF does indeed have these present revenue sources. CNRI/Foretec
currently collects IETF meeting fees and uses them pursuant to IETF
meetings, databases, and teleconferences. ISOC accepts donations
designated to IETF-related activities. ISOC also uses funds from other
revenue sources (other donors) to further IETF purposes.
ISOC places donations "to the IETF" in accounts so designated. When the
money is spent usually on the RFC Editor, which is our largest single
IETF-related expense - the revenue is recognized, and the books show both
the revenue and the expense.
The effect of section 5, if I am reading it correctly, is to present ISOC
with an always-on expense ISOC immediately transfers any such money to
IASA. The money is therefore immediately recognized as both revenue and an
expense in the ISOC ledger and as a net deposit in the IASA checkbook.
ISOC current practice with regard to other IETF (and ISOC) expenses is to
pay them as bills are presented. Bills are not presented on nice neat
quarterly boundaries; the insurance bill is paid annually, IAB telechats
are paid out of the monthly phone bill, meeting expenses and other
payments from the IETF Chair's Discretionary Budget are paid episodically,
and so on. The current issues in the RFC Editor's office (into which I
will not delve in detail; due to an accounting error, they have suddenly
needed an infusion of cash) result in ISOC paying an unplanned and
unbudgeted lump sum payment. In short, like any other ISOC bill,
IETF-related expenses are paid as valid bills are received, sometimes by
surprise.
A significant part of IETF expenses will be in deposits for future
meetings. Generally, the most expensive way to plan and pay for an
excursion in a hotel or conference center is "at the last minute". As a
result, most organizations that plan conferences have deposits on hotels
and such at least a year out. A quick look at
http://www.icann.org/meetings/, for example, shows meetings paid for
through next summer, and on in development in December 2005. When the
document talks about a six-month reserve, I therefore have to ask: which
six months of the year? Does this cover one planned meeting fee, or two?
On an accrual basis, that's not much of an issue, but on a cash basis, it
is a big one.
The effect of section 5, if I am reading it correctly, is to transfer
these budgetary bumps and grinds to the IASA rather than allowing the ISOC
to help out, making "oops, we're low on cash" something that has to be
discussed as opposed to ISOC simply backstopping things as we have
heretofore agreed. By treating them on a cash basis rather than an accrual
basis, this section seems maximize the pain they cause.
I wonder whether the IETF would consider talking with ISOC's accounting
office to normalize these issues now, and whether the problem really needs
to be this tightly constrained?
Regards,
Fred Baker
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