ietf
[Top] [All Lists]

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

/=====================================================================/
 |     Fred Baker                 |        1121 Via Del Rey          |
 |     Chairman, ISOC BoT         |        Santa Barbara, California |
 +--------------------------------+        93117 USA                 |
 | Nothing will ever be attempted,| phone: +1-408-526-4257           |
 | if all possible objections must| fax:   +1-413-473-2403           |
 | be first overcome.             | mobile:+1-805-637-0529           |
 |     Dr. Johnson, Rasselas, 1759|                                  |
/=====================================================================/


_______________________________________________
Ietf mailing list
Ietf(_at_)ietf(_dot_)org
https://www1.ietf.org/mailman/listinfo/ietf


_______________________________________________
Ietf mailing list
Ietf(_at_)ietf(_dot_)org
https://www1.ietf.org/mailman/listinfo/ietf