In accounting and auditing, first two months of a fiscal year (for most, January and February) make up a period of Subsequent Events, which are directly related to a company's previous year's Financial Statements. Goods listed as 12/31 inventory are (hopefully) selling; last year receivalbes are being collected; cash being disbursed for unpaid expenses that comprised your year-end payables and accruals. Financial auditors specifically target these post-12/31 sales, receipts, and payments to test the accuracy of the Financial Statements.
Business owners, most of them lacking formal accounting knowledge, are especially confused about the expenses: they see payments being made now for the last year's interests, services, and commissions, and it worries them that somehow the current period's profitability will be affected. Never mind that every year you explain to them that these items have been already recognized as expenses in the previous fiscal period through payables and accruals, and, therefore, impact only current cash flow, not the operational performance. Even the ones who don't ignore your explanations and, furthermore, remember some of the terminology you've used, can't help but be a little disconcerted.
So, let's say last week (a week of 02/11) you have approved a $75K commission payment due to a procurement agent for the fourth quarter of 2012. It requires a second signature – your boss's. Now, she sees the check and your approval. She knows your qualifications and what you've done for her company. Before meeting you, she didn't know anything about accounting and finance at all, but she has learned a great deal from you. Yet, she is a Business Owner – someone who is not capable of making an effort to overcome her impulses. The strength of the "I-pay-you" sentiment in her subconsciousness is empowering.
So, she comes to your office, announces the topic ("This commission check") and tries to formulate the question. First, she mumbles something about "the last year's income," and then the light bulb comes on in her head and she asks, "Was the expense accrued?"
Your mind is very fast and in a fraction of a second a swarm of neurotic, childish thoughts storms through your head: "Are you fucking joking me? This is from someone who had no concept of revenue and costs recognition? From someone who like a fucking bookie recorded everything when cash exchanged hands? You, bitch, didn't have proper records, reports, financial statements! Your tax returns were made up! Did you forget that the bank demanded you hire a CFO before they gave you the credit line? Now, everyone gets weekly, monthly, quarterly, annual reports and statements, thanks to ME! I pass audits and bank exams without anybody finding a single error or omission! How dare you!!!"
But you have two post-graduate degrees, 20 years of business experience, a book on CFO's functionality, 10 years of age, and a lifetime of hard knocks over this privileged pixie financed by her husband. So, you look her straight in the eyes and calmly, almost jokingly, say, "Are you checking on my work? Accruals and prepaids is what I do. This was a 2012 expense and, in accordance with the Generally Accepted Accounting Principles, it was recognized as such."
Look, the truth is you should not get upset at your bosses for who they are. "…Forgive them, for they know not what they do," and all that. I always say, they are like spoiled and unruly children, who cannot control themselves. And as long as you need the salary, you have to continue swallowing their shit pills.
I wish I could stop taking incidents like that personally. People with my intellect, background, knowledge, and experience – professional, psychological, cultural – should just brush it off. Yet again, if I was able to do it, I wouldn't have had this blog.
The Frustrated CFO 