For companies with material investment portfolios, the market turmoil in the aftermath of the global financial crisis has magnified the importance of accurate and timely investment portfolio information. It has also helped make many of these portfolios more integral to the formal GRC and ERM programs.

According to Courty Gates, the CEO of Clearwater Analytics, there are four pillars to investment portfolio reporting and analytics: accounting, compliance, risk, and performance.

Together these areas comprise the mission-critical information required for portfolio monitoring and management, Gates adds. The importance of the information to an institutional investor varies directly with the size of the portfolio relative to the enterprise value; the larger the ratio, the greater the impact of the portfolio with regard to GRC and ERM.

I recently asked Gates to expand on some of these points in an e-mail chat … more

Law firm Latham & Watkins describes the clawback provision within the Dodd-Frank Wall Street Reform and Consumer Protection Act as potentially qualifying as a “major new weapon” for shareholder plaintiffs and shareholder activists.

The firm indicates that it expects to see shareholder plaintiffs bring derivative suits “challenging the implementation of the company’s clawback policy and attempting to exercise the company’s rights to repayment,” according to this article.

Hopefully, this warning motivates you to read the short article, which, aside, from emphasizing a Dodd-Frank-related risk, provides a useful introduction to the clawback provision. ###

Imagine if an organization had a chief analytics-based performance officer and a department that assisted line managers in applying business analytics embedded in the various methodologies of its the performance management framework. Further imagine if that department had a help desk. Here are some questions, including answers from help desk staff members, that might be fielded:

I am in the pricing department. We determine what price the market can bear in an attempt to maximize our sales volume. Next, we also make sure that the price provides an adequate profit margin. My concern is this: Our cost accountants provide standard costs that are grotesquely flawed due to the way our sizable indirect and shared indirect expenses are allocated to products. I want true costs, not the reported costs. What should I do?

Almost every pricing department is in the same boat as ours, except for those organizations where the accounting department reformed from their traditional costing to an activity-based costing (ABC) method. What most pricing departments do is create their own shadow product costing data separate from the accountants. They assign the various indirect expenses to those products that use more or less (or all or none) of the indirect expenses — thus applying some cause-and-effect consumption relationships. Sadly, these pricing departments are doing the cost accounting department’s job. Needless to say, things get confusing because managers are always asking, “Whose cost data are you using?” Eventually, you may want to get up the nerve to suggest to the CFO and financial controller that they implement an activity-based costing system. But be prepared for their backlash argument: They must use only their traditional costing method to comply with generally accepted accounting principles (GAAP). They don’t want to break the rules and go to jail. What they don’t realize is that if they trace and assign costs the correct way for internal managerial accounting, they won’t go to jail. more