Technology & Life Sciences
Today's competitive business environment and changes in the technology industry require an integrated approach in evaluating the risks you face on a daily basis. Moss Adams has the in-depth industry knowledge to help you with your complex financial accounting issues.
We will work with your team to address the most pressing needs of your technology company, particularly:
Revenue recognition
Revenue recognition remains a hot topic. Building a robust revenue recognition policy and model to track revenue in cases where there are multiple products such as software, maintenance and consulting services is key to recording sales transactions accurately in your financial statements. One of the keys to accurate accounting for revenue is developing consistent customer contracts. Contracts that have concise terms and conditions that reflect the attributes described in the accounting literature will enable efficient recording of new contracts as companies grow and expand. This will also allow clear communication to prevent key terms from being changed in customer specific negotiations that might call into question the company’s stated revenue recognition policy. A specific paragraph or parameter in the contract if not written appropriately can negatively impact the timing of recognition.
Stock compensation
For many technology companies, stock-based compensation is considered a key to attracting top talent. However, creating and maintaining a stock-based compensation plan can be complex and burdensome. There are many important questions relating to plan design, administration, and accounting measurements and ultimately meeting the more complex disclosure requirements. Growing concern surrounds questions of valuation as well. One question usually leads to many more and we provide answers.
Complex capital structures
Growth companies are constantly focused on the need for new funding to support expansion. The instruments used to fund growth are frequently complex, and the accounting literature surrounding complex capital structures has recently been referred to as “the Bermuda Triangle” of accounting. No instrument is immune—bridge financing, convertible debt, warrants or preferred stock—and within them there exist embedded hazards that do not surface except for under careful audit. Unfortunately, the simplification of the terms is outside of the control of the company, and while it is often rules based, no instruments fit the specific rules. Guidance for companies is difficult to track since it is complex and scattered.
Intangible asset valuation
In an age of increased scrutiny and growing regulatory pressures, companies are forced to spend an ever-increasing amount of time defending valuation opinions prepared on their behalf. The stress associated with this can be relieved by a valuation reporting process that has repeatedly withstood the scrutiny of regulatory agencies, major credit reporting agencies, the Internal Revenue Service, and reviews by our accounting and valuation peers. Our process values intellectual property including patents, trademarks, copyrights, licensing and franchise relationships; customer lists; and in-process research & development—just to name a few of the broad asset classes. It has also been used to support FAS reporting requirements (including FAS 141/142/123/144), financing and securitization, to defend federal or international tax decisions, in support of infringement or commercial damages claims, as well as for general corporate or acquisition planning purposes.
Financial statement geography
The GAO has reported that approximately 35% of the recent 1,390 announced restatements are the result of expense reporting on the income statement—a significant portion which is related to geography, meaning the classification of expenses (GAO classified cost or expense related restatements generally include a company understating or overstating costs or expenses, improperly classifying expenses, or any other mistakes or improprieties that led to misreported costs). This emphasis on geography has also been seen in the past year in guidance provided related to geography in the cashflow statement and also due to a large number of announced restatements involving issues solely related to accounting for leases in 2005 after the SEC Chief Accountants February 7, 2005 letter regarding the treatment. For example, companies now need to consider if a re-negotiation of the interest on their term loan is a debt extinguishment or refinancing. Their conclusion on this and other issues will impact the presentation on their cashflow statement.
We strive to provide the maximum return on your investment in the audit process through in-depth analysis of your financial statements, internal controls, and overall business. The result is a more insightful report and action plan on your financial affairs such as operational efficiency and how to strengthen internal controls.
Learn more about Moss Adams’ assurance services.
Technology and Life Sciences Audit Contacts
For All Regions
Ed Drosdick
206-302-6455
Pacific Northwest
Taft Kortus
206-302-6377
Northern California
Derek Dowsett
415-677-8275
Southern California
Ken Salgado
949-623-4156
Carisa Wisniewski
858-627-1402
Southwest
Mark Weber
480-366-8312
Richard Gabaldon
505-830-6242
