The NASPP Blog

The NASPP’s own Robyn Shutak, along with Jim Vincent of E*TRADE & Leigh Vosseller of Genoptix, gave one of the top presentations I’ve seen on reconciliation best practices. Someone in the audience asked a very fabulous question…what exactly is this tick and tie everyone keeps talking about?

So, here it is, the tick and the tie as it relates to stock plan administration. The term tick and tie (or tic and tie) is a staple for CPAs and other financial or audit professionals. In the most general terms, it’s the numbers equivalent of “dot your i’s and cross your t’s.” I have absolutely no idea where it originated, but at this point it is commonly used to refer to the financial audit process. But, there are some tick and tie steps that can apply to any audit you are conducting in stock plan administration that make it easier to validate your conclusions.

Summarize

When you are conducting a reconciliation, you will be confirming two or more independent sources of data. If you are using Excel to reconcile or present the audit data, it’s best to consolidate the independent sources onto separate sheets within one Excel file using one sheet for each source. Then, on a completely separate Excel sheet, you can create a summary data from each source, effectively proving that the sources all match. It is from this summary data that the tick and the tie come into play.

Tie

Taking the phrase back to front, I’m going to start with tie. Each field on your summary sheet should point back to the original source. For example, let’s assume that have 50,000 shares granted to employees in a specific cost center and you are confirming that between your approval documents and the stock plan administration database. Rather than typing in or copy/pasting the numbers, you actually point back to the field on another sheet where that total is housed. This helps prevent manual mistyping and also provides quick tracking for anyone reviewing the reconciliation.

For better clarity, you can use the comment field to confirm where the data originates or any other information that an auditor might need to know about the data. For an electronic or soft copy review of the data, you can leave the comment field hidden. For a hard copy review, you can make the comment field viewable so that someone looking over the data can tie it back without having to think about where to go.

Tick

I am taking a bit of poetic license with this part of the phrase so that it fits a good reconciliation and audit process for stock plan administrators. I think of this as being verifying the validity of data in the reconciliation. Any good reconciliation process includes a final audit by someone who did not contribute to the original data. So, first, there should be a checklist of each essential part of the data that must be reviewed. The person, or people, involved in creating the reconciliation should verify that each item has been reviewed. Then, the person validating the reconciliation should run down the same checklist and sign off on it.

Full Emersion

Now that you’ve stepped into the world of finance, get the full picture with the NASPP’s Financial Reporting for Equity Compensation course that begins on July 14. Learn all the ways that equity compensation data impacts your company’s financial statements in five weekly sessions lead by leading accountants, valuation practitioners, and seasoned stock plan professionals.

-Rachel