The NASPP Blog

For today’s “Meet the Speaker” interview, we feature an interview with Takis Makridis of Equity Methods, who will lead the session “Auditing 101 for Stock Compensation” at the 21st Annual NASPP Conference. Here is what Takis had to say:

NASPP:  Why is the topic of audit procedures particularly timely right now?

Takis:  The finance and accounting space is undergoing a radical transformation and everyone even tangentially touching this space can benefit by understanding the change taking place. Accounting is becoming so much more than a recurring processing arm charged with just reporting the news every quarter. Historically, accounting’s scope of responsibility was tethered to getting numbers into the financials, and being right, of course… But as a result, nobody really cared whether highly talented professionals needed to spend hours using endless pivot tables to reach the goal line.

As auditors become increasingly sophisticated, award designs grow in complexity, and accounting is rebranding itself as much more than the arm that merely reports the news; a renewed focus on auditing stock-based compensation is essential. For one, audits now concentrate largely on the control environment in addition to the material accuracy of reported values. Additionally, the risks are higher than ever as accounting departments grapple with new award complexity while venturing to supply broader and better information to internal decision-makers from a management reporting perspective.

Strong audit processes are essential to accounting’s mission of growing its strategic value within the organization by supplying richer information to key stakeholders–both inside and outside the firm. Our session will equip participants to design more effective controls and help ensure that the release of accounting information, both inside and outside the firm, drives stability and understanding, instead of surprises and revisions.

NASPP:  What common mistakes do companies make when auditing stock plan data?

Takis:  Our session will contain a litany of best practices that have been developed based on experience of common failure points. But for now, let’s focus on a higher level mistake many companies make.

I would like to challenge us all to think bigger. Just because we have a process that gets the job done, is that really enough? As Jim Collins says, good is the enemy of great. Are our processes that are filled with pivot tables and vlookups good, or are they great? Can the process be quickly transitioned if the process owner was abducted by aliens? Can the process adapt quickly and without risk if award designs change? Internal control is all about imagining the “left tail” of possibilities–being imaginative about failure points and not rushing to conclude the process is “in okay shape.”

The biggest mistake I see companies making is being content with a process so long as it seems to generate materially accurate results. The opportunity here is to understand why things are done the way they are and why a more automated, flexible, reliable, faster, etc. procedure has not been put in place.

NASPP:  What is the silver lining to auditing stock plans?

Takis:  The silver lining is that as we strengthen our auditing procedures by implementing best-in-class auditing techniques (which include traditional testing methods and “softer” efforts to bridge information gaps between departments) there is considerable upside–including career upside. I know professionals who once did all the manual processing and were told that unless they made their processes more robust, more auditable, and less person-dependent, they could not be promoted. Similarly, I’ve met dozens of professionals who were branded as the “ASC 718 processors,” but reshaped their image within their companies, driving process stability and auditability so much that they could start generating more useful information for senior management–and all of a sudden management became interested and excited in the role they were playing.

Net-net, a solid audit program is the first step toward ridding the ASC 718 process of drama, risk, and ambiguity. From there, it becomes much more possible to focus on the deliverables from the process and the extent to which they are meeting the information needs of the organization.

NASPP:  What is your favorite NASPP Conference memory?

Takis:  I actually have two favorite NASPP memories. The first is one I experience every year, and that’s a rush of enthusiasm as I begin bumping into so many friends, colleagues, and business partners on the first day. I enjoy accounting, and I really enjoy business (hiring great people, training/developing, R&D, etc.), but more than all that I enjoy the personal relationships that are formed while doing this thing called business. There is nothing more exciting than the energy of reconnecting and rekindling friendships with the many great people I have come to meet through the NASPP.

My second memory was at last year’s conference when we hosted our first large client dinner in many years (previously, we operated as a subsidiary of a larger company). Our theme was “enter as strangers, leave as friends,” in an effort to get everyone to mingle and meet people they didn’t know at the start of the evening. It’s probably the Greek in me, but I really love facilitating networking, bonding, and the formation of new friendships. Seeing this happen was amazing.

About the NASPP Conference
The 21st Annual NASPP Conference will be held from September 23-26 in Washington, DC. This year’s program features 60+ sessions on today’s most timely topics in stock compensation; check out the full agenda and register today! You don’t want to miss Takis’ session, “Auditing 101 for Stock Compensation.”