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Cleaning up the books.

CLEANING UP THE BOOKS Much to the delight of software industry number-crunchers (ourselves included), the Software Publishers Association is about to launch a new campaign to bring consistency to the way developers and publishers track financial data. Starting in the first quarter of 1990, the SPA plans to publish a model income statement that it hopes member companies will use to set up their books. This model statement, moreover, will become the basis for a new SPA data collection program for financial ratios.

The SPA's model, created with input from software company CFOs and Peat Marwick accountants, offers guidelines on how to treat a wide range of expense categories, including tech support, order processing, promotional printing, co-op advertising, bad debts, royalties, contract development, recruiting, and employee benefits. Historically, even public software companies haven't agreed about how to classify these items, so analysts often find themselves trying to compare apples, oranges, and a few odd kiwis.

Ann Stephens, the SPA's research director, says the new guidelines reflect a consensus of "the CFOs of our 20 largest firms," who got together at a summit meeting last March to debate classification problems. The SPA distributed a draft of the CFO recommendations in October, and Stephens says these guidelines will be fine-tuned as the SPA gathers more data on industry accounting practices. "We'll see how this thing flows," she says.

Stephens will also oversee a new program to collect quarterly income statements from SPA members who follow the new reporting guidelines. Using this raw data, the SPA plans to put together comparative studies of financial ratios that will show industry-wide spending and profitability trends. The catch, of course, is that the ratio reports will be available only to SPA members who take part in the program. "There may be some generalized public releases," SPA executive director Ken Wasch told us. "But if you want the data, you'll have to contribute your own data."

Ann Stephens, research director, Software Publishers Association, 1101 Connecticut Ave., NW, Washington, D.C. 20036; 202/452-1600.
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Title Annotation:Software Publishers Association to standardize methods tracking financial data
Date:Dec 26, 1989
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