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Making Your Equity Plan Audit-Ready

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September 05, 2019 | Scott Schwartz, Armanino LLP

Making Your Equity Plan Audit-Ready

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 27th Annual NASPP Conference, is a great way to get to know our many distinguished speakers and find out more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature an interview with Scott Schwartz of Armanino LLP, who will lead the session “Making Your Equity Plan Audit-Ready.”  Here is what Scott had to say:

NASPP: What's your elevator pitch?

Scott:  At the end of the day, everyone goes through an audit. Some are certainly more painful than others, but none are perfect.    

As a CPA firm, we work with people who understand both sides of the fence: the auditor's point of view and the industry's. We know how auditors think, we know how to speak with auditors, the types of questions they are going to ask, and we want to share that knowledge. Partnering with a long-time client with her own experiences from multiple companies, we’ll discuss how to strengthen your team, and identify the processes that lead to smoother equity audits.    

And we’re looking for you to "step right up" and share battle stories and your own scars that we can all learn from.

NASPP: What is one action should companies be taking now to improve their audits?

Scott: Mindset. Changing the mindset from “Us vs. Them” to “We're in this Together.” Auditors and the audit process, as painful as they sometimes seem, are not the enemy. Further, we have to work across department lines internally, even though finance may have different priorities than stock admin, for example.   

Auditors ultimately are doing the job required of them. Yes, there may sometimes be young and inexperienced folks which ask you the same question multiple times or do not understand the equity process that well.  Easier said than done, but perhaps a mindset shift is to see this as an opportunity to teach someone who is new to the industry. Similarly, controls are painful to document, but these are also an opportunity to streamline processes and get your house more in order.   

Fundamentally, equity administration should be a collaborative process that aims to break down silos, creating synergies between finance/accounting, stock administration, (other departments), and the auditors. One way to build trusting relationships is to proactively raise technical issues that come up throughout the quarter and work through them together.

NASPP: When it comes to audits, what is the worst that can happen?

Scott: Ultimately, this is an audit of your financial statements, controls, and shares.  When you look at the range of mistakes on a spectrum of issues, the gradient on the lower end stems from merely doing a sensitivity test and passing on an immaterial adjustment to getting a significant deficiency. On the much more serious side are material weaknesses and restatements. Remember, it’s not always about the number(s) being materially off, but whether the process is so broken that the number could have been material. I’m not in the business of undue fear, but there is also the potential for shareholder lawsuits…

NASPP: If you had an Etsy store, what would you sell in it?

Scott:  After my wife and I were engaged, we decided that as part of starting a new chapter of our life together, we would also start a business together. We sell handmade arts and crafts through our website I am more of the behind the scenes guy, while she is the creative genius, brains, and brawn. It is definitely a hobby business, but it has been fun nonetheless to try and pull it together.

Don’t miss Scott’s session, “Making Your Equity Plan Audit-Ready,” at the NASPP Conference!

About the NASPP Conference

The 27th Annual NASPP Conference will be held from September 16-19 in New Orleans. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!

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The National Association of Stock Plan Professionals is the largest and oldest professional association for the stock and executive compensation community, with over two decades of leadership providing expert resources, education and other benefits for our more than 6,000 members across 32 affiliated chapters.


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