
Equity Accounting & Administration
Equity Accounting & Administration – Complete Outsourcing
Equity administration can be complex, challenging and time consuming. At the same time there might not be enough equity activity to justify hiring or retaining a full time Equity Administrator with adequate knowledge and experience. In such cases our outsourcing or co-sourcing solutions could be the best way to go. We provide professional services to maintain the equity records in any equity accounting software, or spreadsheets that the client selects. The following project tasks are included in our standard suite of services, typically offered at a fixed fee:
i. Update new employee information
ii. Enter and value new grants
iii. Update employee terminations and transfers
iv. Upload stock information
v. Download daily exercise information from broker
vi. Administer black-out periods
vii. SEC reporting – Form 3, 4, 5 etc.
viii. Issue release letters to transfer agent
ix. Reconcile monthly balances with the transfer agent report
x. Respond to employee questions or concerns via email or phone
xi. Manage Equity Edge for subsidiaries of Sigma
We also provide comprehensive technical accounting services related to equity accounting. This area, which seems easy and innocent from the first sight, has caused many restatements at the technology companies in the last decade. Our services are designed to ensure that the accounting entries recorded by our clients on a monthly/quarterly basis are correct, stock-based expense is properly computed, all the assumptions used in the calculation model (e.g. Black-Scholes) are fully vetted and documented, all the required financial statements footnotes are prepared timely and accurately. In addition, we will work with the external auditors to walk them through all the accounting performed and resolve any questions that might have.
Typical project tasks for equity accounting include:
i. Calculating all required assumptions for Black-Scholes model, including:
– Expected life
– Volatility and interest rates
– Forfeiture rates
ii. Preparing expense reports
iii. Preparing disclosure reports
iv. Preparing comprehensive accounting memos
v. Preparing financial statements footnotes and disclosures
vi. Generating income tax-related reports for the period
vii. Supporting the Company through quarterly reviews and annual audit
We also help with ad-hoc work such as modifications, repricing, etc. which require additional accounting. These additional changes are hard to predict, however, our experienced team can help with accounting for any of such changes, including preparation of accounting memos which will meet requirements of the most persistent independent auditors.