Subject: Resolution? #787 terminology - in particular "ISOC Standards Pillar"

From: Harald Tveit Alvestrand <[email-masked]>
Date: Wed, 19 Jan 2005 15:24:03 +0100

In #787, Margaret raised a couple of terminology questions related to the 
terms:

- IASA Accounts
- IETF accounts
- ISOC Standards pillar

In discussion, it seems clear that "IETF accounts" is a mistake, and should 
be changed to "IASA accounts" wherever it occurs.

"IASA accounts" should probably be changed to "IASA general ledger 
accounts" - to have a recognizable term from bookkeeping instead of the 
rather vague term "accounts".

I think both of those are "minor edits".

"ISOC Standards Pillar" is a different issue.
The BCP talks about how the IETF wants the IASA organized as part of ISOC, 
and tries to keep an exclusive focus on that. It's not a reasonable part of 
this BCP to say whether or not ISOC can have other activities that have 
something to do with standards.

In fact, there is another ISOC activity that has to do with standards that 
the BCP tries to keep at some distance from IASA: Fundraising.
Viz:

5.3  Designated Donations, Monetary and In-Kind

   Donations are an essential component of funding.  The IASA undertakes
   no direct fund-raising activities.  This establishes a practice of
   separating IETF administrative and standards activities from
   fund-raising activities, and helps ensure that no undue influence may
   be ascribed to those from whom funds are raised.

So what I said before is clearly wrong - fundraising is NOT part of IASA 
activities. And I think it makes sense for ISOC to operate these activities 
as part of its "standards pillar". If so, the standards pillar and IASA are 
different entities - if ISOC chooses to call IASA part of the standards 
pillar, that's ISOC's choice, and should not be described in this BCP.

But the "transparency" section of section 7 could probably use some 
wordsmithing. It currently says:

   Transparency: The IETF community shall have complete visibility into
      the financial and legal structure of the ISOC standards activity.
      In particular, a detailed budget for the entire standards
      activity, quarterly financial reports, and audited annual
      financial reports shall all be available to the IETF community.
      In addition, key contract material and MOUs shall also be publicly
      available.  The IAD and IAOC are responsible for providing regular
      overviews of the state of the IASA to the IETF community.

I think the last sentence is not part of "ISOC's responsibilities" and 
should be deleted. And under the comments above, I think that the 
"transparency" requirement applies to the parts of ISOC that relate to the 
standards support - this isn't really a problem now, since I believe that 
all of ISOC satisfies the requirements, but it's not the IETF's business to 
place requirements on how ISOC runs its education business.... so, a 
suggestion:

   Transparency: The IETF community shall have complete visibility into
      the financial and legal structure of the ISOC activities that
      are related to, but not part of, the IASA standards support activity.
      In particular, a detailed budget for the entire related ISOC
      activity, quarterly financial reports, and audited annual
      financial reports shall all be available to the IETF community.
      In addition, key contract material and MOUs shall also be publicly
      available, subject to any reasonable confidentiality obligations
      approved by the IAD.

(The last edit is from a comment from the IETF lawyer - we've gotten a 
review from him, but I need some points clarified. Just convenient to get 
all the edits to this paragraph on one thread. His comment was:

> 7 (Transparency):  While I understand the desire for transparency, there
> may be some contracts that contain items that are justifiably
> treated as confidential (such as individual performance rewards,
> terms of settlement of litigation).  To address this point, I might add
> the following words at the end of the penultimate sentence:
> ", subject to any reasonable confidentiality obligations approved
> by the IAD."

Seems to make sense.)

Makes sense?

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---

From: Brian E Carpenter <[email-masked]>
Date: Thu, 20 Jan 2005 09:58:26 +0100

I full agree with Harald on this

     Brian

Harald Tveit Alvestrand wrote:
> In #787, Margaret raised a couple of terminology questions related to 
> the terms:
> 
> - IASA Accounts
> - IETF accounts
> - ISOC Standards pillar
> 
> In discussion, it seems clear that "IETF accounts" is a mistake, and 
> should be changed to "IASA accounts" wherever it occurs.
> 
> The BCP talks about how the IETF wants the IASA organized as part of 
> ISOC, and tries to keep an exclusive focus on that. It's not a 
> reasonable part of this BCP to say whether or not ISOC can have other 
> activities that have something to do with standards.
> 
> In fact, there is another ISOC activity that has to do with standards 
> that the BCP tries to keep at some distance from IASA: Fundraising.
> Viz:
> 
> activities. And I think it makes sense for ISOC to operate these 
> activities as part of its "standards pillar". If so, the standards 
> pillar and IASA are different entities - if ISOC chooses to call IASA 
> part of the standards pillar, that's ISOC's choice, and should not be 
> described in this BCP.
> 
> "transparency" requirement applies to the parts of ISOC that relate to 
> the standards support - this isn't really a problem now, since I believe 
> that all of ISOC satisfies the requirements, but it's not the IETF's 
> business to place requirements on how ISOC runs its education 
> business.... so, a suggestion:
> 
> review from him, but I need some points clarified. Just convenient to 
> get all the edits to this paragraph on one thread. His comment was:
>

---

From: "Tom Petch" <[email-masked]>
Date: Thu, 20 Jan 2005 18:03:51 +0100

Inline,
Tom Petch
----- Original Message -----
From: "Harald Tveit Alvestrand" <[email-masked]>
To: <[email-masked]>
Sent: Wednesday, January 19, 2005 3:24 PM
Subject: Resolution? #787 terminology - in particular "ISOC Standards
Pillar"

> In #787, Margaret raised a couple of terminology questions related to
the
> In discussion, it seems clear that "IETF accounts" is a mistake, and
should
> rather vague term "accounts".
general ledger is indeed a recognizable term from bookkeeping but it is
not the one I would want to see.  Accountancy (as taught to me) divides
up the ledger into accounts, and yes, acccounts is also a recognizable
term.  The ledger is typically divided up into (traditionally physical
separate books)
 - purchases/creditors ledger
 - sales/debtors ledger
 - general/impersonal ledger
 - private ledger
so seeing only the general ledger gives me an incomplete, perhaps
misleading view of the financial state of an organisation.  In fact, I
would want to see the private ledger first since it contains profit and
loss, trading, drawings etc.

More generally, I would want to see the IASA accounts (an accountancy
technical term) in the ledger (another accountancy technical term).

Or do these terms change meaning as they go west across the Atlantic?
<snip>

---

From: Carl Malamud <[email-masked]>
Date: Thu, 20 Jan 2005 11:43:03 -0800 (PST)

Hi -

I agree with Tom that this is kind of confused, and I think there is some
potential fast and loose use of the language of accountancy.  :))

I think the vague term "accounts" is just fine for the purpose we are
engaged in.  I think all we're trying to say is that the ietf community
would like to see a periodic summary of the IASA accounts in the form of
standard financial statements that reflect the income, expenses, assets, and 
liabilities of that cost center.  I don't think we need to get into
general ledgers and all that other technical accounting talk.

Regards,

Carl

---

From: Margaret Wasserman <[email-masked]>
Date: Fri, 21 Jan 2005 09:20:26 -0500

I generally agree with Tom and Carl.

The community needs visibility in to the IASA finances, sufficient to 
ensure that the IETF's money is spent on IETF-related activities with 
a reasonable level of prudence.  I don't think that our BCP needs to 
specify a reporting methodology that the IAD/IAOC should use to 
provide that visibility...

Today, we are looking at organizing the IASA as a cost center within 
ISOC, and it seems likely that the visibility that the IETF needs can 
be provided in the form of a P&L statement for the costs center and a 
summary of its general ledger accounts.  That's fine, but do we need 
to say it here?

There is a section of the BCP that says:

    Within the constraints outlined above, all other details of how to
    structure this activity within ISOC (whether as a cost center, a
    department, or a formal subsidiary) shall be determined by ISOC in
    consultation with the IAOC.

It seems inconsistent with this section to mandate elsewhere that the 
IASA will be organized as a cost center, that we will use "cost 
center accounting", that the financial reports will include a P&L for 
the cost center, that we will publish the general ledger accounts, 
etc.  These are details that, IMO, the IAOC and ISOC should work out 
(and change as needed to meet the needs of IASA and the IETF 
community) between themselves.

Margaret

---

From: Carl Malamud <[email-masked]>
Date: Fri, 21 Jan 2005 06:47:35 -0800 (PST)

Hi Margaret -

Maybe we agree, but I'm not sure.  I used the following phrase:

   periodic summary of the IASA accounts in the form of
   standard financial statements that reflect the income, expenses, assets, and
   liabilities of that cost center.  

So, I agree with you that this doesn't have to say "of that cost center" and could
easily say "the IASA".  But, when you say "in the form of a P&L statement",
I get a little scared ... as you know from your periodic reviews of the ISOC
overall finances, an income statement without a balance sheet doesn't make a lot
of sense.   

While keeping implementation details out of the BCP is a good thing, I do
think it is appropriate to get the general principle across: full visibility
and transparency of the IASA activity through the use of regular reporting
using standard financial statements that show the IETF community the
income, expenses, assets, and liabilities of this particular activity.

The general principle is that, because this is a community activity,
we're all agreeing that more visibility than usual is appropriate
here.  That seems like a reasonable request/requirement, particularly
given the past history of minimal reporting by the secretariat.  Not
your fault, I know, but this is a sensitive issue given the history and
thus requires a little extra attention.  

Regards,

Carl

---

From: "Tom Petch" <[email-masked]>
Date: Fri, 21 Jan 2005 15:01:15 +0100

Broadly I trust ISOC to do what is right and want a form of words that
will keep me informed as to how we are doing financially.  I endorse
Harald's change from IETF to IASA but jibbed at general ledger as having
a technical meaning that to me was too limited.  Going back to sccounts,
as Carl suggested, I am happy with.

If we say profit and loss, then two caveats.  A minor one, again from
the terminology of accountancy, is that some enitities are regarded as
not having profit and loss account but something similar with another
name eg income and expenditure.  I am uncertain what accounts a cost
center has in ISOC; if it has a profit and loss account, then no
problem.

But a bigger issue is that the profit and loss account is only half or a
third of the story.  There must be a balance sheet with it especially as
we talk of building a reserve, be it of whatever sum and built over
whatever timescale.  Only a balance sheet will measure progress against
this objective.  So if you include the term profit and loss, you should
include balance sheet as well.

The other part is cash flow.  Many a business with a healthy profit and
loss account and a healthy balance sheet has ceased trading because it
ran out of cash; it could not pay its bills.  This was the fate of many
dot coms.  It might be ours since we appear not to balance our books
directly and depend on donations coming to balance our books; delayed
donations equals insolvency.  So cash flow is a nice to have.

Or as Carl said we stay with (IASA) accounts and trust ISOC to produce
what is right.

Tom Petch
----- Original Message -----
From: "Margaret Wasserman" <[email-masked]>
To: "Carl Malamud" <[email-masked]>; "Tom Petch"
<[email-masked]>
Cc: "Harald Tveit Alvestrand" <[email-masked]>; <[email-masked]>
Sent: Friday, January 21, 2005 3:20 PM
Subject: Re: Resolution? #787 terminology - in particular "ISOC
Standards Pillar"

> >>  > accounts" - to have a recognizable term from bookkeeping instead
of

---

From: Margaret Wasserman <[email-masked]>
Date: Fri, 21 Jan 2005 10:09:21 -0500

>overall finances, an income statement without a balance sheet 

You are correct, of course.  Which may only underline the silliness of having a
bunch of engineers specify the accounting details at this level.  :-)

>income, expenses, assets, and liabilities of this particular activity.

Yes.  If we said this (and nothing about cost centers and general ledgers,
etc.) I'd be happier.

>thus requires a little extra attention.

Yes, I agree.

Margaret

---

From: "Tom Petch" <[email-masked]>
Date: Fri, 21 Jan 2005 18:13:57 +0100

Ah ships in the night; yes, Carl, I think this is the best wording so
far.

Two queries in my mind.  Looking at the ISOC Report 2003, I notice it
uses revenue rather than income that you use; is there any hidden
meaning in that? eg because it is incorporated as a nonprofit
organization?

And reading between the lines, perhaps I should be less trusting of ISOC
so is
it sufficient to say periodic summary?  Is there any implication
elsewhere of how often periodic is?  I expect accounts at least every
12 months for any organisation, with them being more frequent for larger
organisations, even every three months for some.

Tom Petch
Engineer (who is also his own accountant)
----- Original Message -----
From: "Carl Malamud" <[email-masked]>
To: "Margaret Wasserman" <[email-masked]>
Cc: "Harald Tveit Alvestrand" <[email-masked]>; "Tom Petch"
<[email-masked]>; <[email-masked]>
Sent: Friday, January 21, 2005 3:47 PM
Subject: Re: Resolution? #787 terminology - in particular "ISOC
StandardsPillar"
> > >>  > accounts" - to have a recognizable term from bookkeeping
instead of

---

From: Carl Malamud <[email-masked]>
Date: Fri, 21 Jan 2005 12:23:42 -0800 (PST)

Hi Tom -

> meaning in that? eg because it is incorporated as a nonprofit

Revenue and income are equivalent.  In the non-profit world, we prefer
"revenue" to income and "excess of revenues over expense" to the word
"profit".  

> organisations, even every three months for some.

I really wouldn't bother specifying that.  My personal view?  Quarterly is
always nice.  But, I think that's something for the iaoc/isoc/etc... to
work out ... they can figure out if their specific actions meet the general
principle easily enough.  And, I wasn't being at all distrustful here of
ISOC ... I was just trying to express the general principle in traditional
language.

(Same with your cash flow analysis ... while I always prepare those for
my organizations, it would be unusual require such a level of analysis
for external consumption, and it probably wouldn't give you a tremendous
amount of insight into the functioning of a cost center as that part
of the operation is backed by the overall organization.  That's why
I just listed the usual 4 of revenue/income, expenses, assets, and
liabilities.)

Regards,

Carl

---

From: "Tom Petch" <[email-masked]>
Date: Fri, 21 Jan 2005 21:56:19 +0100

Thanks for the clarification; I think your wording, the one without the
mention of the cost center,. is just fine.
Tom Petch
----- Original Message -----
From: "Carl Malamud" <[email-masked]>
To: "Tom Petch" <[email-masked]>
Cc: "Margaret Wasserman" <[email-masked]>; "Harald Tveit
Alvestrand" <[email-masked]>; <[email-masked]>
Sent: Friday, January 21, 2005 9:23 PM
Subject: Re: Resolution? #787 terminology - in particular "ISOC
StandardsPillar"

---

From: "Lynn St.Amour" <[email-masked]>
Date: Tue, 25 Jan 2005 15:59:39 -0500

Comments below.

Thanks, Lynn

<snip>

>term.

There still seems to be some confusion over terms:

Per ISOC's Director of Finance - Lynn DuVal and following GAAP 
practices: an organization keeps several sets of LEDGERS (sometimes 
called books) and at year end the balances in the LEDGERS get rolled 
up into the GENERAL LEDGER.  The figures in the GENERAL LEDGER are 
used to prepare the balance sheet and profit and loss statements (and 
will be used to prepare the financial statements for IASA).  For 
completeness - during audits, the auditors sample accounting 
transactions during the year and tie them to the GENERAL LEDGER 
accounts.

ISOC's preference is that we stay with the term: General Ledger 
Accounts.   Not only is this most appropriate, but it provides a 
helpful distinction.

>The ledger is typically divided up into (traditionally physical
>separate books)

ISOC does not run private ledgers - at all.

>Or do these terms change meaning as they go west across the Atlantic?

or perhaps they change meaning when technical (terms) meets accountancy? <grin>

I'll address Margaret's comments separately, as while I understand 
and agree with her position, I think it's appropriate to provide a 
bit more specificity in the BCP if only to minimize surprises 
downstream.

Regards,

Lynn St.Amour

---

From: "Lynn St.Amour" <[email-masked]>
Date: Tue, 25 Jan 2005 16:53:59 -0500

Margaret,

I agree with your point below but I do feel it is helpful to state 
what ISOC's intended implementation is: a Cost Center within ISOC. 
This should not override the section (principle) you quote below. 
Perhaps we can add language at the beginning of this section to 
clarify all this (or move the paragraph you quote from section 7 to 
this section).  We might also add some of the other language proposed 
(see immed. below) so that the overall intent is clear rather than 
focusing on the less important detail.

"...periodic summary of the IASA accounts in the form of standard 
financial statements that reflect the income, expenses, assets, and 
liabilities of that cost center."

Regards,

Lynn

At 9:20 AM -0500 1/21/05, Margaret Wasserman wrote:

<snip>

>It seems inconsistent with this section to mandate elsewhere that 
>the IASA will be organized as a cost center, that we will use "cost 
>center accounting", that the financial reports will include a P&L 
>for the cost center, that we will publish the general ledger 
>accounts, etc.  These are details that, IMO, the IAOC and ISOC 
>should work out (and change as needed to meet the needs of IASA and 
>the IETF community) between themselves.

---

From: Margaret Wasserman <[email-masked]>
Date: Tue, 25 Jan 2005 19:47:10 -0500

Lynn's suggested text is fine with me.

Margaret

At 4:53 PM -0500 1/25/05, Lynn St.Amour wrote:
>this section).  We might also add some of the other language 
>proposed (see immed. below) so that the overall intent is clear 
>rather than focusing on the less important detail.
>