Hi tkc,
How do you reach the conclusion that the bonuses are not accrued for?
I think folks should stop think of bonuses as being performance-related for anything other than tax purposes. This is what they get paid, pure and simple. I think they are overpaid, cashwise, but it isn't going to change all the same.
Re headcount - thought I read/heard 250 and that the surge is over.
Error (1) - The deferred revenue increase is one of those technical recognition issues with complex software contracts. The revenue is merely deferred to future periods. Wave is hiring a specialist accountant who understands the complexity of this kind of accounting - so this isn't simple, but in my view, it also isn't too worrying.
Error (2) - The remaining issue is over the collectability of some aged debts. Not sure why this wasn't picked up earlier, as invoices age very visibly: so there's an upfront due diligence issue which is the responsibility of the acquisition auditor, in my view; and then there's a year-end reporting issue, which may affect the standing of whoever is controlling finances at Safend. Sounds like it was turned up by the (possibly new) auditor at year-end. That's one of the purposes of the audit - so the problem was caught in the third stage of Safend's financial control when it should have emerged in both of the other two. The problem simply couldn't be resolved in the timescale available, and that tells me Wave should try to accelerate its reporting schedule. In Feeney's shoes I'd be disappointed and embarrassed, but I'd likely conclude it was an isolated and fixable teething issue.
I suspect they'll look to get some portion of the bad debt money back from Safend's principals in a conversation between lawyers.
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