Financial Reporting for Securities

[EskimoBob]

Standard.. LOL!
Fuck off Mircea Popescu (MPOE-PRBS) You are fkn spammer and a garden variety scumbag.
Your shitty one stock wunder-bazaar is a skid mark on BTC world and hopefully will be washed out soon. LOL
One more thing... go and try to learn how to do financial reporting for a star. This shit you publish is below pathetic.

[cusdog]

I have just finalized the first set of financials for TU.SILVER. See the link below. The following things should be noted when reading these statements


-The underlying accounting for these statements is compliant with IFRS with the exception of the option valuation/trading which is handled at cost due to the low underlying value and degree of uncertainty with respect to the key inputs for an option pricing model.

-The disclosure (i.e. the notes and format of the statements) are not compliant with IFRS. The reason being that there are alot of nonsense requirements that are useless and will confuse unsophisticated readers. I have streamlined the notes down to those key points which I think are relevant to investors. If you have suggestions for further disclosure you would like please post here.

-The statements are not audited. I hope to eventually move in that direction both with TU.SILVER and for any other entities that I can help out, but realize I need to make baby steps.

-There are already a few improvements that I intend to make for the May statements, such as including a cashflow statement and cleaning up some formatting/typo matters, if you notice any issues please post and I will attempt to incorporate any corrections in next month's statements.



http://www.pdfhost.net/index.php?Action=Download&File=44604fc9ed76c8d091848d4321d8624b

[EskimoBob]

Cusdog, good job
There is comment, that everything is in BTC but at the same time, I see $ on every line. Is this something you can fix for clarity?
Why don't you do the report in USD/CAD/EUR/etc to begin with?
I rather avoid the endless "is btc a currency" debate but at current volatility and the fact, that every price in every *coin business is actually based on fiat, makes it kinda pointless to use *coin as the base currency for accounting (unless you are btc/ltc mining?)

Let me give you a example:
I sell you a service X at 1 BTC and BTC:EUR is 40
Month later, you buy that same service but now you pay only 0.5 BTC and BTC:EUR is at 80
If you look at the report, my price in BTC, for service X has  dropped 50%! and my revenue has fallen too.
Now, lets say I actually did well and sold 20% more stuff (in EUR) but because of massive rise in BTC price, it looks like I have lost a nice slice of my income.

Because my services are sold in fiat, I stopped screwing around with BTC and LTC as base currency for accounting. It made no sense.
When BTC:FIAT mellows out, it's ready for prime time. At the moment, it's just another absurdly volatile investment in my books.

I really like to hear your comments on  this.

Cheers

PS! What software do you use for accounting.

[BitHub]

Hi, i like that google doc its pretty cool, is it namworld's got a link to any other assets?

I'm real interested in analysing and reporting on crypto assets/companies.

[BitHub]

Been in talks with Kenilworth Exploration (Australian Mineral Exploration) about going down there for a few days to get the "investors" tour and do some reporting, potential security asset starting on BitFunder. Is there anything specific you guys would like me to validate with this company?

[Deprived]

Cusdog, good job
There is comment, that everything is in BTC but at the same time, I see $ on every line. Is this something you can fix for clarity?
Why don't you do the report in USD/CAD/EUR/etc to begin with?
I rather avoid the endless "is btc a currency" debate but at current volatility and the fact, that every price in every *coin business is actually based on fiat, makes it kinda pointless to use *coin as the base currency for accounting (unless you are btc/ltc mining?)

Actually it makes sense to be reporting in BTC.

I don't know what all of the securities invested in are, but disclosed ones are namworld's BTC-BOND and my LTC-ATB.B1.  Both of those have a fixed face value in BTC, pay fixed interest/dividends based on that face value and are redeemable at (or very near) face value.

The startup loan is also fixed in BTC - so a large part of assets and all liabilities are genuinely fixed price in BTC.  Only major element that isn't is the silver - and it makes sense to value that in BTC as well given that one of the purposes of the security is to invest BTC into silver.  And obviously all elements need to be valued in same currency - or it becomes a pain working out what portion of share price is what.

Valuing in USD is either for assets that have a face value in USD or for ones that pretended to be priced in a crypto-currency but are now accounting in fiat so their losses are disguised.

Nice clear accounts by the way Cusdog.

[EskimoBob]

Cusdog, good job
There is comment, that everything is in BTC but at the same time, I see $ on every line. Is this something you can fix for clarity?
Why don't you do the report in USD/CAD/EUR/etc to begin with?
I rather avoid the endless "is btc a currency" debate but at current volatility and the fact, that every price in every *coin business is actually based on fiat, makes it kinda pointless to use *coin as the base currency for accounting (unless you are btc/ltc mining?)

Actually it makes sense to be reporting in BTC.

I don't know what all of the securities invested in are, but disclosed ones are namworld's BTC-BOND and my LTC-ATB.B1.  Both of those have a fixed face value in BTC, pay fixed interest/dividends based on that face value and are redeemable at (or very near) face value.

The startup loan is also fixed in BTC - so a large part of assets and all liabilities are genuinely fixed price in BTC.  Only major element that isn't is the silver - and it makes sense to value that in BTC as well given that one of the purposes of the security is to invest BTC into silver.  And obviously all elements need to be valued in same currency - or it becomes a pain working out what portion of share price is what.

Valuing in USD is either for assets that have a face value in USD or for ones that pretended to be priced in a crypto-currency but are now accounting in fiat so their losses are disguised.

Nice clear accounts by the way Cusdog.

You are probably one of the few who are all in BTC and in your case, reporting in BTC is a must or reports get distorted other way around.

Buying shares in a fiat business and paying with cryptocoin is actually like selling your coin for fiat on that date - using cryptocoin tokens  to transfer fiat. 

If you sold your 1000 LTC on 01.01.2013 for 0.005 and now it's trading at 0.03,  have you realized a loss of 0.03-0.005=0.025*1000?
No matter how good your hindsight is, this can not be called a loss. Lost opportunity, maybe, but not a loss of 25LTC or 77.5 USD
What if you bought those 1000 coin for 0.10 USD?
You can realize a loss only if the cost of acquiring those coins was higher than what you received when sold.
After you sold your position, no matter where the coin trades, it has no effect on your finances (except emotional).

Simply put, you can not generate a loss or profit from position you do not have.

[cusdog]

Cusdog, good job
There is comment, that everything is in BTC but at the same time, I see $ on every line. Is this something you can fix for clarity?
Why don't you do the report in USD/CAD/EUR/etc to begin with?
I rather avoid the endless "is btc a currency" debate but at current volatility and the fact, that every price in every *coin business is actually based on fiat, makes it kinda pointless to use *coin as the base currency for accounting (unless you are btc/ltc mining?)

Let me give you a example:
I sell you a service X at 1 BTC and BTC:EUR is 40
Month later, you buy that same service but now you pay only 0.5 BTC and BTC:EUR is at 80
If you look at the report, my price in BTC, for service X has  dropped 50%! and my revenue has fallen too.
Now, lets say I actually did well and sold 20% more stuff (in EUR) but because of massive rise in BTC price, it looks like I have lost a nice slice of my income.

Because my services are sold in fiat, I stopped screwing around with BTC and LTC as base currency for accounting. It made no sense.
When BTC:FIAT mellows out, it's ready for prime time. At the moment, it's just another absurdly volatile investment in my books.

I really like to hear your comments on  this.

Cheers

PS! What software do you use for accounting.

Thank you for your kind words. For your questions:


1) I spent 30 minutes with my software trying to figure out a way to import the BTC symbol with no luck. This is why I put "expressed in BTC" in the statements. I will try again when I have a bit more time. I do agree that "$" is confusing.

2) As a general rule, unless you have to follow regulatory requirements, the currency that you should be reporting in should be the same as the functional currency of the business. In this case the assets are denominated in BTC and silver, the liabilities in BTC, the Revenue in BTC and the expenses in BTC. Using fiat currency as the reporting unit might make sense for some other businesses in the BTC  universe (maybe miners?) but not for TU.SILVER. Good question though.

3) The software I use is called caseware. I don't deal with small businesses IRL, but I know other CAs who do and I piggyback off of their license for the program and preexisting formatting. I don't think it is viable for a layperson to use. You would be better off with something like Quickbooks, Simply Accounting, etc, and using their automated F/S generation.

Let me know if you have any other questions.

[Deprived]

Cusdog, good job
There is comment, that everything is in BTC but at the same time, I see $ on every line. Is this something you can fix for clarity?
Why don't you do the report in USD/CAD/EUR/etc to begin with?
I rather avoid the endless "is btc a currency" debate but at current volatility and the fact, that every price in every *coin business is actually based on fiat, makes it kinda pointless to use *coin as the base currency for accounting (unless you are btc/ltc mining?)

Actually it makes sense to be reporting in BTC.

I don't know what all of the securities invested in are, but disclosed ones are namworld's BTC-BOND and my LTC-ATB.B1.  Both of those have a fixed face value in BTC, pay fixed interest/dividends based on that face value and are redeemable at (or very near) face value.

The startup loan is also fixed in BTC - so a large part of assets and all liabilities are genuinely fixed price in BTC.  Only major element that isn't is the silver - and it makes sense to value that in BTC as well given that one of the purposes of the security is to invest BTC into silver.  And obviously all elements need to be valued in same currency - or it becomes a pain working out what portion of share price is what.

Valuing in USD is either for assets that have a face value in USD or for ones that pretended to be priced in a crypto-currency but are now accounting in fiat so their losses are disguised.

Nice clear accounts by the way Cusdog.

You are probably one of the few who are all in BTC and in your case, reporting in BTC is a must or reports get distorted other way around.

Buying shares in a fiat business and paying with cryptocoin is actually like selling your coin for fiat on that date - using cryptocoin tokens  to transfer fiat.  

If you sold your 1000 LTC on 01.01.2013 for 0.005 and now it's trading at 0.03,  have you realized a loss of 0.03-0.005=0.025*1000?
No matter how good your hindsight is, this can not be called a loss. Lost opportunity, maybe, but not a loss of 25LTC or 77.5 USD
What if you bought those 1000 coin for 0.10 USD?
You can realize a loss only if the cost of acquiring those coins was higher than what you received when sold.
After you sold your position, no matter where the coin trades, it has no effect on your finances (except emotional).

Simply put, you can not generate a loss or profit from position you do not have.

Your mistake is not treating BTC as a currency - that simple.

If buy some euros for $100 then a month later sell them for $75 I've made a $25 loss - even though I had same number of euros.
If I buy some BTC for $100 then a month later sell them for $75 I've made a $25 loss - even though I had same number of BTC.
If I buy some USD for 100 BTC then a month later sell them for 75 BTC then I've made a 25 BTC loss - even though I had same number of USD.
If i trade 10 oz of silver for some USD then a month later trade those USD back for 7.5 oz of silver then I've lost 2.5 oz of silver - even though I had same number of USD.

For some strange reason you see the third case as somehow different to the first two (and I've no idea how you see the fourth) - maybe because YOU value everything in USD/euros.  Profit/Loss is measured in the currency you invest - not some arbitrary currency that your investments may be valued in elsewhere.

If I invest USD into something priced in USD then I expect profit/loss to be measured in USD.  If I invest BTC into something priced in BTC then I expect profit/loss to be measured in BTC.

Exception to that is where the investment is explicitly denominated in a currency other than the one it's transacted in.  Examples of that being my LTC-ATF.B1 (transacted in LTC but with a face value in BTC) and Esecurity (which is traded in both LTC/BTC but has a face value set in USD).

Where the dishonesty creeps in is where asset issuers sell things which SHOULD plainly be denominated in USD (assets and income being in USD) but then set a fixed price in BTC/LTC to try to pretend it's a BTC/LTC investment.  That type of asset should set their price/face value in USD, do all accounting in USD and report profit/loss in USD.  They should also make plain to potential investors that their investment is a SHORT on BTC/LTC.  But they don't do that because of some mix of ignorance (some falsely believe their security IS BTC-denominated when in practical terms it isn't - see most FMBs) and deceit (they know they wouldn't get so much investment if they were honest from the start about investors making a BTC-denominated loss if BTC rises).

PM funds in general SHOULD be valued in BTC/LTC - as they're explicit in being a bet that PM value will rise faster than BTC/LTC (they have other uses which are an extension of that).  So the value of the fund in BTC/LTC IS what matters - as that's what investors CHOSE to bet on when they invested and is the number they're interested in.

[cusdog]

Cusdog, good job
There is comment, that everything is in BTC but at the same time, I see $ on every line. Is this something you can fix for clarity?
Why don't you do the report in USD/CAD/EUR/etc to begin with?
I rather avoid the endless "is btc a currency" debate but at current volatility and the fact, that every price in every *coin business is actually based on fiat, makes it kinda pointless to use *coin as the base currency for accounting (unless you are btc/ltc mining?)

Actually it makes sense to be reporting in BTC.

I don't know what all of the securities invested in are, but disclosed ones are namworld's BTC-BOND and my LTC-ATB.B1.  Both of those have a fixed face value in BTC, pay fixed interest/dividends based on that face value and are redeemable at (or very near) face value.

The startup loan is also fixed in BTC - so a large part of assets and all liabilities are genuinely fixed price in BTC.  Only major element that isn't is the silver - and it makes sense to value that in BTC as well given that one of the purposes of the security is to invest BTC into silver.  And obviously all elements need to be valued in same currency - or it becomes a pain working out what portion of share price is what.

Valuing in USD is either for assets that have a face value in USD or for ones that pretended to be priced in a crypto-currency but are now accounting in fiat so their losses are disguised.

Nice clear accounts by the way Cusdog.

Thank you, your analysis is exactly the same as my reasoning for presenting in BTC.

[BitHub]

could anyone do a report on asicminer for a tip or bounty? Thanks

[EskimoBob]

Deprived, nice attempt at demagogy.
Let me make it more simple, what I was talking about:
You buy 10 BTC at price X
You sell your 10 BTC at price X+Y
It is completely irrelevant, where the BTC trades AFTER you have sold your 10 coins. Got it?

But you are correct, most of those bitcoin businesses are nothing more than fiat businesses, pretending to be something else.
BTW, if you invest in a foreign company, is it your business or their business to protect you from currency risk?

I still hold on to the BTC we had left after the IPO and I listed it as an investment. I can probably look at it as a foreign currency, but the end result is still the same. It  shows up on the same side of the balance sheet and show profit or loss (realized or not).

[EskimoBob]

Any advances in this department?

Maybe our exchanges of virtual shares can start demanding proper reporting?

[burnside]

Any advances in this department?

Maybe our exchanges of virtual shares can start demanding proper reporting?

I'm coming full circle on this.  Most of my attempts at cleaning up the landscape have backfired.  Even legit issuers go wherever regulation is most lax.  Can't blame them.  Why make things harder on yourself unnecessarily?

[EskimoBob]

Any advances in this department?

Maybe our exchanges of virtual shares can start demanding proper reporting?

I'm coming full circle on this.  Most of my attempts at cleaning up the landscape have backfired.  Even legit issuers go wherever regulation is most lax.  Can't blame them.  Why make things harder on yourself unnecessarily?

Businesses here are really simple so is the accounting.
It is not that hard to type in your income, expenses and value of you equipment, investments etc... unless you let is pile up or have no idea what you really got. If issuer do not know wtf is going on, how can investors know? Or let me put it this way, if issuers do not care to know... oh never mind, maybe this idea is years to early and we need to keep playing this kindergarten for few more years.
 

[burnside]

Any advances in this department?

Maybe our exchanges of virtual shares can start demanding proper reporting?

I'm coming full circle on this.  Most of my attempts at cleaning up the landscape have backfired.  Even legit issuers go wherever regulation is most lax.  Can't blame them.  Why make things harder on yourself unnecessarily?

Businesses here are really simple so is the accounting.
It is not that hard to type in your income, expenses and value of you equipment, investments etc... unless you let is pile up or have no idea what you really got. If issuer do not know wtf is going on, how can investors know? Or let me put it this way, if issuers do not care to know... oh never mind, maybe this idea is years to early and we need to keep playing this kindergarten for few more years.

Yup, I hear ya.  All businesses should be doing spreadsheets internally just for their own operations.  If you are investing in a stock and they can't show you (at least) an overview of their numbers (at least) quarterly, you're in for a world of hurt.

[ThickAsThieves]

Any advances in this department?

Maybe our exchanges of virtual shares can start demanding proper reporting?

I'm coming full circle on this.  Most of my attempts at cleaning up the landscape have backfired.  Even legit issuers go wherever regulation is most lax.  Can't blame them.  Why make things harder on yourself unnecessarily?

Businesses here are really simple so is the accounting.
It is not that hard to type in your income, expenses and value of you equipment, investments etc... unless you let is pile up or have no idea what you really got. If issuer do not know wtf is going on, how can investors know? Or let me put it this way, if issuers do not care to know... oh never mind, maybe this idea is years to early and we need to keep playing this kindergarten for few more years.

Yup, I hear ya.  All businesses should be doing spreadsheets internally just for their own operations.  If you are investing in a stock and they can't show you (at least) an overview of their numbers (at least) quarterly, you're in for a world of hurt.

I happen to have spreadsheets out the wazoo for my assets, but so far these are only privately necessary due to the nature of my assets.

[EskimoBob]

Using spreadsheet to calculate/convert prices etc is probably fine. I bet those spreadsheets are not the best idea for actual bookkeeping ... unless you enjoy and know how to do bookkeeping with pen an paper.

Try something like Gnucash. I bet KMyMoney can do the trick too. It's not a rocket science

Lets put it this way, if you can not figure out how to set up your accounts in Gnucash so everything balances out, you can not do it correctly with a spreadsheets for sure.

[EskimoBob]

Hi guys,

Longtime lurker. I’ve become more actively engaged in the community more recently, specifically the securities side of things and noticed something: A dearth of transparency, even for the large issuances. Current and prospective investors have very little to go on, which allows scammers/poor investments to suck-up capital and makes the cost of capital for profitable and strong enterprises more expensive. This is a drain on the entire community. I think a lot of good can be done for the market stability and perception of bitcoin securities if people would move towards transparency. Incidentally it would be more profitable for people running solid, honest businesses because they would be able to raise capital more cheaply.

I don’t want to be mean and single out any entity/person, but stuff like this:

https://docs.google.com/spreadsheet/pub?key=0AoYY1V1t8ncndFBwV04zZzBKRWFqbFFua2JsT3Jaemc&single=true&gid=2&output=html

makes little sense and has only limited usefulness for a potential investor.

I want to explore the possibility of having widespread adoption legitimate accrual accounting and useful disclosure/reporting. And when I say “useful” I mean for a miner disclosure about each piece of equipment you have, the shape it is in, projected performance, allocated expenses for the period broken down (and not on a cash basis), etc. I mean for an investment fund, the FMV of your holdings @ the reporting date, the dividends from your holdings accrued and included in NAV,  clear disclosure about the management fee, etc.

Here is what I propose, and tell me if I am being too optimistic; One of the large exchanged-traded entities (maybe run by someone on this board, BTCinvest? ASICMINER?) takes the first step with this. I am a Canadian CA who can spare a few hours a week and am willing to help out for free to get this done. Input is appreciated.

S.MPOE: April, March, February, January, [2012] December, November, October, September, August, July, June, May etc (yes it goes back further than that).

S.BBET: April, March, February, January.

Cummulatives: MPEx dividends 1 year history, MPBOR 1 year retrospective.

MPEx is the standard of Bitcoin finance, and has been since inception. Familiarize yourself with it.

(Also, the legitimate venue for this sort of discussion is #bitcoin-assets on Freenode, that's where the heavyweights hang out. The forum is mostly for supernoding.)

I guess your half ass "standard" is blowing up in S.DICE investors faces right about now https://bitcointalk.org/index.php?topic=101902.1740

[Peter Lambert]

I see in the MPEx examples of reports the profit/loss statement, but they seem to be missing the balance sheet (List of total assets and liabilities).