A Busy and Stressful Time

February 25, 2008

Wow, I haven’t written in a month. It’s that way this time of the year, for us Statutory Accountants -- too busy to have a life of our own!

Here's a quick background of my company: CompSource Oklahoma is, for all intents and purposes, an insurance company. We are a State Agency, created by Statute in 1933 to provide workers' compensation insurance to Oklahoma employers. We are not-for-profit but operate similarly to a commercial corporation. The company is completely self-funded and receives no appropriations from the State of Oklahoma.

Since CompSource is the "insurer of last resort," we cannot turn down any entity which applies for insurance with us, and as such, we often insure the riskier clients.

Statutory Accounting is what we in the accounting profession refer to as "OCBOA" -- Other Comprehensive Basis of Accounting. A commercial corporation normally employs GAAP accounting, or Generally Accepted Accounting Principles. The focus of GAAP accounting is the bottom line, or net income. The goal is to make a profit and increase shareholder wealth.

Statutory, or STAT, accounting, focuses on solvency. Our goal is to maintain the capital necessary to meet claimant obligations. Regardless of our net income, if we do not have the capital (net assets) available to meet any and all claims at a given time, we are considered insolvent and can no longer operate.

Our deadline for annual reporting to the State is March 1, so from December 31 to March 1, we’re involved in not only month-end reporting for December, but year-end reporting which primarily involves preparation of the Annual Statement. This, among other things, involves preparation of Schedule P, a heavily detailed schedule of our claim activity for the year (and thankfully we only write one line of business – Work Comp – and not numerous Property & Casualty lines).

Adding to the year-end mix, our independent auditors (KPMG, one of the Big 4. Remember when there was the Big 8? Wikipedia says, "..... the "Big Eight"...was reduced to the "Big Five" by a series of mergers. The Big Five became the Big Four after the near-demise of Arthur Andersen in 2002, following its involvement in the Enron Scandal." Such tumultous times in our profession!) pay a visit to study and scrutinize every aspect of our financial activity for the previous year.

Then inevitably comes January month-end, which is important because our Board of Directors meets monthly and we report financial activity at each board meeting. January numbers can't wait for year-end numbers!

So we cram 3-4 months' worth of work into 2 months. It gets to be quite a busy and stressful time! Maybe now though I can breathe a little and write more.