The Christmas Give-away

At about this time of the year across the archipelago there is an important assessment that takes place allowing companies to take stock of its strategic position among the various publics in which it operates. These exercises are deliberate and critical both to the highest in the hierarchy, chairmen and chief executive officers, and the busiest among the staff, the administrative clerks and messengers.

One of course is the scheduled process of budgeting for the next year, a necessary strategic exercise that goes with corporate planning and, for some companies, capped at the end by a bonding exercise designed to embellish with solidarity what the budget might not.

For government agencies, budgeting likewise involves the unusually aggressive propensity to spend what has not been spent. The give-away is the suddenness of useless activity. Hence, a flurry of infrastructure spending typically unnecessary such as repaving paved roads, re-installing signage and beautifying the hopelessly ugly.

The other exercise takes place in a firm’s typically drab accounting and bookkeeping sections but it involves decisions made by the company’s highest officers. Never at any other time are accountants as busy, nor are they as creative and artistic than at year-end when the stoic act of counting turns complex, transforming science into art.

Some of the decisions involve the recognition of prospective revenues and its degree of reasonable certainty, deciding whether these are contracted and assured enough to be confidently recognized among the current year’s sales. It is an acceptable accounting practice that given certain conditions allows legitimate and early recognition on the revenue end. At the time the books are closed, it helps to top off a Christmas tree with a bright shiny plastic star.

While the same can occur on expense items, these are more important two months later at that time immediately preceding the filing of tax returns. In both instances, unusual activity is the give-away.

The beehive bookkeeping creativity rivals the artful twists and turns of wrapping ribbons at a department store gift wrapping counter. Depending on tax shelters, deductibles and depreciation, plus expenses that reduce operating income enough to carve out an eventual profit figure near enough to what was budgeted in 2007, most bookkeepers work backwards and attempt to compute an acceptable sales figure.

The virtual reverse engineering of revenues is a requisite to reviewing assured sales contracts for the following year and whether that extra year-end bonus to be announced during the Christmas party might or might not be advisable.

While both processes are some of the most critical during the December half-month, there is a flurry of activity that belies what is truly important, and, following Parkinson’s Law on prioritizing agenda, a preoccupation taking precedence at Christmastime.

Conference rooms are filled to the rafters with Christmas give-aways. Its process follows segregation, discrimination and politics. It starts with a routing slip that tours officers empowered the perk of choosing acquaintances entitled a gift. To those for regulators, politicians, taxmen and the police, these are listed and ranked according to unofficial niches.

While the give-away list should follow above-board business relationships, it does not. Here the corporate world surrenders to political pragmatism absent in lessons espoused by business literature save those written after business school and authored by Ralph Reality and Eunice Utility.

The list and the give-aways is a who’s who and reflects who are truly important at the operational level. Never mind the absolute restrictions specified by R.A. 3019, and, for American multinationals, the audit requirements under the Foreign Corrupt Practices Act (FCPA). The ministerial adherence to the FCPA is typically reportorial. Moreover, FCPA does not apply to other nationalities. The Chinese and Korean investors who’ve been in the news lately do not have similar statutes. Note how government gravitates to these. By the manner some practice their trade, the absence of regulatory hurdles is evident.

The Christmas basket with a bottle of wine, imported Edam and other delicatessen knick-knacks are reserved for government factotum and other influential people. Never mind that these are hardly ever acknowledged. Down the pecking order, the same basket applies, but both wine and cheese turn into cans of refried beans, grocery items with near-expiration dates and confetti. Middle managers get umbrellas or faux leather bags. Totem pole bottom denizens get rolled-up calendars.

The typical Christmas give-away is not what we might think. In the season of giving, it is not dictated by thoughtfulness. It is the mandatory result of a corporate SWOT (strengths, weaknesses, opportunities and threats) matrix.

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