path to ifrs conversion - hftp (usali) and how the ifrs differs from u.s. gaap. the ifrs could be...

THE JOURNAL OF HOSPITALITY FINANCIAL AND TECHNOLOGY PROFESSIONALS

February / March 2009Volume 24, Number 1

Path to IFRS ConversionUS GAAP vs. IFRS

What’s Next for the USALI

Extending the Life of a PC

PCI Data Security Standards v1.2

Profile: Stephen LeBruto, CPA, CHAE, Ed.D.

®

www.berlinconference.com

The Bottomline �

THE JOURNAL OFHOSPITALITY FINANCIAL AND

TECHNOLOGY PROFESSIONALS

Volume 24, Number 1

10 Should I Buy a New PC?Maintain the health of a PC to squeeze a few dollars out of your IT budgetBy Terry L. Price, CHAE, CHTP, CPA

14 Staying Current with the PCI StandardWhat version 1.2 and PA-DSS mean to your operationBy Mark G. Haley, CHTP and Daniel J. Connolly, Ph.D.

18 The Path to IFRS ConversionMoving toward a worldwide accounting system with the International Financial Reporting StandardsBy Tanya Venegas, MBA, MHM

25 USALI — What’s Next?Issues to be addressed for the next edition of the Uniform System of Accounts for the Lodging IndustryBy Arlene Ramirez, MBA

5 Between the LinesStay on Top By Staying Informed — HFTP’s conferences and resources keep members ahead in trying times

6 Q&A From The HFTP Research InstituteDeciphering Account Standards — Reporting systems for the lodging, club, spa and restaurant industries. When should a particular standard be used?

8 HFTP News and NotesEHTEC 2009; Certification Call

27 HFTP Event Calendar

28 Feature Profile: Stephen LeBruto, CPA, CHAE, Ed.D.At the head of the class

�0 The Bottomline Resource Guide

HFTP® and HITEC® are registered ser-vice marks of Hospitality Financial and Technology Professionals. ProLinks and GUESTROOM 2010 are service marks of Hospitality Financial and Technology Professionals.

Submissions and InquiriesIndividuals interested in submitting an article for publication should contact the editor. The Bottomline is a peer review journal. All ma-terials submitted for publication are reviewed by members of the editorial review board or recognized experts in the field.

The Bottomline (ISSN 0279-1889), the jour-nal of Hospitality Financial and Technology Professionals, Inc., is published bimonthly with two special editions by HFTP®. Copy-right © by Hospitality Financial and Technol-ogy Professionals. All rights are reserved. All opinions expressed herein represent the views of the authors. The Bottomline and HFTP disclaim any responsibility for views expressed or statements made in any articles published. HFTP disclaims any liability with respect to the use of or reliance on any such information. The information contained in this publication is in no way to be construed as a recommendation by HFTP or any industry standard, or as a recommendation of any kind to be adopted or binding upon any member of the hospitality industry. Written consent must be obtained from HFTP before reprinting articles. Subscription fee of $30 for HFTP members is included in the membership fee. HFTP is headquartered at 11709 Boulder Lane, Suite 110, Austin, Texas 78726. Periodicals Postage Paid at Austin, Texas. POSTMASTER: Send ad-dress changes to The Bottomline, 11709 Boulder Lane, Suite 110, Austin, Texas 78726, (512) 249-5333.

C o n t e n t s

F E A T U R E S

D E P A R T M E N T S

F E B R U A R y / M A R C H • 2 0 0 9

4 February / March 2009

THE BOTTOMLINE STAFFFrank I. Wolfe, CAE

Executive Vice President/CEO [email protected]

Eliza R. Selig Editor/Director of Communications

[email protected]

Jennifer Lee Advertising Sales / Director of Marketing

[email protected]

2008–2009 HFTP OFFICERSPresident

Jules Sieburgh, CHTP O’Neal Consultants Bethesda, Maryland

Vice PresidentTerry Price, CHAE, CHTP, CPA The Grove Park Inn Resort & Spa

Asheville, N.C.

TreasurerThomas G. Smith, CHAE

Ozaukee Country Club Mequon, Wis.

Immediate Past PresidentAnna McFarland, CPA, CFE, CHAE, CHTP

Sofitel Luxury Hotels, North America Carrollton, Texas

2008–2009 EDITORIAL ADVISORY COUNCIL Chair

Arlene Ramirez, MBA Lecturer

University of Houston

Board LiaisonDipankar Mukherjee, CHAE, CIA, CMC

Corp. Financial Consultant Hospitality Inns Ltd.

Kaye Chon, Ph.D., CHE Chair Professor and Director

Hong Kong Polytechnic University

Cihan Cobanoglu, Ph.D., CHTP IT Director

Courtyard Newark – University of Delaware

Daniel J. Connolly, Ph.D. Associate Professor

University of Denver

Dennis DuBois, CHAE Director of Finance

Carlson Hotels Americas

Ab M. Echenberg, CHAE, CHTP Consultant

AME Consulting

David W. Eller President

Finance Guy, Inc.

Mehmet Erdem, Ph.D., CHTP Asst. Professor of Hotel Mgmt

University of Nevada, Las Vegas

Jason R. Filippini, CPA Accounting & Auditing Manager

Clothier & Head PS

Melih Madanoglu, Ph.D., CHE Assistant Professor

Florida Gulf Coast University

Brian Miller, Ph.D. Assistant Professor

University of Delaware

Christina E. Miller, CAM Assistant Controller

Ginn Reunion Resort & Club

Raymond S. Schmidgall, Ph.D., CPA, CHAE Professor

Michigan State University

Franklin John P. Sikich, CPA, CHAE Owner

Franklin John Patrick Sikich, CPA

Paul A. Willie, CHAE, CHTP, CHA, CMA Hotel And Restaurant Management Professor,

Niagara College

11709 Boulder Lane, Suite 110 • Austin, TX 78726–1832+1 (512) 249-5333 • (800) 646-4387 • Fax +1 (512) 249-1533

www.hftp.org • www.hitec.org

mailto:[email protected]



http://www.hftp.org

http://www.hitec.org

www.hftp.org

www.hftp.org

The Bottomline 5

STAy oN ToP By STAyING INFoRMED HFTP’s conferences and resources keep members ahead in trying times

Jules Sieburgh, CHTP, is a hospitality consultant with O’Neal Consultants and an inductee to the HFTP International Hospitality Technology Hall of Fame.

Between the LinesA Letter From the President

Jules Sieburgh, CHTP

“ The HFTP Global Board feels it can help reverse the momentum by continuing with its current level of quality benefits and industry outreach — existing as a strong foundation.”

While it may seem like the business world is in an un-controllable tailspin, profes-

sionals across the globe are starting to stand back up — even if it’s on shaky ground — and put on the brakes with small corrective actions. The HFTP Global Board feels it can help reverse the momentum by continuing with its current level of quality benefits and in-dustry outreach — existing as a strong foundation. By continuing forward, it is our hope that we will facilitate our members and the industry through a faster economic recovery.

We can do nothing less than look ahead, and continue to accommodate for evolving business practices. One area that is changing is standardized accounting. In August 2008 the SEC unanimously voted to propose a road map for conversion and eventual adop-tion of International Financial Report-ing Standards (IFRS). In this issue you will find a full report from the HFTP Research Institute that discusses the impact of such a change, as well as results from an HFTP-hosted round-table of senior-level financial execu-tives from major lodging companies who explored this topic. In addition the section covers issues to address for the next edition of the Uniform System of Accounts for the Lodging Industry (USALI) and how the IFRS differs from U.S. GAAP. The IFRS could be adopted as soon as soon as 2014, and HFTP will continue to keep its mem-bers updated on this issue.

HFTP is also looking to continue the dialogue of current trends through its education programs. Early in Feb-ruary was the third European Hos-

pitality Technology Exposition and Conference, EHTEC, in Amsterdam, The Netherlands. EHTEC has rap-idly established itself as an essential forum to review the state of hospitality technology in Europe. The conference hosted top hospitality executives and academics from across Europe to dis-cuss mobile technology, using mobile technology to re-engage the customer, kiosk use and more. Read details on page 8 of this issue.

Also coming up is the Club and Hotel Controllers Conferences in March and June, the HFTP Asian Hospitality Financial and Technology Conference in May, HITEC in June and the HFTP Annual Convention & Tradeshow in September. For each of these educational opportunities we strive to provide session topics that are the most valuable to the current busi-ness environment.

And beyond our member benefits, we aim to contribute to the industry as a whole by participating in numerous allied association events. This winter and spring HFTP has a presence at the CMAA World Conference and Golf Industry Show and the International Hotel Investment Forum in Berlin.

While it may be hard to look beyond the hard facts of the slow economy, I feel the best way to turn it around is to incrementally pull our-selves up. The association is lucky to be in a sturdy position and be of assis-tance to our members and the industry as a whole.


HFTP News and NotesQ&A from the Research Institute

Question:

Answer:

DECIPHERING ACCoUNTING STANDARDSReporting systems for the lodging, club, spa and restaurant industriesWhen should a particular standard be used?

Can you provide details on the recording of service charges?

The topic of service charges is a greatly debated topic. There are major differences between the Uni-form System of Accounts for the Lodging Industry (USALI) and the Uniform System of Financial Reporting for Clubs (USFRC).

Uniform System of Accounts for the Lodging IndustryAccording to the current edition of the USALI, all service charges must be recorded as revenues. The following is an excerpt from page 57 of the USALI 10th edition discussing the recording of service charges.

Service Charges includes automatic charges added to any food sale to help cover the cost of staff service to the customer. Service Charges must be recorded as revenue and may not be credited to any expense ac-count. Discretionary amounts added to a food sale as a gratuity to an employee by the customer are treated as tip income to the employee.

The confusion in the recording of service charges oc-curred due to changes made between the 9th and 10th edi-tions of the USALI. The 9th edition provided less detail, only stating that service charges included “charges for services that are added to a customer’s bill or banquet contract at either a fixed amount or a percentage of the sale” (USALI 9th ed., 1996). Therefore, many operators did not record the portion of service charges used to offset payroll as revenues. The difference between the two versions can significantly impact revenues, which impacts the amount paid in manage-ment contracts.

Uniform System of Financial Reporting for ClubsThe USFRC treats service charges in a different manner al-lowing operators to offset payroll and related expenses with

service charges. The following is an excerpt from the most recent version of the USFRC pertaining to the recording of service charges.

Service charges not distributed to employees should be subtracted from salaries and wages… The use of service charges varies across the many clubs constitut-ing the club industry. Often, clubs use a service charge effectively to offset part of their labor cost. When the club pays the entire service charge to its employees, the proper labor costs should be reduced by the amount of the service charge to the members. If the club retains a major portion of the service charge, the portion of the service charge levied to raise revenues should be credited to Other Revenue and the portion meant to offset labor costs should be credited to the proper labor cost accounts.

We have an extensive golf operation at our resort. Is it appropriate for us to use guidelines from the Uniform System of Financial Reporting for Clubs for financial reporting?

Question:

Answer: Yes, you are welcome to use guidelines from the various financial reporting systems. Many resorts face difficulties because their golf, restaurant and spa facili-ties are very complex and they need further detail to make appropriate management and financial decisions. Therefore,

The Bottomline 7

Q&A from the Research Institute

these properties can use either the USFRC, Uniform System of Financial Reporting for Spas (USFRS) or the Uniform System of Accounts for Restaurants (USAR) for guidelines on further detail. The only requirement is that the reported fi-nancial statements need to be in compliance with the USALI for comparability purposes.

Where can I purchase copies of the various financial reporting systems?

pitality industry is a very complex issue; therefore, from one committee to the next there can be different perspectives. One other factor is the fact that the publications are written at different times/locations. A committee discussing golf operations for the lodging system is not privy to the discus-sion of the committee discussing golf for the club systems. Revising the uniform systems is a very complex matter, and in the future, there is certainty that the committees working on the projects will strive to coordinate their efforts.

USALI Discussion GroupFor those of you with questions pertaining to the 10th edi-tion of the USALI, there is a great resource offered by the AH&LA. When the 10th edition was created, AH&LA de-signed a discussion forum to field questions on any changes that were made and interpretations of the latest edition.

It is very simple to use the forum. All you need to do is visit the following link and complete a few simple steps.

http://forums.ahla.com/forum.asp?FORUM_ID=8

First of all, you will need to register before you are able to post a question. Just click on “Register” in the upper right corner and you will be guided through the free process. Once you post a question in the forum, it will be forwarded to the appropriate person on the committee that was respon-sible for writing the section in question.

If you have any questions pertaining to this forum please contact Tanya Venegas at [email protected].

Question:

Answer:

Question:

Answer:

The USFRC, USFRS and the USALI are all available through the American Hotel & Lodging Asso-ciation (AH&LA) Educational Foundation at www.ei-ahla.org. Many of these publications can also be found at online retailers such as Amazon with a simple Internet search. The USAR is currently out of print and limited copies can be found by searching the Internet.

It appears that there are some conflicting guidelines between the different uniform systems (lodging, clubs, restaurants and spas). Which standard should we use when reporting for our resort?

Yes, there are some conflicting guide-lines when the three major systems (USFRC, USFRS and the USALI) are compared. Ideally, all of the systems should be interchangeable and provide the same guidance, but in reality there are some minor differences. The most important test is to determine the primary function of the business. If it is a resort, then your primary business is probably operat-ing a lodging facility with a golf and spa operation. There-fore, when there are differences, you would want to use the guidelines set forth in the USALI. Of course, for bench-marking purposes, you will need to take this into account. For example, if you want to compare your spa operation, you will need to know how the differences in the financial reporting system for spas and lodging facilities will impact the benchmarks.

Many ask why there are differences in the different financial reporting systems. There are a couple of reasons for the differences. First of all, each system is produced and/or owned by a different entity. In addition, the committees in-volved in writing and revising each system are different and offer different industry perspectives. Accounting in the hos-

Each hospitality sector has unique accounting standards.

http://forums.ahla.com/forum.asp?FORUM_ID=8


http://www.ei-ahla


HFTP News & Notes

Professional Development

EHTEC 2009Featured Sessions Provide Insight for European HoteliersBy Katy Walterscheidt

For the third year, hospitality technology professionals from across Europe and the globe convened in Amster-dam February 2 – 4 at the 2009 European Hospitality

Technology Educational Conference (EHTEC). Delegates gathered to talk about issues like environmental responsibil-ity, short-range wireless networks, understanding the Millen-nial Generation, optimizing hospitality business processes and more. Here is a glimpse into two of the featured sessions at EHTEC 2009.

Let the Citizen Take ControlIf you’re one of the few that hasn’t heard of citizenM, short for Citizen Mobile, it is a hotel company breaking the mold of traditional hotel chains by offering more control for guests through the use of technology. Geared towards seasoned travelers, the hotel offers easy access, affordable costs and a contemporary setting. With two hotels in Amsterdam, the hotel is planning to expand across Europe to all major cities.

CEO of citizenM, Michael Levie, shares the hotel’s system of the guests’ use of technology during the session “Hiring Technology — How Guests Can Do Our Work.” Based on citizenM’s approach to customer service, Levie’s session discussed how hotels can use technology to free up employees and give more control back to guests. Levie as-sures us that customers like the freedom of using technology to check themselves in and out of the hotel and the ability to choose their room settings.

The hotel uses a combination of Application Service Providers (ASP) with Customer Relation Management (CRM), Property Management Systems (PMS) and Point of Sale (POS) systems that connect to a Philips ambient room system. At citizenM, rooms can be customized when the reservation is made, at the self check-in kiosk or on the touch screen moodpad in the room. Personal settings include choice of lighting, temperature, window treatment, televi-sion, music and a wake-up system. Guests’ settings saved on the personal key card are adjusted in the room instantly and saved for the next stay.

Levie does note that, “A friendly smile and personal warmth cannot be replaced or taken out of the hotel indus-try.” So while hotel employees aren’t doing typical front desk tasks, customer service is a highly-lauded feature at

citizenM. Levie says that customer feedback reveals that ser-vice at citizenM is only outshined by the extremely comfort-able beds. And with all the free time, employees are able to serve up a nice cocktail or use their barista training to make you a cappuccino.

With the combination of technology, customer service and guest participation, citizenM is creating a new model for European hotels. Levie said, “Guests appreciate being back in control and finally treated for who they are, not for who the hotelier wants them to be.”

Hoteliers and IT Companies — Working TogetherWith over 40 years of hospitality industry experience, re-cently completing a 444-room hotel renovation and receiv-ing the title of Caterer & Hotelkeeper magazine’s 2007 “UK Hotelier of the Year,” Michael Gray knows a thing or two about what hoteliers want. During his EHTEC 2009 session, Gray, general manager of the Hyatt Regency London — The Churchill, discussed “What Hoteliers Really Want From Hospitality IT Companies.”

According to Gray and his IT manager Holger Wunsch, hoteliers are looking for companies that can deliver what they offer. They also are interested in IT consultants that have hospitality-oriented expertise; flexibility to work with

The Bottomline 9

Professional Development

How’s your finance knowledge? Test yourself with this question found on the CHAE exam

CERTIFICATIoN CALL

By Stephen M. LeBruto, CPA, CHAE, Ed.D.

Answer:

Question:

the hotel’s unique schedule; account and project manag-ers that are available when needed; someone that provides provisions for consultations, instead of just acting like a supplier; provision of complete IP systems, networked enter-tainment, marketing and helpdesk solutions; and flexibility and fair pricing policies.

But Gray notes that constant dialogue is key to success, whether that’s through e-mails, telephone calls, face-to-face meetings or even a newsletter. “Ensure that a good relation-ship can develop between you and the IT company, and that the right lead person on the team relates well with the project specialists working on the project.”

The relationship between hoteliers and IT companies is important with the rise in guest expectations for technology. “The new generation of guests expects customized services to get the ultimate connectivity everywhere — Internet, e-mail, personal content Internet television, PC and mobile devices,” said Gray.

Even though Europe is behind Far East Asia in regards to technology, there is visible progress to providing digital in-room entertainment. Televisions are being upgraded to LCD and there is increased demand for free, high-speed Internet ac-cess. And with the rise in IP technology, hotels must improve personalized guest services. “There will be a need to find other ways to generate revenues, as IP technology will most likely lead to the final extinction of telephone revenues.”

With the increase of technology demands from guests, hoteliers and IT companies will be working closer together more than ever before. So it is imperative now that relation-ships are strong between hoteliers and their IT companies.

other EHTEC 2009 Featured SessionsGlobal Hospitality Trends: Profit From Change Chekitan Dev, Ph.D., is a professor at Cornell University,

School of Hotel Administration.

Using Mobile Technology — Re-engaging the Customer Tim Jefferson is the managing director with the

Human Chain.

Short Range Wireless Networks and Possible Applications in Hotels

Frank Breugelmans is vice president of corporate sales, hospitality for Siemens. Jeremy Ward is senior vice president of IT for Kempinski Hotels.

The Millennial — our Associates and our Guests Chekitan Dev, Ph.D.

Savings with Kiosk Use in Hotels Laurent Cardot is a managing director with Ariane

Systems Group. Lennert de Jong is director of distribution and business development for CitizenM Hotels. Riko van Santen is vice president of electronic distribution and IT for Golden Tulip Hospitality Group.

The “ Financial Accounting “ section of the exam includes questions on the financial impact of errant entries made during the year. Candidates are asked a series of questions to test their knowledge

of how entries can effect the financial statement. The following question is typical of an errant entry question.

Shoemaker Inn’s rookie assistant restaurant manager understated the ending food inventory for the month of November. December purchases, transfers and ending inventory numbers are recorded correctly. What effect, if any, does the November error have on December’s Financial Statements?

a. None, since the error was in November

b. December’s Cost of Food Sold is understated, causing income to be understated

c. December’s Cost of Food Sold is understated, causing income to be overstated

d. December’s Cost of Food Sold is overstated, causing income to be understated

This question reminds the candidate that errors in one month may transcend over several months until it is resolved. Since the ending inventory for November is understated, the beginning inventory for December is understated. Since the beginning inventory is understated and purchases for December are recorded correctly, goods available for sale are understated. Given that the ending inventories and transfers are recorded correctly, cost of goods sold is understated. Since cost of goods sold is understated, we have recorded less expenses than we should have and thus have overstated our income. The answer is C.


IT SpendingMoney-saving Tips

By Terry L. Price, CHAE, CHTP, CPA

As many have closed the books on 2008, we look back and say, “Boy, I’m glad that’s over!” Then we begin to look at the 2009 projections and a resounding “OMG” (ask your teenager) rings forth. Economists say that

we will not begin to see an upward turn in the economy until 2010. People will be cutting back on spending and that translates into less revenue for us. Occupancy will be down, memberships will decrease and we will be forced to tighten our belts as well. The question is where do I find that extra link on the belt? I would like to share some ideas that may squeeze a few dollars out of your IT budget.

PC EvolutionTo buy a new PC or not to buy a new PC? That is the question. Many technologists (computer geeks), including myself, have been preaching to refresh the technology every three to four years. Technology advances and we need bigger, better, faster have been our back-up reasoning. Do we really? Take a look at the progression of the PC over the last several years. From 1998 to 2001 the Central Processing Unit (CPU) frequency increased from 486 MHz to 1.1 GHz, nearly tripling in speed over a three year period of time. When Intel introduced the Pentium chip, the result was a frequency increase to 2.1 GHz by 2002 and then to 3.1 GHz by 2003, only taking two years to triple in speed. We could not keep up with the technol-ogy. As soon as we purchased a PC, it was outdated and a newer, faster model was released. It was frustrating to make any purchasing decisions. “Should I wait

Terry Price, CHAE, CHTP, CPA is the executive IT manager at the The Grove Park Inn Resort & Spa in Asheville, N.C. Price is also the HFTP Global Vice Presi-dent and a frequent speaker at HFTP educational conferences.

SHoULD I BUy A NEW PC?Maintain the health of a PC to squeeze a few dollars out of your IT budget

The Bottomline 11

www.arda.org


for the next model before I buy,” was rushing through our heads. At that pace, our PCs today should be running at around 80 GHz speed. In reality, the frequency speed of the CPU has made minimal increases since 2003. Instead of making the processors faster, they began putting multiple processors on the same chip. This allows the computer to handle twice (dual-core processors) or four times (quad-core processors) the amount of data at the same time. The data is not going any faster, there’s just more avenues available to process it. An example would be a car driving down a road at 60 MPH (CPU speed). If there is only one lane of traffic (single-core processor), it takes longer for all the cars to get to their destination than it would if we had four lanes of traffic (quad-core processor). Logical process would tell us that we need the quad-core processors. That may not be the case. While I am writing this, I have word processing, presentation software, Internet browser, e-mail, property management system and Windows task manager all open at the same time and I am using one to two percent of my dual-core 2.4 GHz processor. The soft-ware we use each day at work does not require very much processing power. I have a two-lane highway, but there are usually only a handful of cars on the road at any given time. That is the case with most of the PCs that are sitting on our desks. Do we need a new PC? I would say probably not.

Taking Care of the EnvironmentIf we are going to keep our PCs longer, we have to consider factors other than just CPU speed and RAM. A PC is a

physical piece of equipment that needs TLC in order to keep working at top performance. The issues that keep a PC running at top performance center on the environment in which the machine is working. The CPU of a computer op-erates by sending millions of electrical signals across very small wires at very fast speeds. This causes the CPU to heat up to between 125

F to 175

F (50

C to

80 C). This would be the normal range

of operation; however, the temperature can get much higher. Running the CPU at higher temperatures will cause the physical degradation of those small wires over time, causing the machine to stop functioning properly. Sources on the Internet say (and if it says it on the Internet, it must be true) that a 10

C increase in the core temperature of a processor will reduce the life of the component by 50 percent. Likewise, a 10

C decrease in the core temperature of

a processor will increase the life of the component by 100 percent. Moral of the story, cooler is better.

A PC has built-in defenses to help keep the core temperature as cool as possible. The heat sink (the radiator looking thing) is designed to draw the heat away from the processor allowing the fans to blow the heat out. Our job is to assist this process as much as pos-sible. Here are some ways we can help.

Make sure there is adequate space around the computer. There needs to be enough room to allow air to flow freely through the machine. Avoid placing the computer in confined places such as in-side a cabinet. Most computers draw air from the front of the machine and blow it out the back. Avoid putting items next to the front or back of a PC such

as stacks of papers, posted notes, stick-ers and pictures. Adequate airflow can only be achieved if nothing is blocking the front or back of the machine.

Keep the PC clean. Dust can ac-cumulate very quickly on the inside of a PC making it very difficult to allow proper airflow. You need to open up the machine on a regular basis and blow the dust out of it. Use only the approved, static free, canned air products to do this. Avoid using a vacuum cleaner or a standard air compressor as these tend to generate static electricity. How often you need to clean the PC depends on the location. Some machines need to be cleaned every couple of weeks, and some only every couple of months. If the computer is in a very dusty area, you may consider placing some filter material on the front of the machine to help keep the dust out; however, make sure you clean the filter regularly.

Keep the PC away from a heat source. One of the locations that I quite often see a computer placed is under the desk. This is a great location to hide the computer and keep the top of the desk clean and organized. There is nothing wrong with this location, except when it is combined with a small space heater under the desk. This is causing the computer to attempt to cool itself with heated air. If you need a space heater under your desk to keep your legs warm, place the PC back on top of the desk so it can have cool air to circulate.

There are other factors concerning where a PC is located that can affect the longevity of the equipment.

Temperature. PC manufacturers rec-ommend that a computer be operated in an environment where the temperature is between 60

F and 75

F (15

C to 24

C).

If the temperature is too hot, it makes it difficult for the PC to cool itself down. If the temperature is too cold, conden-sation can build up on the components and cause them to short out.

Humidity. The recommended level of humidity to operate computer equip-ment is between 35 and 65 percent. Working in a more humid environment can cause condensation to build up. Water and electronics is not usually a

Environmental PrecautionsMake sure there is adequate space

around the computer Keep the PC cleanKeep the PC away from a heat sourceMonitor temperature and humidity

levels

Maintaining Top SpeedUpgrade the RAM Uninstall unnecessary software Defragment the hard drive Clean off SpywareClean the registry Format the hard drive

Extending the Life of your PCFollow these suggestions to maintain your PC’s health and speed.

Money-saving Tips

The Bottomline 1�

good mix. If the working environment is too dry, then static electricity can build up and cause the components to be zapped.

We do not always have control of all the environmental factors that we have to operate in. I was recently in Jamaica sitting at the pool bar and it was 85

F, humid, moisture rising from

the pool and sand blowing around. Ask my wife and she would tell you the environment was perfect. Ask the PC on the counter and it would say, “Not liking it so much, mon.” When we have equipment that has to operate in conditions outside of the recom-mended environment, establish an equipment rotation program. Machines can operate outside of the recom-mended range for short periods of time without experiencing long-term damage. Exchanging a machine from a good environment with a machine from a bad environment will help keep all the machines working longer. How often depends on the severity of the environment. The more extreme the environment, the more often it needs to be exchanged. When exchanging the equipment, or getting a new piece of equipment, it is good practice to allow the machine to acclimate to the surroundings 24 hours before plugging it in and turning it on.

The core temperature of a CPU increases the more it has to process. The more electrical pulses flying through, the hotter it gets. One practice that elongates the life of the machine is to distribute processes more evenly. Instead of allowing one machine to do several intensive processes, have sever-al machines doing one intensive process each. This will allow all the machines to operate within their normal tempera-tures and keep them alive longer.

Picking Up SpeedAt this point you may be thinking, “Yes, my machine is still running, but it is rrruuunnniiinnnggg toooooo sssslll-loooooowwwww!!!!” A PC that has been used a few years may seem to be much slower than when it was originally purchased. Here are some possible fixes.

Random Access Memory (RAM). The software that we are using does not require much processing power. They do, however, have a hunger for RAM. A PC should have at least 2GB of RAM to function properly moving forward. I would suggest 4GB if you are attempt-ing to, or considering attempting to, run Windows Vista.

Uninstall unnecessary software. Machines purchased from manufac-turers are delivered with a “bundled software package.” The bundle should have a Glad label on it because they are mostly trash. Open the Add/Re-move Programs option in your Control Panel and remove any of the software that you are not using. It is just taking up space on your system and in some cases, loading processes that are using up resources.

Defragment the hard drive. A com-puter stores its information by using a read/write head to place information on a platter similar to a record on a record player (teenagers ask your parents). When files get written to the drive, there is not always space to store the file all together. The computer then has to store part of the file in one location and the remainder of the file in another and sometimes several different locations. This is called a fragmented file. Imagine the needle of a record player bouncing back and forth if the songs were stored on different parts of the record. The hard drive has to move around to gather all the information it needs. The more fragmented files, the harder it has to work. Running the Disk Defragmenter Utility provided with Windows, reduces the number of fragmented files and al-lows the system to run faster.

Clean off Spyware. Spyware are small programs that get downloaded and installed on the computer. They are usually installed through Web brows-ing. They range from the annoying Internet pop-up to the evasive keyboard loggers that capture your account and password information. These programs

get loaded in the background and use the computers resources, causing the computer to start slowing down. Spy-ware cleanup utilities can be found on the Internet and many are free.

Clean the registry. The registry, for a Windows machine, is the list of instruc-tions that the computer uses to run. As software and hardware are installed and uninstalled, a computer will accumulate instructions that are no longer neces-sary. A registry cleaning utility analyz-es your registry and assists in removing any instructions that are not needed. The reduction of instructions allows the computer to run more efficiently. As a precaution, I would discuss the use of a registry cleaning utility with your software providers.

Disable start-up processes. Soft-ware solutions that we install on our computers have small programs that start running every time you turn on your computer. These small programs are designed to allow that particular software to respond quicker. This may be true, but they are also using the re-sources of the computer and causing the other programs to run slower. You can disable those processes from loading by running the Microsoft Configuration Utility. To run this utility click Start> Run then type MSCONFIG and hit OK. Go to the Startup tab and disable any of the programs that are not needed.

Format the hard drive. Sometimes it is just best to get a clean start. By for-matting the hard drive and re-installing the operating system, you will eliminate all the “garbage” that has accumulated on the computer over time. This will bring the machine back to its original performance.

As we work through these tough times, we need to operate as lean as we can. Better use of what we have is the best way to save dollars in your IT budget. I just ask one favor. If you re-duce the budget for your IT department, please do not tell them it was my idea.

How to Save Money When PurchasingLook for Terry Price’s follow-up to this article in the April/May 2009 issue, when he gives money-saving tips for purchasing new hardware and software.

Money-saving Tips


What Version 1.2 and PA-DSS Mean to Your Operation

by Mark G. Haley, CHTP and Daniel J. Connolly, Ph.D.

Mark G. Haley, CHTP ([email protected]) is a partner at The Prism Partnership, LLC, a Boston-based consultancy servicing the global hospital-ity industry in technology and marketing. Daniel J. Connolly, Ph.D. ([email protected]) is an associate professor of IT at the University of Denver with dual appointments in the School of Hotel, Restaurant and Tourism Management and in the Department of Information Technology and Electronic Commerce. Both are frequent speakers at HFTP conferences.

Changes in technology necessitate ongoing audits and the implementation of newer and tighter security measures. Hoteliers weren’t certain how to react when they first heard about the Payment Card Industry (PCI) Data Security

Standards (DSS). Beginning in 2005, this initiative by the major card-issuing brands (Visa, American Express, MasterCard, Discover and Japan Credit Bureau) started to impose strict obligations of self-regulation on all merchants accepting payment cards (i.e. credit and debit cards). This includes most businesses, includ-ing just about every hotel in the world. Meeting these obligations required hoteliers to develop new competencies never before required and to invest in technology, people and business processes to better safeguard guest data and to improve secu-rity practices across the organization. In many cases, the changes required by the standard to achieve compliance were costly to achieve and lacked an easy return-on-investment calculation. Nevertheless, the changes were important, necessary and represented good business practices for all merchants to follow.

Given that change is inevitable (especially when it comes to technology), it is a hotelier’s responsibility to stay current and adapt accordingly. In the case of PCI, the reasons to stay on top of the standard and ensure compliance are compelling and go beyond the fact that compliance is being mandated. First, compliance is a business obligation. It is part of the contract or merchant agreement that hoteliers sign allowing them to accept credit and debit cards as forms of payment in their operations. Second, one’s reputation is at risk. Consumers want to do business with organizations in which they can trust. Moreover, the media is quick to publicize breaches. Third, the financial penalties and legal litigation are costly, as are the re-medial action required by the banks and payment card companies. Finally, it is the smart and ethical thing to do. Hoteliers have a responsibility to protect their guests and the data they collect about them.

Technology UpdateData Security

STAyING CURRENT WITH THE PCI STANDARD




Updated Standards — v1.2As with any standard, one of the dismaying things about PCI is that it sometimes can seem to be a moving target, but this is necessary due to the ever-changing nature of technology and the increase in security threats. In recent months, the body that maintains the standards on behalf of the card issu-ing brands, the PCI Security Standards Council (SSC), issued version 1.2 of the standard and published newer requirements for the computer systems that process payment card transactions (Payment Application Data Security Standards, or PA-DSS). For many, the updated standard may seem both frustrating and daunting, especially for those just trying to achieve compliance with the earlier version of the standard.

Version 1.2 of the DSS contains 122 individual changes from version 1.1, which was rendered obsolete as of De-cember 31, 2008. The good news is that the changes are not radically different from what was first proposed. Instead, they mostly provide clarifications and refinements to make the standard easier to understand and follow. The new standard keeps with the spirit of its predecessor, but offers improvements

clearly designed to support the compli-ance effort. Thus, hoteliers can and should continue working to evaluate and enhance their business processes, technology, training, policies and over-all security to better protect their opera-tions and safeguard their guests’ data.

One significant change in the stan-dard is that the SSC has combined the requirements with the assessment or verification content for each require-ment. This format change puts the stan-dard and the test for compliance all into the same document, making it easier to manage and scope the compliance pro-cess. If only for this improvement, the SSC deserves kudos for improving the circumstances of a merchant moving towards compliance.

Launching of the PA-DSS also benefits the merchant community. PA-DSS was formerly administered by Visa as the Payment Applications Best Practices program. Moving the soft-ware vendor-oriented standards to the stewardship of the SSC allows this very important set of security standards to be administered in parallel to the mer-chant-oriented standards defined in the DSS. This means better consistency for merchants and vendors. Moreover, it

clarifies the delineation between main-tenance of the standards (the province of the PCI SSC) and the enforcement of the standards (reserved by the card-is-suing brands to themselves).

All told, the new 1.2 version of the PCI Standard, in conjunction with the release of the PA-DSS, represents an improvement for hoteliers conscien-tiously working to achieve and maintain compliance. Looking ahead, the reason-able inference is that the PCI standard will continue to evolve over time, with most changes being incremental rather than radical and provided with a reason-able lead time before enforcement of new requirements goes into effect.

EnforcementEnforcement of the PCI standards is done by the card-issuing brands through the merchant acquirers. The brands impose fines (which can be quite steep) on merchants for failure to comply and report on compliance activities. The merchant agreement that every mer-chant must sign in order to accept credit cards gives the brands this privilege. The standard defines what software vendors need to do in their applications like property management systems (PMS) or point-of-sale (POS) systems to make them comply with the standard: Never store full track data, the

entire contents of one or more of the “tracks” of data on the magnetic strip on the back of a card, including Primary Account Number (PAN) and the verification code.

Encrypt card holder data in the data-base and in transmission.

Require user log-in security with strong passwords.

Log potential intrusion events. Pay to have systems, processes and

coding evaluated and approved by an approved, PA-Qualified Security Assessor (QSA).

These requirements are all reason-able and useful to protect cardholder data, the merchants themselves and the integrity of the global payment system. However, software vendors are unlikely to take on the expense and effort (not

Visa’s Enforcement PhasesPhase Compliance Mandate Effective Date

I Newly boarded merchants must not use known vulner-able payment applications, and VisaNet Processors (VNPs) and agents must not certify new payment ap-plications to their platforms that are known vulnerable payment applications

Jan. 1, 2008

II VNPs and agents must only certify new payment appli-cations to their platforms that are PA-DSS-compliant

Jul 1, 2008

III Newly boarded Level 3 and 4 merchants must be PCI DSS compliant or use PA-DSS-compliant applications*

Oct 1, 2008

IV VNPs and agents must decertify all vulnerable payment applications**

Oct 1, 2009

V Acquirers must ensure their merchants, VNPs and agents use only PA compliant applications***

Jul 1, 2010

* In-house use only developed applications and stand-alone POS hardware terminals are not applicable

** VisaNet Processors (VNPs) and agents must decertify vulnerable payment applications within 12 months of identification

*** Date is aligned with TDES mandate for all POS PEDs to support TDES and be Visa-Approved/Lab-Evaluated

Source: http://usa.visa.com/merchants/risk_management/cisp_payment_applications.html

Data Security

http://usa.visa.com/merchants/risk_management/cisp_payment_applications.html

The Bottomline 17

to mention diversion of resources from other initiatives) unless their customers demand evidence of certified compli-ance as part of their product evaluations and purchase decisions. Ultimately, the onus of compliance falls upon the mer-chant. Therefore, it is very important for hoteliers to hold their technology vendors accountable for compliance.

The standards require merchants to use systems that comply now. A visit to Visa’s web site suggests that Visa will be enforcing this requirement in phases as shown in the table on page 16.

If an application is identified as “vulnerable” (typically one storing full track data), the acquirers must decer-tify it; that is, disconnect it from their network and not allow the processing or transmission of transactions from these systems. This action must be taken within 12 months of identification or by October 1, 2009. Ratcheting up the enforcement mechanism, acquiring banks will be required to actively verify that all systems used in all merchant locations are using software systems verified to comply with the PA-DSS.

In other words, if a merchant does not have PA-DSS certified systems throughout its hotel company, the organization now has about a 16-month window left to budget for, source, select and install them. For an enterprise with multiple systems or multiple properties, 16 months is not a very long time. In addition to PMS and POS, systems to evaluate include: Central reservations systems (CRS) Guest history and loyalty systems Point-of-sale systems (restaurant,

retail, spa, parking) Sales and catering systems (Note:

sales managers are famous for put-ting credit card numbers into unen-crypted comment fields and writing credit card numbers in notes stored in unsecure, manual files.)

High-speed Internet access systems (HSIA)

E-commerce enabled web sites

In short, anything that captures a credit card number that ends up at the hotel, even if the system is physically

located elsewhere (such as the CRS), is impacted by the PCI standard and must be evaluated for compliance.

The first thing for a hotelier should do is to check the list of currently-certified Payment Applications found at https://www.pcisecuritystandards.org/security_standards/pa_dss.shtml. Look for key systems by vendor name. If they are on the list, verify that all versions currently in use are in fact the certified ones. Remember, certification is based upon software version, not the vendor itself. If your vendors are not on the list (a pretty high probability), one should request a formal statement in writing from vendors as to their current status relative to compliance certifica-tion, their plans to obtain certification and a specific timeline for the specific software versions in use.

If satisfied with the responses re-ceived from the vendors, one can move on to review other security practices and business procedures within the organization. If a vendor response is unsatisfactory, one must make a value judgment — either find a replacement product or accept the risk of not being able to process credit cards through that system.

The focus on enforcement of PA-DSS compliance for July 2010 in no way relieves the hotelier of the other elements of PCI compliance. Often overlooked in compliance include:

Ignoring paper-based processes and reports involving credit cards, including PMS reports, registration cards with imprints, reservation cards for groups, etc. PCI compli-ance extends to all of these areas.

Ensure that your network is secured and tested. Knowing that your franchisor and software vendors are compliant doesn’t mean that you are compliant. You must ensure that your firewalls, anti-virus and other network security elements are in order, not to mention your security policies and training procedures. These elements must be implement-ed, documented and tested regularly.

Establish a culture of security and respect for customer privacy in your hotel. The human factor is paramount in security and often the weakest link.

Assign ownership of compliance to an empowered individual with authority and budget to achieve nec-essary changes in the organization.

Compliance, coupled with the broader concern of privacy rights, is a task for all of us in the business of serving hotel guests. This is not an op-tion, but an important business obliga-tion. Consider the costs and efforts of compliance as an investment in guest service, which is why we are all work-ing in hotels in the first place.

Additional Sources of InformationVisit these web sites to for further details on PCI compliance.

The PCI Security Standards Council www.pcisecuritystandards.orgThis site offers the standards themselves and numerous other useful documents supporting the compliance journey.

The American Hotel & Lodging Association www.ahla.comThe AH&LA Technology & E-business Committee published two useful resources with rich content specific to hotels: The Payment Card Industry Compliance Process for Lodging Establishments and Principles of Privacy. Both are available to download, free to AH&LA members or for a nominal fee for nonmembers.

Visa, the card issuing brandusa.visa.com/merchants/risk_management/cisp.html?ep=v_sym_cisp Visa has been probably at the leading edge of defining compliance and driving the merchant community to accept it.

Data Security

http://www.pcisecuritystandards.org

http://www.ahla.com

usa.visa.com/merchants/risk_management/cisp.html?ep=v_sym_cisp

https://www.pcisecuritystandards.org/security_standards/pa_dss.shtml


For years the U.S. Securities and Exchange Commission (SEC) has supported the idea of a unified worldwide accounting system and has made strides towards this goal in recent years. A major step occurred in August 2008 when

the SEC unanimously voted to propose a road map for conversion and eventual adoption of International Financial Reporting Standards (IFRS). The road map is available for comment until February 19, 2009. Depending on the company’s size, the proposed road map would require the mandatory use of IFRS beginning in 2014, 2015 or 2016 (Ostling, 2009).

History of U.S. GAAPTo gain a better understanding of the convergence of the two accounting systems, the first step is to understand the history behind the systems. Modern accounting in the United States started as a result of the Great Depression. The nation was facing a crisis and investors could not understand why companies that posted profits on their books were, in reality, loosing excessive sums of money. Since there was not a separate governing body to oversee accounting principles accountants were left to do as they please and satisfy the needs of corporate management. At that time, the primary job responsibility of accountants was to make corporate management look good (Le Moine, 2004).

THE PATH To IFRS CoNVERSIoN

Tanya Venegas, MBA, MHM, is program director of the HFTP Research Institute at the University of Houston and frequent speaker at HFTP conferences.

Financial Reporting

Accounting Standards

Moving toward a worldwide accounting system with the International Financial Reporting StandardsBy Tanya Venegas, MBA, MHM

The Bottomline 19

As a result of the Great Depression fallout, the American Institute of Certi-fied Public Accounts (AICPA) created the Committee on Accounting Proce-dure (CAP) to set rules, standards and oversight of professional accountants. The CAP operated between 1938 and 1959 and set forth 51 authoritative an-nouncements (Bateman & Co., 2002). In addition, the SEC was created which required audit reports for all companies publicly traded in the United States (Le Moine, 2004).

By the late 1950s the CAP was un-able to keep up with the needs of the accounting industry. The economy was expanding and new rules and proce-dures needed to be enacted; therefore, the AICPA replaced the CAP with the Accounting Principles Board (APB) in 1959. The APB set forth 31 new standards over a time period of 14 years (Bateman & Co., 2002). There was still a desire from the community to have an independent rule-making body that could address needed rules in a timely manner. In 1973 the Financial Account-ing Standards Board (FASB) was cre-ated and replaced the APB (Le Moine, 2004). The SEC currently recognizes the FASB as the official accounting rules-making body in the United States.

History of IFRSThe history of international accounting standards reaches back to 1966 with the development of an International Study Group made up of the Institute of Chartered Accountants of England & Wales (ICAEW), AICPA and the Cana-dian Institute of Chartered Accountants (CICA). This group resulted in the formation of the Accountants Interna-tional Study Group (AISG) who began writing papers on important accounting topics (Institute of Chartered Accoun-tants in England and Wales, 2009).

The first official international standards group was established in June 1973 and was called the Interna-tional Accounting Standards Committee (IASC). The intent of the IASC was to set International Accounting Standards (IAS) that would be accepted and imple-mented around the world. All together,

41 international accounting standards were released by the IASC between 1973 and 2000. To assist with interpret-ing the new international standards, the Standing Interpretations Committee (SIC) was established in 1997 to avoid variances in interpretations and practice (Institute of Chartered Accountants in England and Wales, 2009).

In April 2001, the International Accounting Standards Committee was restructured to create the International Accounting Standards Board (IASB) which would issue new standards as IFRS. The first IFRS was published in June 2003. In December 2001 the SIC also received a makeover and was

renamed the International Financial Reporting Issues Committee (IFRIC) (Institute of Chartered Accountants in England and Wales, 2009).

The next major step for the IFRS oc-curred in June 2002 when the European Council of Ministers approved the regu-lation to require all EU companies to report using IAS for accounting periods beginning on or after January 1, 2005. The European Commission confirmed the requirement of IAS for EU compa-nies on September 29, 2003; with the hope that it would improve transparen-cy and increase the movement of capital (Institute of Chartered Accountants in England and Wales, 2009).

The PriceWaterhouseCoopers National Professional Services Group named several benefits in their document “IFRS: The Right Step for US Business.”

BENEFITS TO IFRS CONVERSION

Conversion to IFRS will: Increase comparability for investment analysis; Enhance the efficiency of capital allocation on a global basis and decrease

the overall cost of capital; Increase the competitiveness of U.S. companies and capital markets by

eliminating barriers (costly requirements to report in, or reconcile to, other GAAPs);

Reduce accounting complexity and the risk of errors; Generate process and cost efficiencies for preparers, investors, auditors

and others by operating in essentially a single accounting environment. (PriceWaterhouseCoopers, 2007)

The ultimate decision to convert will occur in 2011 when the SEC will make the final decision on whether to proceed with implementing International Financial Reporting Standards (IFRS). Included in the road map set forth by the SEC are seven milestones which must be met before conversion.

MILESTONES BEFORE CONVERSION71. Improvements in accounting standards;2. The accountability and funding of the International Accounting Standards

Committee (IASC) Foundation;�. The improvement in the ability to use interactive data for IFRS reporting;4. Education and training relating to IFRS;5. Limited early use of IFRS where this would enhance comparability for U.S.

investors;6. The anticipated timing of future rulemaking by the Commission; and 7. The implementation of the mandatory use of IFRS by U.S. issuers.

(Securities and Exchange Commission, 2008)



How Will the Conversion to IFRS Be Beneficial?First of all, there are many reasons why the shift to IFRS is occurring. Accord-ing to the PriceWaterhouseCoopers Na-tional Professional Services Group there are four primary reasons: globalization, complexity of current U.S. standards, convergence of U.S. GAAP and IFRS is complicated and IFRS will create cost efficiencies for companies (PriceWa-terhouseCoopers, 2007). The SEC also believes it will be easier for investors to compare companies operating in dif-ferent countries and for corporations to raise capital (Ostling, 2009).

Companies already operating in mul-tiple markets will see the greatest benefit in a conversion to the IFRS. It is likely that these companies are already work-ing with the IFRS and conversion will streamline their operations so that they do not have to reconcile to U.S. GAAP. In addition, many accounting functions can be centralized and financial employ-ees could be easily transferred from one country to another without major educa-tional challenges (American Institute of Certified Public Accountants, 2008).

The PriceWaterhouseCoopers Na-tional Professional Services Group also named several benefits in their docu-ment “IFRS: The Right Step for US Business.” Conversion to IFRS will: Increase comparability for invest-

ment analysis; Enhance the efficiency of capital

allocation on a global basis and decrease the overall cost of capital;

Increase the competitiveness of U.S. companies and capital markets by eliminating barriers (costly require-ments to report in, or reconcile to, other GAAPs);

Reduce accounting complexity and the risk of errors;

Generate process and cost efficien-cies for preparers, investors, auditors and others by operating in essentially a single accounting environment. (PriceWaterhouseCoopers, 2007)

This is only a short list of benefits that companies could experience after instituting the use of IFRS.

Conversion ConcernsThe ultimate decision to convert will occur in 2011 when the SEC will make the final decision on whether to proceed with implementing IFRS. Included in the road map set forth by the SEC are seven milestones which must be met before conversion. These milestones include:1. Improvements in accounting

standards;2. The accountability and funding of the

IASC Foundation;�. The improvement in the ability to use

interactive data for IFRS reporting;4. Education and training relating to

IFRS;5. Limited early use of IFRS where this

would enhance comparability for U.S. investors;

6. The anticipated timing of future rule-making by the Commission; and

7. The implementation of the manda-tory use of IFRS by U.S. issuers.

(Securities and Exchange Commis-sion, 2008)

One of the biggest concerns listed above is funding. Currently, the IASB, who is in charge of developing the IFRS, is funded by the IASC Founda-tion. The IASC Foundation gathers funding from numerous resources such as firms in the accounting profession, various companies, international orga-nizations, central banks and govern-ments. Before implementing IFRS for use in the U.S., the SEC must confirm that the IASB has stable and indepen-dent funding capabilities (Securities and Exchange Commission, 2008).

Another concern set forth by U.S. constituencies is handing over power to an entity outside of the U.S. and outside of the control of the SEC. Americans may not have complete control over the creation of IFRS, but both the SEC and the FASB have played a significant role in the creation of these standards. In addition, three Americans are currently members of the IASB and five of the 22 trustees charged with overseeing the board are American (PriceWater-houseCoopers, 2007).

Even though the standards have been adopted in over 100 countries, many

of these countries have retained power over the standards and reserve the right to modify standards when necessary for national interest (American Institute of Certified Public Accountants, 2008). For example, in Australia standards must be approved by the local standard-setting body before they can be used by Australian companies (PriceWater-houseCoopers, 2007). It is likely that in the U.S. the SEC will retain oversight over the adoption of IFRS.

Convergence of the IFRS and U.S. GAAPAs stated earlier, the SEC for many years has supported international stan-dards. The first official move towards acceptance of international standards in the U.S. occurred back in 2002 when the FASB and the IASB came together to forge the Norwalk Agreement. “This agreement established a joint commit-ment to develop compatible accounting standards that could be used for both domestic and cross-border financial re-porting” (American Institute of Certified Public Accountants, 2008).

The SEC made its first move in November 2007 when it voted unani-mously to allow foreign private issuers to submit financial statements prepared with IFRS without having to reconcile to U.S. GAAP. Many felt that this was the first step to the SEC allowing U.S. companies to also use IFRS in financial reporting, and they were correct. In De-cember 2007 the SEC issued a Concept Release asking for input on allowing U.S. public companies to use IFRS (American Institute of Certified Public Accountants, 2008).

The primary difference between U.S. GAAP and IFRS is that U.S. GAAP is rules-based and the IFRS are principles-based. Many firms in the U.S. fear that a principles-based system will leave too many things up for interpretation and there will not be any comparability or transparency when it comes to opera-tional information. Others believe that IFRS will have a positive impact by leading financial executives in the right direction and not offering rules they need to circumvent as with U.S. GAAP.


The Bottomline 21

All together, the U.S. GAAP is very complex and covers over 25,000 pages in multiple publications while the IFRS are published in one document with only 2,500 pages (Iwata, 2009).

Even though the two systems are very different, the IASB and the FASB have strived to converge the two stan-dards. Since the Norwalk Agreement in 2002, both entities have worked togeth-er to modify existing standards where major differences lie between them and collaborate on any new standards being developed. As stated earlier, one of the major goals before allowing U.S. companies to convert is for most of the differences in the two systems to be resolved to allow for an easy transition (American Institute of Certified Public Accountants, 2008). A new column in The Bottomline will highlight the major differences between the IFRS and U.S. GAAP (see the first one at right, future updates will follow).

Company-level ConversionEarlier in this article the market advan-tages and disadvantages to the conver-sion where discussed, but companies want to know how it will impact them directly. For the majority of U.S. companies conversion is going to be a tough road. The SEC has estimated that the largest 110 companies operating in the U.S. who will be allowed to convert prior to 2014 will see implementation costs reach and maybe even surpass $32 million (Iwata, 2009). The switch is being compared to the new standards corporate companies had to face with the Sarbanes-Oxley Act of 2002.

As set forth by the AICPA, there are multiple areas companies need to examine when preparing for the conver-sion to IFRS. These areas include the following: Tax planning, Management reporting systems, Investor relations, Employee and executive

compensation, Employee benefit plans, Performance indicators, Corporate finance and structured

financial products, and

Financial accounting and reporting. (American Institute of Certified Pub-lic Accountants, 2008)

This list covers many aspects of the business that corporate managers must analyze in order to prepare a compre-hensive conversion plan.

There are multiple initiatives corpo-rate financial managers can tackle in or-der to ready their company for the IFRS conversion. The following list provides

some suggestions on what can be done. Conduct an analysis of the costs and

benefits of the transition to IFRS. Analyze IFRS standards and how

they will impact financial reporting for the company.

Look at current contracts such as management and debt to determine if they need to be updated according to the IFRS.

Develop a detailed plan and timeline for conversion to IFRS.

RULES- VS. PRINCIPLES-BASED ACCoUNTINGThere are a number of differences between the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). In the coming issues of The Bottomline, we will be running this column to note the major differences between the two systems and any updates on convergence of the systems, providing an easy way to keep up.

U.S. GAAPU.S. GAAP is a rules-based accounting

system which means that companies in the United States operate under a strict system of detailed rules when preparing financial statements. Some of the primary benefits of a rules-based system include increased accuracy, reduced ambiguity and a diminished possibility of lawsuits. The major drawback to a rules-based system is the complexity in the preparation of financial statements (Investopedia, 2009).

International Financial Reporting Standards (IFRS)IFRS is a principles-based accounting system which is based on

a set of key objectives rather than detailed rules for financial reporting purposes. In principles-based accounting the guidelines are set but not necessarily dictated for every situation, which is one of the major concerns pertaining to this type of accounting system. Sometimes financial information can be inconsistent from one company to the next in the same industry damaging the ability for comparability. The major benefit of principles-based accounting is that the guidelines can be applied in a variety of situations/industries which avoids the need of managers to manipulate statements to fit a certain need (Investopedia, 2009).

SourceInvestopedia. (2009). What is the difference between principles-based accounting and rules-based accounting? Retrieved January 10, 2009 from http://www.investopedia.com/ask/answers/06/rulesandpriciplesbasedaccounting.asp.


http://www.investopedia.com/ask/answers/06/


Look for cost efficiencies and, when possible, centralize accounting func-tions across business units.

Investors are an important piece of the puzzle and must be educated on the changes that are being made and how financial information will be impacted. (PriceWaterhouseCoo-pers, 2007)

Identify all business processes that will be affected by conversion such as internal reporting, key perfor-mance indicators, executive compen-sation plans, and investor relations.

Analyze current IT infrastructure and determine if it will accommo-date the change to IFRS and report-ing requirements.

Training and communication are also two key ingredients in the conversion process to IFRS. (Ostling, 2009)

This list is not comprehensive, but provides financial managers a basis to begin planning for the change to a new accounting system.

One thing that management must

keep in mind is that the IFRS are principles-based, which means that there is a lot left to interpretation. In the past, the IASB has avoided making interpretations of its standards leaving those decisions up to accounting profes-sionals, auditors, and the IFRIC (Ernst & Young, 2008). Since U.S. GAAP is rules-based, guidance is much more comprehensive and nearly all account-ing procedures are dictated by the rules. Corporate-level financial executives will have to make major decisions when it comes to financial reporting; therefore, a great deal of their time will be spent issuing interpretations. In a survey conducted of 200 financial professionals by Deloitte & Touche, 9 percent indicated that they already use IFRS and an additional 42 percent said that they would consider early adoption if allowed by the SEC (Iwata, 2009).

Probably one of the greatest expens-es for businesses, aside from training, will be evaluating and implement-ing new technology to handle IFRS. First of all, some businesses may be

lucky enough that their current finan-cial reporting systems will be able to handle the switch. Management must determine if current systems are geared to record and report financial data or if it can be modified to do so. This may actually be the easy part. The most dif-ficult question is to determine whether current systems can run both financial systems, U.S. GAAP and IFRS, at the same time. During the transition period management will have to report in both accounting systems for several years.

These are just a few topics of concern for financial managers when being faced with a change in accounting standards. Hopefully these suggestions will help point management in the right direction so that they can address these issues to avoid any crisis during the actual conversion.

HFTP IFRS RoundtableHFTP strives to be the leader in com-municating the most current financial and technology news in the hospitality industry. For that reason, HFTP gath-ered a team of executives on November 10 – 11, 2008, to explore the impact of the impending change the SEC is proposing to IFRS. The group consisted of senior-level, financial executives from major lodging companies such as Four Seasons Hotels, Rosewood Hotels, and Marriott. In addition, there were representatives from other facets of the lodging industry, including: operators, owners, consultants, association execu-tives and educators. All together, there were 11 participants in the discussion offering great opportunities for open dialogue.

During the focus group there were two primary areas of discussion: Uni-form System of Accounts for the Lodg-ing Industry (USALI) and the IFRS. The results from the discussion on the USALI is on page 25, written by Arlene Ramirez, MBA. The focus of this article is to cover information directly related to the implementation of the IFRS. The two topics do overlap at times; there-fore, the discussion continually bounced back and forth between the USALI and the IFRS.


There are multiple initiatives corporate financial managers can tackle in order to ready their company for the IFRS conversion. The following list provides some suggestions on what can be done.

READY YOUR COMPANY FOR IFRS CONVERSION

Conduct an analysis of the costs and benefits of the transition to IFRS.

Analyze IFRS standards and how they will impact financial reporting for the company.

Look at current contracts such as management and debt to determine if they need to be updated according to the IFRS.

Look for cost efficiencies and, when possible, centralize accounting functions across business units.

Investors are an important piece of the puzzle and must be educated on the changes that are being made and how financial information will be impacted. (PriceWaterhouseCoopers, 2007)

Develop a detailed plan and timeline for conversion to IFRS.

Identify all business processes that will be affected by conversion such as internal reporting, key performance indicators, executive compensation plans and investor relations.

Analyze current IT infrastructure and determine if it will accommodate the change to IFRS and reporting requirements.

Training and communication are also two key ingredients in the conversion process to IFRS. (Ostling, 2009)

The Bottomline 2�

THANK YOU

The majority of the participants in the focus group had heard of IFRS, but were unfamiliar with the details and dif-ferences between the two systems. For that reason Kapila K. Anand, partner with KPMG LLP and an expert in the area of IFRS, was invited to help fa-cilitate the discussion. Anand reviewed some of the most common differences between U.S. GAAP and IFRS. In addition, two of the members of the focus group were from Canada and had already begun the transition to IFRS since they are required to use the new standards by 2010.

The biggest point of concern for the group is the fact that the IFRS are rules-based; therefore, leaving some things up to interpretation. Members of the group thought that this might cause inconsistencies in financial reporting and benchmarking information. Every-one agreed that the industry must step forward and set standards before any confusion ensues, and the suggestion was brought forth that HFTP should be the force behind these standards and in-terpretations. Many also mentioned that the USALI would be the perfect com-munication tool. In the past, the USALI was based on U.S. GAAP, but going forward it was suggested that the pub-lication take a more international view. Many companies operate multi-national operations and the USALI is currently the only set standard when it comes to accounting for lodging operations.

Another concern put forth by the group was education, which is a topic on everyone’s mind that is facing a change in accounting standards. How will companies educate their account-ing and finance staff to deal with the new standards? Educational resources are available outside of the United States, but educational institutions and accounting associations have only begun to address the educational needs of a conversion. Anand indicated that KPMG developed their own training program which they are offering to their staff and clients. Again, the group felt that HFTP could assist in this area by developing various training programs whether they are offered in an online

format, written publication or live ses-sions at a conference or meeting. The first step in this process has already begun by offering various articles in The Bottomline on the topic of IFRS.

Since there is still a great deal of uncertainty as to when or if U.S. com-panies will be required to use IFRS, the focus group felt it was important for HFTP to develop a committee or task force to address any future issues that may arise. The responsibilities of this committee may include the transition to IFRS, impact on the USALI, training and interpretation of principles.

Future ThoughtsMost companies are taking a sit and wait mentality since the SEC has not yet set an official date for conversion. Due to all of the economic uncertainty in the U.S. at the current time, the time-frame for conversion may be elongated, but most financial executives realize that this is a switch that will eventu-ally happen. Since over 100 countries have already adopted IFRS, including some of the major players such as the EU, Brazil and Australia; it only makes sense that the U.S. will eventually make the switch. The best thing that everyone

Christopher Garland Sr VP, Operations FinanceFour Seasons Hotels, Ltd.

Ernest W. Glidden, Sr VP, Finance Rosewood Hotels

Calvester C. Legister, CHAE CFOHerald Hotel Associates, LP

Collin A LubbeVP, FinanceGlobal Hyatt Corp.

Robert Mandelbaum Dir, Research Information ServicesPKF Hospitality Research

Ralph Miller, CA, CBV, CHA, CHAE President and Owner Inntegrated Hospitality Mgmt. Ltd.

Jorge PerezSr VP, Finance and Accounting/NALO Finance Business Partner Marriott

Arlene Ramirez, MBA, LecturerUniversity of Houston Conrad N. Hilton College of Hotel & Restaurant Mgmt.


Vicki RichmanCFOHVS American Hospitality Mgmt.

Ronald W. Strecker, CHTP, CHAE CFOAl J. Schneider Co.

Tanya Venegas, MHM, MBAExecutive Director HFTP Research InstituteUniversity of Houston Conrad N. Hilton College of Hotel & Restaurant Mgmt.

Rex Warren, CAE, CEO Starwood Hotels & Resorts WWW Inc.

Frank Wolfe, CAECEO Hospitality Financial & Technology Professionals

Celina R. Mendieta Meetings and Events MgrHospitality Financial & Technology Professionals

HFTP’S IFRS RoUNDTABLE DISCUSSIoNHFTP gathered a team of executives and academics on November 10–11, 2008, to discuss the impact of the impending change the SEC is proposing to IFRS. During the focus group there were two primary areas of discussion: Uniform System of Accounts for the Lodging Industry (USALI) and the International Financial Reporting Standards (IFRS). HFTP would like to thank these individuals for their participation.


can do at this time is to begin educating themselves on international standards so that they are not caught off guard.

Even more uncertainty is brought forth by U.S. President Barack Obama’s new administration. With his eye on improving the economy, it is unsure whether he will endorse the change to new accounting standards or put the idea on the back-burner to address in the future. When analyzing the President’s cabinet choices, many have worked on global standards while others are staunch supporters of U.S. GAAP (Iwa-ta, 2009). It will be interesting to see

Make certain the voice of U.S. CPAs is heard internationally.

Incorporate questions about IFRS into the uniform CPA exam. (Ameri-can institute of certified public ac-countants, 2008)

One thing is clear, U.S. financial ex-ecutives should begin educating them-selves on IFRS. At this time they may not be impacted by the new standards, but at some point in their career they will likely have to deal with IFRS in one capacity or another. They may go to work for a global corporation which has operations in countries where IFRS is applied; or the U.S. will eventually make the likely move to the internation-al standards. Many say that they will not be affected because they work for a private company, but it is hard to be-lieve that if or when the U.S. switches, it will continue to write a separate set of standards for private companies.

Continue to keep up with the latest information on the switch to IFRS through HFTP publications and the HFTP web site at www.hftp.org. If you have any specific questions about the IFRS contact the HFTP Research Institute.

Sources American Institute of Certified Pub-

lic Accountants. (2008). Internation-al Financial Reporting Standards (IFRS): An AICPA Backgrounder. Retrieved January 9, 2009 from http://www.ifrs.com/pdf/IFRSUp-date_V8.pdf.

Bateman & Co., Inc., P.C. (2002). A History of Accounting and Audit-ing Standards. Retrieved January 8, 2009 from http://www.batemanhous-ton.com/newsStds.htm.

Ernst & Young. (2008, April). IFRS: The Basics. Retrieved January 10, 2009 from http://www.ey.com/Glob-al/assets.nsf/US/Assurance_US_GAAP_v_IFRS/$file/US_GAAP_v_IFRS.pdf.

Institute of Chartered Accountants in England and Wales. (2009). Knowledge Guide to International


To keep an eye on the latest developments pertaining to the International Financial Reporting Standards visit the following web sites.

ADDITIONAL RESOURCES

American Institute of CPAs • www.aicpa.org

Financial Accounting Standards Board • www.fasb.org

International Accounting Standards Board • www.iasb.org

International Federation of Accountants • www.ifac.org

International Financial Reporting Standards • www.ifrs.com

International Organization of Securities Commissions • www.iosco.org

Securities and Exchange Commission • www.sec.gov

SEC roadmap • www.sec.gov/spotlight/ifrsroadmap.htm

Accounting Standards. Retrieved January 8, 2009 from http://www.icaew.com/index.cfm/route/156901/icaew_ga/en/Technical_and_Busi-ness_Topics/Guides_and_publica-tions/Knowledge_guides/Knowl-edge_Guide_to_IAS_IFRS.

Iwata, Edward. (2009, January). U.S. Considers Costly Switch To International Accounting Rules. USA Today. Retrieved January 9, 2009 from http://www.usatoday.com/money/companies/regulation/2009-01-05-international-accounting-rule-switch_N.htm.

Le Moine, Jack. (2004). History of Accounting. Retrieved January 8, 2009 from http://www.lemoineand-james.com/gaap/11history.html.

Ostling, Danita. (2009, February). Converting to IFRS. Journal of

Accountancy. Retrieved January 9, 2009 from http://www.journalofac-countancy.com/Web/ConvertingtoI-FRS.htm.

PriceWaterhouseCoopers Na-tional Professional Services Group. (2007). IFRS: The Right Step For US Business. Retrieved January 9, 2009 from http://www.pwc.com/Extweb/pwcpublications.nsf/docid/B803FA4CB068525737D004AF34A/$file/PwC_IFRSWP_102007.pdf.

Securities and Exchange Com-mission. (2008, November 14). Roadmap For the Potential Use of Financial Statements Prepared In Accordance With International Fi-nancial Reporting Standards By US Issuers. Retrieved January 9, 2009 from http://www.sec.gov/rules/pro-posed/2008/33-8982.pdf.

how quickly the SEC moves forward after the comment deadline in February.

In the arena of education, the AICPA has begun to address several issues pertaining to the conversion to IFRS. In their 2008 document “International Fi-nancial Reporting Standards (IFRS): An AICPA Backgrounder,” they published the following initiatives. Continue to educate AICPA mem-

bers about IFRS. Work with accounting educators,

textbook authors and educational institutions to prepare future profes-sionals to use IFRS.

http://www.aicpa.org

http://www.fasb.org

http://www.iasb.org

http://www.ifac.org

http://www.ifrs.com

http://www.iosco.org

http://www.sec.gov

http://www.sec.gov/spotlight/ifrsroadmap.htm

http://www.hftp.org

http://www.ifrs.com/pdf/IFRSUp-date_V8.pdf



http://www.batemanhous-ton.com/newsStds.htm



http://www.ey.com/Glob-al/assets.nsf/US/Assurance_US_



http://www

http://www.usatoday.com/

http://www.lemoineand-james.com/gaap/11history.html



http://www.journalofac-countancy.com/Web/ConvertingtoI-FRS.htm





http://www.pwc.com/

http://www.sec.gov/rules/pro-posed/2008/33-8982.pdf



The Bottomline 25

HFTP’s financial executive roundtable on the SEC’s proposed International Financial Reporting Stan-dards (IFRS) regulations and the Uniform System

of Accounts for the Lodging Industry (USALI) was held at the Penn Club of New York, November 11 – 12, 2008. The reason for the discussion on the USALI is that many in the industry felt as though there needed to be a more modern standard system of accounts. Perhaps this has stemmed from the fact that many organizations had less than smooth transitions from the 9th to the 10th edition of the USALI. Many may have faced the difficulty in the transition more from an ownership perspective because as this report will reflect, there are some significant issues that many felt were vague or not suffi-ciently covered in the 10th Edition. With more transparency being required of those reporting financials and more comparative analysis of the competition, having a system of accounts that allows for both of these objectives to be meet is essential. The roundtable participants dedicated time to reviewing the entire USALI 10th Edition for the purpose of indentifying areas of concern. The purpose of this report is to highlight the issues that the group felt needed to be addressed and hopefully start a dialogue to incorporate these changes into the next revision. In addition to providing feedback on changes to be made, the participants also made suggestions for the review process that takes place prior to a new published edition.

USALI — WHAT’S NExT?

Arlene Ramirez, MBA, is a lecturer at the University of Houston’s Conrad N. Hilton College of Hotel and Restaurant Management. She is also the chair of the HFTP Com-munications Editorial Advisory Council.

Issues to be addressed for the next edition of the Uniform System of Accounts for the Lodging Industry

By Arlene Ramirez, MBA


General ConsensusOne consensus from the group was that the USALI is a great resource for the hospitality industry and should remain as such. General comments on the overall publication were: Reduce time interval of updates to USALI. Perhaps every

three to five years. Provide CFOs of major companies, private or public, who

are not part of the revision committee, an opportunity to review the drafts for commentary.

Insure that all links or cross-references within the book are accurate. Inaccuracies were found within the Expense Dictionary and cross-references provided.

Place an effective date on the material as it is revised. Coordinate with the International Spa Association

(ISPA), Club Manager’s Association of America (CMAA) and the National Restaurant Association (NRA) to provide consistency with the terminology used in their uniform system of account publications.

Any section provided in the USALI should reflect terms consistent with those found in a similarly-specialized publication.

Allow feedback from asset managers in future editions of the USALI.

Coordinate changes to the Certified Hospitality Ac-counting Executive (CHAE) exam and its corresponding review material to become effective relatively close to the release of new USALI editions.

More foresight of future revenue generation sources in future revisions.

Rooms: Condominiums/Timeshares More clarification is needed on how to reflect the revenue

split for mixed-ownership lodging facilities based on the amount of risk. Currently the USALI has the rev-enue from this type of structure reported in the Rooms Department if the property management has assumed the economic risk of the units. Should the third-party owner share in the economic risk, then the revenues are reported in Other Operated Departments. Overall the group felt that these mixed-ownership arrangements should be

reflected in a separate department and not be included in the Rooms Department.

Another issue related to Condominiums/Timeshares is the proper reporting of statistics. Currently it has become difficult to benchmark results when statistics are not consistently reported. Many have commented that Smith Travel Research (STR) has had issues with the statistics being provided by hotels with mixed-ownership structure, primarily due to inconsistencies in available rooms. A set standard needs to be developed on how statistics will be reported for this segment since availability will vary based on ownership usage.

Clarification is also needed on where some condo-related expenses or allocations should be reported. Primarily, what expenses should be considered above or below the Gross Operating Profit (GOP) line.

Service ChargesThe current edition of the USALI is not clear on the report-ing of service charges. The group felt that the 9th Edition of the USALI addressed this subject more clearly. Furthermore, the discussion or explanation of service charges should be reflected in every department, not just limited to the food and beverage areas.

outsourcing operationsMany hospitality concerns are outsourcing various segments of their operation to third parties (i.e. restaurants, spas, coffee shops, etc.). The USALI needs to expand on how to report revenue derived from outsourced functions, especially when all the risk is taken by the operator.

Leasing operations The current version of the USALI does not provide detail

or definitions of major expenses associated with leased operations.

The group felt that perhaps the USALI should mirror U.S. GAAP, or maybe IFRS, in this area. Regardless, the “Minor Operated Departments” or “Rental and Other Income” sections are not sufficient to provide the report-ing necessary for the sophisticated leasing operations that some hospitality concerns are currently involved with.

Miscellaneous ItemsAs the group dissected the book section by section, below are other areas in which discussions took place and which the group felt should be addressed in future editions. Consider the changing of the classification of Wholesaler

to group instead of Transient where the USALI currently reflects this segment. Several in the group felt this would provide a more accurate reflection.

In Food and Beverage, it was thought that cover counts should be defined as what is included in a cover and what is not. Specifically when dealing with the banquets/cater-ing areas.


“ One resounding theme that became

apparent, was that many organizations

using the USALI are global players

and therefore, future editions should

include an international perspective,

making it as all-inclusive as possible.”

The Bottomline 27

CHAE and CHTP ExamsMarch 15, 2009The Westin Tampa Harbour IslandTampa, Fla.

Club and Hotel Controllers ConferenceMarch 16 – 17, 2009 Westin Tampa Harbour Island Tampa, Fla.

Asian Hospitality Financial and Technology ConferenceMay 11–12, 2009UNLV–SingaporeSingapore

CHAE & CHTP Reviews and ExamsJune 22, 2009Anaheim Convention CenterAnaheim, Calif.

HITEC 2009June 22 – 25, 2009 Anaheim Convention Center Anaheim, Calif.

Club and Hotel Controllers ConferenceJune 23 – 24, 2009 Anaheim Convention Center Anaheim, Calif.

GUESTRooM 20xJune 23 – 25, 2009 Anaheim Convention Center Anaheim, Calif.

HFTP Leadership AcademySeptember 15 – 16, 2009 Green Valley Resort, Las VegasLas Vegas, Nev.

CHAE & CHTP Reviews and ExamsSeptember 16, 2009Green Valley Ranch ResortLas Vegas, Nev.

HFTP Annual Convention & TradeshowSeptember 16 – 19, 2009 Green Valley Resort, Las VegasLas Vegas, Nev.

HITEC 2010June 21 – 24, 2010 Orange County Convention CenterOrlando, Fla.

CALENDARFor more information about HFTP events, please call (800) 646-4387 or +1(512) 249-5333, or visit www.hftp.org.


Many in the group felt it would be helpful for the USALI to provide a reference source covering allocation methods (i.e. laundry allocations, employee meals, benefits, etc.). The USALI does not need to provide recommendations for which method to use, but at least be a point of refer-ence of acceptable allocation methods.

In reviewing the Telecommunications section, the group felt that it was time to eliminate or redefine this depart-ment. Most agreed it was not necessarily a revenue gen-erating area and should not be considered as an “Other Operated Department” in a future version.

In the sales and marketing expense area, it was discussed that the E-commerce line should be expanded to include Global Distribution Systems (GDS), word search/automa-tion and e-mail blast expenses.

The proper handling of chargebacks by corporate offices or ownership needs to be discussed in future issues. Cur-rently the USALI is vague on this subject.

As more and more organizations are asked to put into play sustainable practices, the treatment of these green costs needs to be explained. What departments are these costs to be reflected? Property Operation and Mainte-nance or Public Relations?

In addition to the reporting of green costs, future editions need to consider the statistical reporting on carbon credits and other environmental statistics that may become gov-ernmental requirements.

Many in the group felt that the Management Fees section should be expanded and include the use of Royalty Fees.

In Rent, Property and Other Taxes and Insurance, it was discussed by the group that it would be beneficial to have a break out of deductible under the Insurance Expenses classification.

online ResourcesOne subject that surfaced at the roundtable was the potential of providing this resource online. The section of the book that the group felt would be the most useful online was the Expense Dictionary. A suggestion was made to eliminate the printed version of the expense dictionary altogether and provide it online only.

Overall, everyone involved felt that the USALI is an important framework or guide for the hospitality industry to use if IFRS is adopted by the U.S. One resounding theme that became apparent was that many organizations using the USALI are global players and therefore, future editions should include an international perspective, making it as all-inclusive as possible. While this is a momentous task, those behind the revision need to at least plan towards a broader viewpoint. Again, the goal of this roundtable was not to make the changes, but to hopefully initiate change in the next edition and surface the concerns that many in the industry have expressed.

http://www.hftp.org


STEPHEN LEBRUTo, CPA, CHAE, ED.D.

By Lou Cook

Feature Profile

Stephen LeBruto

Stephen LeBruto, CPA, CHAE, Ed.D., went off to college at age 18, knowing

what he wanted to do with the rest of his life. It may sound corny or trite, but he had found his call-ing — not medicine or politics or writing, but hospitality. “Know-ing what I wanted to do anchored things; I felt rooted.” These initial roots were in Boston-area kitchens washing pots and dishes, and then moving through the prep kitchen and on to the front-of-the-house at a Howard Johnson. “I always worked,” says LeBruto, “full-time during summers and part-time dur-ing the year.”

His acceptance at the Cornell School of Hotel Administration in 1968 now seems preor-dained, and a bachelors in hotel administration gave him a focused curriculum in everything related to the hospitality industry. “It was a nice blend of practical education and an academic classroom,” says LeBruto. After his 1972 gradua-tion, he started in food service and management training pro-grams, then became intrigued with finance and accounting, particularly reporting and cost controls.

“I enjoyed my college accounting and financial manage-ment classes and realized that this area interested me.” For him, the best way to feed that interest was by returning to school for a masters. LeBruto enrolled at Long Island University’s C.W. Post Campus to study professional ac-counting at night, while working during the day. It took him five years and in 1979 he earned his masters in accounting. LeBruto also passed the CPA exam, which he calls a good thing to have. “It’s something extra to make me more valu-able.” Operations are his strong suit, and he says, “When you combine operations and accounting you find yourself at the head of the class. You can hire good accountants who don’t know hospitality, or those who know hospitality, but not accounting. The hospitality and accounting combination provides an extra swap of knowledge.”

LeBruto took one detour outside the hospitality industry into more traditional accounting, working with professional accountants. It was only for several years, but enough to be

convinced that it wasn’t for him. He says, “These sidesteps solidified my feeling that hospitality was the right career for me, and I missed it.” He describes his career as “much like any-one else’s.” He moved up to corporate controller for a small hotel develop-ment company, who built, operated and managed properties. “Large com-panies have time-tested procedures that assure some degree of success, but in smaller companies you are the deci-sion-maker. When you’re independent, as many small companies are, you sometimes like the challenge.”

By then LeBruto had expertise in hospitality accounting and finance, food and beverage cost controls, and hotel operations. He held managerial

and executive positions in the industry and worked for both small and large companies. “It’s easy to switch,” he says. “If you have developed a work ethic and good skills, you’re always in demand.”

In 1983, this belief was reinforced by a call came from New York University (NYU). NYU was looking for some-one to teach hotel accounting. LeBruto had never thought of teaching. “I said to myself, ‘I can’t do this. I can’t teach.’” On the other end of the line, he was told, “You can teach, and it’s always good to give back.” LeBruto started teaching one night a week in New York City and discovered he really liked the profession. The class was challenging, rewarding, stimulating and filled with students who had chosen to study this specialized area of accounting. This new side job got him to think that maybe teaching wouldn’t be a bad career change. He talked to NYU and discovered that a doctor-ate degree would be required. Enough said — following his belief in life-long learning, he entered NYU’s doctoral program on a part-time basis .

Everything moved along smoothly until 1989 when he accepted a new position. This job required more travel, interfering with his teaching and his own academic program. Something had to give, and it would have to be his academic pursuits. He had been at NYU for about seven years, off and on while working as both adjunct faculty and Ph.D. student. Then in 1990 an advertisement showed up in his mail.

At the Head of the Class

The Bottomline 29

The University of Central Florida (UCF) had an opening for an assistant professor in hospitality management teach-ing hospitality accounting. LeBruto was offered the position with the understanding that he would complete his doctorate (begun at NYU) and at the same time get ready for tenure. For LeBruto it would involve a significant salary reduc-tion, and with a wife, young daughter and son, his decision wasn’t taken lightly. After much consideration, he decided to go for it. Promising himself, “I can do the work, fulfill the requirements and learn a new trade teaching full time.”

LeBruto believes that if you are lucky enough to do what you want to do, success will come. The key is finding what you like to do. He says, “It was a little risky, but I decided to do what I liked.” He gained tenure, was promoted to associ-ate professor, then to full professor and earned his doctorate all at UCF.

Hospitality management education has been delivered at UCF since 1983, but it started as a small program and with low demand. In the late-’90s, an article in the local press criticized the University’s hospitality management program and suggested that Orlando, as the hospitality capital of the world, should have the world’s best hospitality program. A local hotelier, Harris Rosen, agreed and made an $18 million contribution, which when matched by the state, provided $36 million. In addition, all of the local hospitality compa-nies also made very generous donations to the endowment allowing the College to create an extraordinary physical plant. This gift came with the understanding that the pro-gram would be housed in a stand-alone college within the University, and on it’s own campus in the heart of the tourist district. LeBruto says, “This proviso gives the curriculum breadth and depth. Our college, The Rosen College of Hos-pitality Management at the University of Central Florida, was finally established on July 1, 2000 and has become very successful. We started with about 100 students and a hand-ful of faculty. And, as a stand-alone college, we developed our own curriculum to reflect a blend of academics and experience.” He also notes that the self-contained campus resembles a resort.

The school planners began with questions to the industry. What do you want in a graduate of a hospitality college? What skills and knowledge do you want them to have? Hospitality leaders were invited to campus for a series of workshops with the faculty and the industry. LeBruto says, “Then we went out and marketed our curriculum to potential students saying, ‘here’s what we have to offer.’ Our number one priority would be to provide good service, attention and a good staff, all functions you would expect of a first-rate university.” Rosen increased enrollment from 100 to 2,700 students and is now one of the largest academic hospitality programs in the world. The school listened to its custom-ers. The industry hires 100 percent of its graduates, and the school’s enrollment continues to increase.

LeBruto believes in a constantly evolving curriculum, and the college now offers four undergraduate degrees, and

a masters and a doctorate program. He says, “Now we’re a worldwide business and have 45 full-time faculty from 19 incredibly diverse and different countries. We have a strong pool of industry professionals who give back by serving as adjunct professors and are great role models.”

In 2000 LeBruto became associate dean. In 2001, he was promoted from associate to full professor with areas of expertise in hospitality accounting and finance, food and beverage cost controls and hotel operations. He also held the HFTP Endowed Professorship.

Due to a bad heart, LeBruto retired in August 2008 on long-term disability, a decision it took him eight months to make. He says, “I have a pacemaker and a defibrillator and an extra wire into the bottom of the heart, which makes it work better. I have to stay out of stressful situations.”

He is a big supporter of and has worked with the CHAE certification program by developing the review course for the exam and he continues to contribute a CHAE column to The Bottomline (p. 9). He’s a member of the HFTP Mid-Florida Chapter and helps with their programs and publica-tions. He can help out as a volunteer on a limited basis. He also continues his hobbies — golf and playing rock-and-roll on his electric guitar.

LeBruto and his wife Dianne met as undergraduates and have been married 36 years. She is an elementary school principal. Their daughter Elizabeth is nearby and finish-ing her Ph.D. in hospitality education at UCF. Previously, she worked with PricewaterhouseCoopers specializing in hospitality accounting and already has her CHAE. His son Jonathan is a lawyer working in Washington, DC.

“I’m really a lucky guy,” says Lebruto. “What I would like to do now is travel and help out a little bit with different groups or properties throughout the world.”

There’s an offer of expertise that somebody out there may find hard to refuse.

LeBruto at his retirement party in 2008. He received a framed photo of The Rosen College of Hospitality Management at the University of Central Florida with hand-written messages from his colleagues.

�0 February / March 2009

The Bottomline Resource GuideAmerican Resort Development Associationwww.arda.orgThe American Resort Development Association (ARDA) is the Washing-ton D.C.-based trade association representing the vacation ownership and resort development industries. Established in 1969, ARDA today has over 1,000 corporate members ranging from pri-vately held firms to publicly traded companies and international corporations with expertise in shared ownership interests in leisure real estate.

Gatekeepers Business Solutionswww. gatekeepersolutions.com(888)428-�577 ext. 108Control your labor costs, improve ad-ministrative produc-tivity and increase profits with our signature Labor Management System designed for the hospitality industry. LMS with time & attendance and schedul-ing are part of our proprietary suite of software, and work with all third party payroll services, and with our integrated modules for in-house payroll and human resources.

Hospitality Technologywww.htmagazine.comHospitality Technology pro-vides foodservice and lodg-ing professionals with in-depth industry informa-tion they need to stay abreast of emerging technol-ogy, maintain a competitive advantage and steer their purchas-ing decisions. Hospitality Technolo-gy’s integrated portfolio reaches more than 16,000 hospi-tality operators — executives with proven IT buying power — through print, online and in person at four targeted yearly conferences.

ADVERTISE HERE Advertise your services with a brief listing in this Resource Guide. Listing includes 50 words and a color logo. Prices as low as $105! BONUS: Full- and Half-page advertisers get a free listing in the Resource Guide section.Contact Jennifer Lee, HFTP Director of Marketing at +1 (512) 249-5333 x25 or (800) 646-4387 x25 or [email protected].

International Hotel Investment Forum 2009March 9 – 11 • Berlin, Germanywww.berlinconference.comThe International Hotel Investment Forum (IHIF), provides an invaluable opportunity for leading hotel inves-tors and executives to meet and do business and has become known as the place where deals are done. The IHIF is a 3 day conference consisting of unrivalled networking opportunities, a world-class educational pro-gramme and an exhibition, structured with the aim of providing you with the knowledge, contacts and information you need to grow your business. Don’t miss out on this valuable opportunity.

Task Force Financewww.taskforcefinance.comTask Force Finance provides experienced hotel, resort and club financial professionals for short-term, project specific assignments. Today’s business environ-ment makes it increasingly difficult to justify the addition of full-time staff, and we offer an effective way to meet deadlines while staying within budget. Reduce fixed payroll expenses by minimizing FTEs and associated benefit costs.

Interim DoF/Controller for [email protected] in interim DOF/Controller work with over 10 years experience as an interim DOF/Controller for resorts in the US and Caribbean and over 20 years finance and over all experi-ence in the hospitality industry.Experience with preparation of budgets, cash-flows, forecasting; preparation of month end statements; daily operation of resort accounting.Short and long term assignments accepted in US or Caribbean. Please call L Roser at 602-317-7997 or email [email protected].

FEATURED LISTING

http://www.arda.org

http://www.gatekeepersolutions.com

http://www.htmagazine.com




http://www.berlinconference.com

http://www.taskforcefinance.com

www.hftp.org

www.hitec.org

path to ifrs conversion - hftp (usali) and how the ifrs differs from u.s. gaap. the ifrs could be...

Documents