Spolu 13: Spolu Accounting

When I was in business, my accountant was using the term “Generally Accepted Accounting Principles,” known as GAAP. GAAP was a guide for Canadian accountants on how to record transactions and display the state of the business on its financial sheets. This does not mean all accountants would do things the same way; rather, it just narrows the range of accounting interpretations. By staying within GAAP, different accountants should produce similar, if not exact, financial sheets. In other words, all businesses under GAAP are presented reasonably fairly. Reasonably good decisions can be made with these statements.

The first spolu will need to produce a similar guide like GAAP. It might even just adopt its local version of GAAP.

But there will be some other accounting rules spolus need to abide by.

Profit Distribution

I recommend that, after annual financial statements are completed, spolus are obligated to distribute at least 40% of stated profits to the various stakeholders. The senior management team can decide to distribute more than 40%.

I can see many spolus wanting to maintain a certain cash reserve. When a few months of cash flow is covered by these reserves, the senior management team would be more likely to distribute 80% to 100% of its stated profits.