On this episode of Controllers Classified, Brex’s CAO Erik Zhou is joined by Angelina Hendraka, the CAO at Redis. The conversation begins with a recap of Angelina’s diverse experiences across financial services, biotech, and SaaS companies, as well as her recent participation on a panel discussion related to fostering inclusive work environments. The dialogue then dives deep into critical financial topics including how to make strategic and thoughtful spend decisions in the current cost containment environment, the role of a strategic procurement function in enabling smarter spend, and important financial processes for post-IPO success, including SOX readiness.
On this episode of Controllers Classified, Brex’s CAO Erik Zhou is joined by Angelina Hendraka, the CAO at Redis. The conversation begins with a recap of Angelina’s diverse experiences across financial services, biotech, and SaaS companies. Angelina notes that while KPIs shift based on business strategy & industry, the transition from one industry to another in her career has felt seamless given finance is the universal language of business. Erik and Angelina also discuss the transition from big 4 accounting firms to controllership, and the evolution of one’s approach with that transition (i.e. from being deep in technical accounting to thinking more broadly and operationally).
The conversation then turns to recapping a recent panel discussion that Angelina participated in related to women in the workplace and fostering inclusive work environments. She shares her perspective on what it means to be an inclusive leader, and what more leaders can be doing to ensure diverse representation in finance and accounting.
The dialogue pivots to some critical financial topics including how to make strategic and thoughtful spend decisions in the current cost containment environment, the role of a strategic procurement function in enabling smarter spend, and important financial processes for post-IPO success, including SOX readiness.
This episode closes with Angelina’s favorite expense reporting story. Hint: no one is above travel and expense policies!
Key Quotes
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Erik: [00:00:00] Some people call the IPO the Super Bowl within finance and accounting.
Angelina: It is the Super Bowl. You're right.
Erik: Some people also say that defending your Super Bowl championship is actually more difficult. So tell me about after IPO, converting to SOX, you know, getting those audits done, maintaining the compliance.
Like, was that a big change for you guys?
Angelina:So I think, the, the biggest lift was SOX.
Announcer: Welcome to Controllers Classified. The podcast where we take a deep dive into the dynamic world of controllers, accountants, and finance leaders, and hear how their ever evolving roles are redefining accounting and the future of business.
And now, here's your host, Eric Zhou.
Erik: Welcome to Controllers Classified. I'm your host, Eric Zhou. I'm the Chief Accounting Officer at Brex, and I'm really pleased to present our guest today, Angelina Hendraka. She's a CAO at Redis and [00:01:00] has spent an entire career leading accounting across so many different companies and industries.
You've spent time at Financial Services, in SaaS, Now a data platform company. And I looked a little bit into your background, right? When you were an auditor, you actually worked in biotech. So a really diverse set of companies there. First of all, welcome Angelina.
Angelina: Thank you. And thanks for having me. It's great to be here.
Erik: You just started at Redis. I'm really curious what drew you to the company and really what your plan is over the next 6 to 12 months there, now that you've started.
Angelina: I was at another SaaS company, though that one is public, PowerSchool. I was there for over 2 years in a similar role. So, the Redis CIO position kind of appealed me on two fronts.
So first, it's the role itself. I joined PowerSchool about three months before their IPO, after a long time of them being a private PE backed company. So I found myself really enjoying the experience of building and scaling best in class processes, implementing systems, looking for [00:02:00] efficiencies, getting the team ready for SOCKS, and just overall rallying the team to Think ahead instead of relying on the status quo.
And also there's that level of excitement that comes with seeing your company go public because that's kind of the next step in their journey. so Radis is slightly an earlier stage company, not by much. So I'm super excited about the opportunity to bring what I've learned during my time scaling PowerSchool I actually did not know what Redis does until I heard about this role.
But then I did my research, I talked to people, I found out how the product works, and I also found out that it's super popular in the developer community. So there is that product market fit, which I think is extremely important when I'm looking for my next company. Because I do believe that once you achieve that, then it's just a matter of executing on your go to market strategy.
So your second part of the question about my focus in the next 6 12 months. It's really about scaling for growth, scaling for the next phase of the [00:03:00] company, and efficiency. We have a fair idea of where the opportunities are, but it's a little bit too early right now. I'll find out more as I go spend more time with the team.
And hopefully, in the not so distant future, based on what we discover together, then we'll get a line on the vision and the goal going
Erik: forward. I have a thing that I, I work through now when I think about even my team at Brex, I won't take credit for this. This was Josh Waldron. He, he's the CAO or, or the VP of finance, I think at scale AI, but he has this thing, it's called people process systems.
And so when I think about my org, I think about, do I have the right people, do I have the right processes, do I have the right systems to take all that home? And so if you were to think about those three things, like. Sounds like the people are great. What about the process and systems? Like what are the processes or systems you're thinking you want to make a change on or improve, et cetera?
Angelina: When you say people process system, I do believe that it should be in that order, right? You need to have the people that actually execute on your [00:04:00] vision. And then next you look at the process. And then you can jump ahead and look at the system because, well, you know, you can't systematize a bad process. I mean, that's, that's really kind of my philosophy.
So as far as the processes go, the company is definitely able to close the books reliably and be able to kind of glean into the data and know what the stories are. There are definitely prevalence of manual processes. And so my focus would be to re review the processes, make sure that they are appropriate, and if they are, then we will look at system solutions that can make it more efficient.
Erik: You said something really interesting. If you have a bad process and you systematize it, it kind of makes it worse, right? Because, because you've now invested all this technology to make something bad just automated, and then one day you have to unwind it. It could be pretty bad experience. I mean, from your perspective, Like, what are the different manual processes that you guys are going through right now that you [00:05:00] think have the highest probability of being automated in the future?
Angelina: Yeah, so I think it's probably around, you know, the easiest or the lowest hanging fruit will be around expenses, right? So AT, T& E, you know, quite frankly, those are also areas where there's a prevalence of tools that can help us. Get there. So, so that would be the first thing that I would look at. And then the second one will be on the billing ops area.
So these are, you know, your invoice processing, you know, making sure that when you have an opportunity that is closed and won, it kind of, you know, it translates itself to an accurate billing. And the third area would be around cash applications. How do you do it at Brex?
Erik: I joined Brex, five years ago, and it was straight out of Big Four.
And so it was new to me being in the industry, and I talked to a lot of colleagues and a lot of people in my network about how to tackle, this role and how to scale Brex from like, we were 70 people at the time on [00:06:00] QuickBooks, now we're on NetSuite, a much bigger team. And, and you know what? The, the answer back to me was very surprising from a lot of people.
They all said, get your AP right. Get your AP, get your accruals right, get them done as early as possible in the cycle, because that's what hangs you up month to month. And it wasn't what I was focusing on when I was in the audit. I did technical accounting work. I did a lot more complex transactions.
Those were all the focus high risk areas from an audit side. But you know, when you're doing day to day like GL management, expenses are a vast majority of the activities at the company. And getting them right day to day really, it's what I call it is flattening the spike. Like, you don't, you can't wait till the first day of the month, second day of the month.
You have to think about all those expenses throughout the month and get the work done.
Angelina: Yeah, no, I mean, it's, it's interesting. you know, you were talking about, transitioning from a big four where it's really heavy focus on technical accounting and financial reporting into a controllership slash CEO [00:07:00] role because The role is very operational and, what I learned is you need to get the transactions right.
Right? So, because if you don't get the transactions right, you are not going to get the numbers right.
Erik: I had, I had something I wanted to ask you and it goes back to what I was saying. You have all this experience and these are large public companies, right? So in financial services, in SaaS, you audited biotech companies before.
Do you, given like what you're saying about operational importance? Do you think that's kind of like how you approach each of those jobs and why you've kind of become almost industry agnostic?
Angelina: Yeah, so I mean, I, I do think operational accounting, so corporate accounting and finance, they are all industry agnostic and I feel like that's the beauty of it. So to me, finance is the universal language of business, right? you know, you, that has worked out for me over the years. because I was able to transition across industries pretty seamlessly. Now, there are [00:08:00] obviously some industry specific nuances. In life sciences, you know, you have the accounting for clinical trial costs.
When I moved to asset management, I was introduced to a whole new slew of acronyms and jargons. And then once I moved to SaaS, it's all about the ARR, the MRR, the churn, the contraction, the natural tension, you know, but all of these to me are just These are ways of measuring the state of your business using pretty much the same financial data.
So, again, it goes back to my comment earlier that you need to get the data right in order to get the numbers right, in order for you to really understand how your business is going. And then finally, in order for you to be able to tell the story to the street, to investors, analysts, and, and, and basically to people about your growth.
Erik: I really, I really, enjoy hearing that from you. I think, I mean, coming from now at Brex, we always talk about approaching a problem from a first principles approach. So I think what you've done is really applied first [00:09:00] principles to each of your different jobs, right? At the end of the day, day to day, there's transaction data coming through, there's activities of the business coming through.
It's not, you know, specific to any one industry. And so approach. Yeah. I really, I really appreciate kind of what you, what you're saying here. let's, let's, switch gears just, just a little bit. Sure. I know that you were on a panel recently hosted by Coupa. It discussed women in the workplace and breaking down barriers to success.
You know, can you tell me a little bit about your experience there and, and, and what you think were the highlights of that panel?
Angelina: Yeah, it was a great panel. It was, actually part of the, Coupa user conference back in April. we really had a great time prepping for it and sharing the stage with the other panelists and, one pretty good nugget that I got from my, one of my fellow panelists is around imposter syndrome. so it was pretty interesting, right? So most of us on the [00:10:00] panels had what I would call a pretty traditional career, right? You graduate college, you got CPA, you spend a few years following accounting, at least for me, made transition to the industry, set in different roles, and here we are.
one of the panelists, did not have this traditional career. she did not come from a four year college. She started out as an executive assistant, somehow got into an entry level procurement specialist role. worked her way up and then she's now a Chief Procurement Officer at this company that was previously public, got recently taken private for over 12 billion dollars.
So it is super inspirational for me. but when she described, when she was going up the chain, she experienced the biggest imposter syndrome and felt the biggest amount of insecurity when people were talking about which college they went to. so, and I think, the takeaway from that is You know, as a leader, I want to try to consider people from diverse backgrounds because they bring in different perspectives, [00:11:00] right?
So they may not go to a four year college, but that does not automatically mean that they do not have the potential to be a top
Erik: performer. And do you think being a woman impacted that imposter syndrome differently than a man? Like, maybe it's even more so because you're kind of a minority group already in the field?
Angelina: Yeah, so I cannot speak for her. For me, definitely as I was going up the chain, it felt like You know, I have to kind of fit into the stereotype of being a little bit more quiet, keeping my heads down, making sure that I actually have a work shows my capability before I can actually speak up. Now, looking back, I probably should not have felt that insecure, earlier in my career, but you know, it's like hindsight 2020,
Erik: right? And then, like, what are some of the things do you think in the profession, in our functions? And maybe they're not [00:12:00] specific to finance and accounting, but what are some of the things that we can do to promote some more inclusivity, to encourage maybe especially women to speak up more, when they have, I certainly want to hear all the good ideas.
I don't care if you're a man or a woman, right? Like, Yeah. Right. Like what, what is it that I can do better to kind of be an ally? For us,
Angelina: it starts from the pipeline. you know, once you have that pipeline of diverse background and experiences, then you should be conscious about trying to draw on their experiences and perspectives and actively seek their inputs.
especially at the more junior slash entry level, right? They don't feel like, okay, you know, I have a CAO talking to me. You know, I'll probably just, you know, agree and be okay with everything that he or she said. but I think it's very important to communicate that you want to hear their voice as well.
and you want to create that psychological safety, so nobody has to feel like they don't belong or have no business being there.
Erik: Have you seen any examples of someone who's kind of trying to break down those barriers themselves? [00:13:00] I want to encourage really everyone the same way, but maybe I should be taking time out of my day to specifically address one person or a couple of people on the team knowing that they may feel Whether it's imposter syndrome, whether they feel some way because they're a woman, like just sharing that.
Angelina: And you know what is also eye opening to me is, I would like to think that I'm pretty passionate about people's development, but as things get really busy, you know, for you and me, and we have a ton of other things that we need to take care of and a lot of fires that we need to put out, That people development aspect of your job kind of fell by the wayside.
And, it is eye opening because I just did a 360. And then one of the things that came out from the 360, and you know how it is with 360, right? You open the report and then you immediately zero in on the areas that you think [00:14:00] that you're weak at. and that area was people development. And then I was thinking to myself, like, okay, wait a minute, I am super passionate about people development.
because, you know, I got here because I had mentors and I had managers that were investing time in me. So, but, you know, I guess whatever people's perception is completely different and it made me step back and acknowledge the fact that, yes, that has taken. The backseat because, you know, I've been so focused on getting systems in place or, you know, just closing the books or, you know, getting the company public and things like that.
Erik: I appreciate you sharing that. I think about Brex's own growth story and then what we've been able to accomplish in accounting, getting the close down from call it two weeks. We, we, we do it at five days now on the accounting side, you know, we've expanded our reporting. We have. Regulated statutory reports, all this required a lot of day to day [00:15:00] work and it's just like, you know, getting stuff done, getting tasks done.
And I think, yeah, like when you're in the hyper growth stage, it's obviously very important to carve out at least some time to ensure that people are doing well, to ensure that people are getting what they want out of these tasks and learning a lot to ensure that their careers are being developed. And a little goes a long way, I think, in this arena.
So that's, that's a good spend management philosophy. And let's talk about where we're at today and even at Redis. So you just joined this company, you know, Brex is a private company, we have 1, 200 folks. we're feeling the same thing that a lot of other companies are feeling. Boards across the country are saying, okay, let's make sure that every dollar that's being spent has the right ROI we need for this company.
Tell me about how you're approaching kind of spend management at Redis.
Angelina: You and I are pretty much in the same spot, right? We are, our companies are definitely watching their spend and their cash flows. For us, how we're approaching it is, A, we're still [00:16:00] making investments, but there are just a lot more strategic and thoughtful discussions around what we should be spending, what kind of return we will get from the So, you know, for example, things that will drive sales growth, absolutely.
Things that are pure GNA, it'll probably be on the back burner until, you know, until, until it's absolutely necessary. and then for us, we do start with a high dollar value spend. Being a software company, the, the biggest to spend is basically people and cloud. I think if you want to focus on.
Optimizing spend. Cloud is probably the one area that you should focus your time on, especially because it should correlate with the on demand slash consumption based component of the revenue. That would be the area where you would focus on, make sure that you have the right rate, make sure that you're not being paid for what you're not using.
and we actually have, an effort within the company called, [00:17:00] you know, for the lack of a better name, cloud optimization effort.
Erik: I don't know, like which. Cloud service provider you have, whether it's AWS or Azure or Google, like, like, it doesn't really matter who it is, but like, how many people do you have focused on this effort?
And what's their strategy? Like, what are they doing? Is it just monitoring? Is it making sure that servers are being used in an optimal way? You know, what, what does that look like?
Angelina: We do have one person that is almost 100 percent exclusively focused on our cloud spend, meaning that, you know, if we're seeing some sort of a contraction on the revenue side, we want to make sure that we see the same thing on the expense side.
and another thing as well is, these cloud providers have different, pricing structures, right? So it's really also looking at the pricing structures and make sure that we have the most optimal. Pricing structure. And that is just kind of an ongoing thing that we,
Erik: So do you have like month to month, week to week meetings with your cloud provider?
Like, oh, how much is like, like Amazon [00:18:00] has an EC2 server or like this S3?
Angelina: So we don't exactly have, you know, that high touch, interaction with our cloud providers, but we're basically monitoring it in the backend where. You know, we're dialing things down as we need to. and we're basically just watching how the expense, you know, hopefully the expense correlates with the revenue
Erik: Makes sense. Yeah. I mean, that's probably the biggest line item. I mean, certainly one of our biggest line items at Brex, right? what are some of the other areas that you, that you're focusing on?
Angelina: I think procurement in general, right? I always say, you know, to my boss, as well as, to my team, if you want to achieve what we call smart spending, i.e. spending the right amount in the right areas that will drive the business forward, you should invest in a good strategic procurement function. So, I'm not talking about a team or a system that handles the processing So, basically like pushing papers, but, it's really around, You know, is there a team or is there somebody that can take a look, identify duplicative [00:19:00] spend across the different functions?
Because you know, people get pretty territorial about their decision making around what to buy from who, and there can be redundancies across the org. And then, you know, optimize the suppliers list and more importantly, negotiate on your behalf to get the most optimal pricing. That's really when you can realize your savings.
And, the, the reason why, I think procurement is where you should invest is because If you think about your P& L, a dollar of revenue that you grow does not translate to a dollar to the bottom line, but a dollar that you save on your spend does. So you know, I, I have a pretty amazing strategic procurement person at my last company and and that was basically what she said and it really resonates to me and you know, I, I, I carry it forward.
Erik: Wow. I mean, my father said this growing up, you know, a dollar saved is a dollar earned. There you go. Right? I'm really curious. So I'm going to play devil's [00:20:00] advocate here just a little bit. And I, by the way, I 100 percent agree with you, but I'm going to play this role anyway. how can there be a procurement person that understands all the different pricing structures for different services that we might get across all these departments?
Like, why do we need a centralized person to do this when, you know, this person in business development kind of knows this area the most, or these engineers kind of know the cloud service space the most. Like, where do you, where do you really get that value from? Why don't we just like let the experts handle it?
Angelina: Yeah. Okay. So, so I'll, I'll, I'll, I'll throw, I'll, I'll throw in two words, learning agility. So, learning agility is the number one factor of predicting success in a new environment, right? and what it means is, you know, if you have learning agility and you're humble, you're self aware, you're willing to learn, you're willing to ask a ton of questions and talk to a lot of people, you could probably be successful.
so how we went about it, and you're absolutely right. Right? [00:21:00] Different, different areas of the organization have different spend. an example is my biggest spend is my audit fees. and, you know, but my audit fees is very different from, you know, cloud service provider. the, the procurement person that I was referring to, you know, she obviously has had procurement background.
She is She's an amazingly tough negotiator, and how she approaches these, these contracts that are about to come to you and about to be negotiated is she asks a lot of questions, right? So, you know, we started her with, I think, you know, some of the, the SaaS spend. This is back at PowerSchool.
and then she learns very quickly. And once she was successful with one contract, people started looking at her and be like, Hey, you know, you're not there to be in my way. You're there to actually help me manage my department budget. so it's almost like a, you know, it's, it's like a, it's like a circle.
Right. The more she is [00:22:00] successful, the more people are willing to engage with her. So she is not shown as a roadblock, and she's actually somebody that, that helps, the business safe. yeah. And then a few months later, I was talking to her. I was like, Hey, can you, take a look at my audit fees?
because we're, we're about to sign this engagement letter. we're about to go to the audit committee. and. And of course she knew nothing about professional services. So I talked to her about fixed fee, out of scope, you know, the hourly rate, budget rate, basically kind of, you know, The whole black box of fees.
Erik: Yes, yes, exactly. Yeah, I agree. I get it.
Angelina: Yeah. Yep. And then she basically, and I basically just unleashed her. And then, and, and we were able to actually, when we were benchmarking against our peers, we actually came up pretty
Erik: good. How do you add to or support the cause. Like, what are some of the things that you've done in accounting to reduce kind of your own spend?
Maybe it's like actually bringing in a system so that you don't have to hire as many people. or maybe it's outsourcing. but like, you know, curious, curious [00:23:00] what, how you've done it. What
Angelina: I've done in the past is, leveraging our lower cost locations. So, so at PowerSchool, we have a pretty robust, shared services center in, Bangalore, India and it's a captive model. So, these are our employees. when I came into the role, we already had a team there, performing things like, you know, billing ops and, collections, AP, and of course, there's like, you know, a separate statutory team, but, you know, they, they kind of do their own, you know, finance slash accounting local for the local entity.
Now, so what I did during my time there is, really. Expanding the scope of the team that is there, by giving them higher level work. So for example, if, um, you know, at the beginning, these collections folks are only dealing with, you know, what we call inside sales customers. So these are your lower end customers, like smaller dollar value.
We [00:24:00] want them to do more of our enterprise customers that are bigger, right? So you kind of give them piecemeal, like the work is still the same, but of course the stakes are higher because you're dealing with bigger customers. And then, you know, they get a lot more sensitive when you mess up, right? So, you know, really just kind of upskilling the team that you have in there.
And, if you have a natural attrition, then, instead of immediately backfilling it in the U. S. really think about whether this role can be performed in India. So, that was just a mandate that was given by our CFO and, you know, we were, I would say that we were pretty good at being thoughtful about where to open the backfill.
Erik: Let's talk about, some stories from the inside, like in terms of like big initiatives and projects. So, you started at PowerSchool. PowerSchool. Three months before the IPO. Why don't you talk us through that process? So you were there, maybe the S 1 was already written or, or about to be completed by the time you started, or what was the S 1 writing process like [00:25:00] getting the issuance out there on the public markets, the afterwards, which some argue is even more important.
What was that like?
Angelina: So I joined in April 2021, we eventually went in July of 2021. The S1 was ready, all of the SEC comment letters were already cleared, but then the S1 was about to go stale. So, what I did coming in was actually updating the S1. well thankfully we did not have to go through the SEC comment process anymore.
but there was a lot of interactions with our, our experts. that was EY at the time. our tax team, our audit team, our bankers, as well as our, attorneys,
Erik: right? And for reviewers, what is the, what is the comment letter process from the SEC? Like, like what's the process when you write the SEC and oh, sorry, when you write the S1, you have to submit it and what the SEC reviews it first?
Angelina: that's correct. So, you know, we, we can, we have the option of submit. of submitting a confidential [00:26:00] S 1, right? So you submit the confidential S 1 and then they look at it, they review it, they ask questions. usually the questions are always around revenue, and you know, how, what your policies are, why, you know, for example, why is it gross versus net, you know, what is upfront versus deferred, like all that.
So, you know, you have to clear that, and once you're done with that process, then basically your S 1 is. You know, your S1
Erik: is there. And the S1 is the prospectus, right? It's the document that you share with prospective investors, you know, telling them about your company so that they'll buy into the issuance.
.
Angelina: Exactly and then, what I, you know, what I was also experiencing before we went public was, the process of roadshow. And this is 2021 when, you know, people are kind of, okay, do I want to do it in person? Do I want to do it online? we ended up doing it remotely. So, you can imagine our CFO and our CEO, meeting back to back with various investors, repeating the same stories.
I don't know how [00:27:00] many times during the, during the roadshow. and I think what was also. about how they approached it is we had a pretty big float. Our float is about three and a quarter billion, right? So when you have that big of a float and you are not a snowflake, you want to make sure that your IPO is successful.
And one way of doing that is making sure that you have this so called anchor investor. So these are investors that, are willing to have their name be put on the prospectus, in exchange of. A guaranteed allocation of IPO shares. And the reason why you want to do that is it actually makes your case stronger.
And then people would look at it and be like, Oh, wait, you know, there's already an anchor investor that is committed. For a sizable amount off the float.
Erik: And this is an anchor, like, actual investor. This is not one of the investment bankers that end up on
Angelina: No, it's an actual investor. Yeah, I think, oh my gosh, who was it?
It's, it's this, investment fund called Select Equity. was, was our anchor. and I believe the second one was Canadian [00:28:00] Pension Plan, CPP, which is huge, right? So, what's interesting was I never heard the term anchor investor. I don't think that was the norm back in 2021, but, you know, the last three IPOs, the last three tech IPOs that we had, right?
ARM, Klaviyo and Instacart, all of them have anchor investors. And I was like, Oh, hey, anchor investors. Now I know. So, but yeah, so that was, that was kind of the process. And then, you know, a bunch of us went to New York and then, you know, I was, I was lucky enough to be on the podium for the, for the ringing of the opening bell.
so that was. definitely a bucket list item.
Erik: Some people call the IPO the Superbowl within finance and accounting. It is the
Angelina: Superbowl,
Erik: you're right. Some people also say that defending your Superbowl championship is actually more difficult. So tell me about after IPO, converting to SOX. You know, getting those audits done, maintaining the compliance, like, was that a big change for you guys?
Angelina: So, I think, [00:29:00] the biggest lift was SOX, because, PowerSchool was listed in NYSC, and I believe there is a requirement that you have an internal audit. function stood up by the first anniversary of your IPO. So, immediately after we, we IPO ed, the effort was to actually find that internal audit head and engage a third party to be the, um, almost like a lone staff or a team extension to serve as internal audit team.
so, and then as far as SaaS goes, I think PowerSchool was pretty good in that they already understood and they already documented the controls. the, the, the, the long pole was around the IT system. Because, you know, to me, that one's the biggest left. Because if you scope in certain systems that you're not ready to, you can get into a pretty bad spot.
Erik: What, what, what kind of impact does that have on a software company where in a system that like a homegrown [00:30:00] application that's relevant for financial reporting? Like, what does that change? for the team that manages that application or system?
Angelina: How it changes is if it is homegrown, there's definitely a lot more scrutiny around the controls, that, um, that we put in place for the systems for, for, for the systems to continue having and maintaining its integrity, right?
So, for example, if you have an outsourced system, then you can rely, well, I mean, you still need to do some work, but it's a lot less because you rely on, their controls audit report that says that the controls within that system is working. Yeah. And
Erik: for listeners, that's, that's simply called like a SOC 1 report.
Angelina: I feel like it sucks. You're more likely to get a significant deficiency or a material weakness from an IT system than from a business process controls not working or not being designed well. And that's
Erik: like, like, is it, is it really like every code change has to be reviewed?
Angelina: I don't know the nitty [00:31:00] gritty of that, but yes, there are, there needs to be a control around change management because you don't want a change within the system to actually affect the integrity of the data and the outputs of it, especially if the outputs are something that you rely on for financial reporting, right?
And, you know, remediating, significant deficiency and material weakness within IT is a long process.
Erik: So yeah, just for our listeners out there, you know, some of the things I've seen that may or may not work for your companies, but maybe something to consider when you have an application in scope, there's a lot of code changes that still occur even after the application is live.
And so sometimes some companies, they, they will classify those changes as minor or major. And so if it's a minor change, you know, it's not really that important. Like let's, we can push it through. There's not as many controls that you need over it, but if it's a major change. That may impact the data integrity that's used for reporting revenue or reporting [00:32:00] some other metric that's important to the financial statements.
You know, that's when it's something that you need to get reviewed. you know, you've been in, I haven't taken a company public yet, but like, okay, so let's just say you get a significant deficiency or a material weakness in ITGCs. Do people care? Does the, like, does the board really care? Like, you know what I mean?
Like, at the end of the day, the stock's already out there. People are trading and selling it. How does it, how does it actually economically impact the company?
Angelina: I mean, I think it, you know, I, I don't know how deeply people look into this. And again, you know, I'm an accountant, of course, I am going to look for significant deficiency and material weakness in filings, right?
So I can't really tell how it does or does not impact the stock price, but, you know, it definitely calls into question your readiness as a public company. Because if you're, if you're a public company, you'd better make sure that all of these things are, reliable, that it's going to produce a reliable result.
so [00:33:00] you just don't want that doubt out there that, you know, oh my gosh, you know, the IT system is not working very well. Oh, you don't know how to, to, to manage changes very well. Oh, your access control is not very good, right? So, you know, you definitely want to get all of those things.
Erik: I mean, I've heard a couple of things on how to think about this. Wall Street Journal will from time to time report on these matters when the company is significant enough and the finding is significant enough. This has to get reported on your public filings registered with the SEC so investors see it.
It adds to your litigation risk potentially at the board level, right? So investors could sue the company because they saw that there was a material weakness and, you know, you couldn't rely on the financial reporting that you did. So, you know, you need to give me money back for this unrealized loss that I had or this realized loss that I had.
So yeah, I do think downstream, there are some impacts there. [00:34:00] Oh, for
Angelina: sure. And then when you mentioned Sheriff Holder's lawsuit, that reminds me of another impact, right? Because, you know, when you first become public, your DNO, the, the direct, what is it? Directors and officers liability insurance just go through the roof.
And as you become mature as a public company, you see the, you know, the premium going down. That's a real savings, right? But if you have, an instance of, you know, like, I don't know, like a potential threat of shareholder's lawsuit that can be part of the consideration when insurers come out and give you a quote for your next DNO.
Erik: And then if you, if you have a really high DNO insurance, it kind of makes it tough to fill up the board sometimes with the people. Oh, absolutely. Yeah.
Angelina: So yeah. Yeah. No, so there are these, you know, long lasting impact, right?
Erik: All right. Let's, let's end the show. Do something fun. Recall the segment, controllers are fun too.[00:35:00]
I mean, I would love to hear about a funny accounting story that you may have.
Angelina: I am still debating whether controllers are fun, but you know,
Erik: By the way, the answer is no, we're not. We're totally not. Yeah,
Angelina: they know. But just be clear. I can probably tell you, about my, most unusual expense reports.
And this is one of the last expense reports that I submitted at. at PowerSchool before I left. So, I'll preface it by saying that the T& E function rolls up, rolled up to me within the CAO organization. and you know, I mentioned earlier that we have India Shared Services Center, right? T& E is one of the functions that are performed out of the India Siak Show Business Center.
So we have somebody there that's doing the day to day operations of expense report review, approval, and reimbursement processing. It's part of the AP function. So, I went to India earlier in the year. Didn't [00:36:00] meet the guy, unfortunately, as he was not feeling well the week that I was there. But I heard from the team that he's He's very diligent and he takes his work very seriously.
He has a lot of pride in his role and basically just an all around great team member, right? I mean, great. Who would want people who would not want people like that? anyways, I didn't know the extent of how seriously he takes his work until I came back stateside. and a few months later I submitted an expense report.
that got rejected because a 24 cents misclassification. So it was a parking fee that's somewhat embedded within a hotel folio that should have been broken out. So, you know, of course, you know, it got kicked back to me. I, I resubmitted the expense report and I got paid. And then, you know, later on, I was talking to the team about it.
It was like, well, you gotta, you know, you gotta hear about this 24 cents misclassification. And if my team was like, well, You know what, he rejected the expense reports of our CEO and most recently, [00:37:00] and most recently our CPO, our Chief People Officer, and his reason, because you need to put in reason for rejection, his reason was that the Chief People Officer's expense reimbursement was not being Made in accordance with HR policy.
I was like, dude, she's the one that made the HR policy.
Erik: Oh my gosh.
Angelina: I know, I know. It was a, a plain internet fee reimbursement that was above our limit, so.
Erik: There's two sides to that coin. I think, I think being on this end, it's not The most pleasant experience. Yeah. But you got to respect the fact that the guy takes his job seriously.
I know. I know. That's the one person that controls kind of a little bit of the culture on the correct spend. And so if you have someone that takes it diligently, you can actually have a good impact across the board on just being a little bit more responsible on your
Angelina: charges. And make sure that the policy has teeth.
Erik: Well, Angela, it was great to have you on the [00:38:00] show. Thank you so much for taking the time.
Angelina: Thanks for having me.
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