Monday, December 17, 2012

If Santa suffered an audit.....

ParenteBeard, a top 25 U.S. accounting firm, is helping to balance the books of what would be the largest non-profit in the world: Santa, Inc. The following notes are extracted from the related Press Release which goes into far more detail.  They have been described as 'Reckless Santanomics on CNN (see video below).

While Santa’s magical powers eliminate many of the typical business fundamentals such as production and employee costs, ParenteBeard analysed what it would take to actually operate Santa’s North Pole. They determined that it would cost 42.3 billion dollars to operate Santa, Inc. annually.

ParenteBeard's analysis includes detailed consideration of the following categories of expense and how the figures below have been computed:
  • Gift Production: $39.5 billion (assuming the av value of Santa's gifts per child =  $75)
  • Employee Costs: $2.77 billion (incl: Elve's Salaries: $2 billion and Health Benefits: $773 million) 
  • Electricity Costs: $98 million 
  • Reindeer Costs: $54,000
It's a long time since I was in practice but it strikes me that ParentBoard's Santanomics are flawed.

I'm prepared to accept that they can ignore any property related costs other than electricity on the assumption that Santa.Inc owns the workshop and that no impairment costs arise due to specific local weather conditions. But there is still the cost of a new red suit each year - with all the travelling he does it's unlikely his suit would last indefinitely. And, I'm no expert but I suspect the reindeer costs are too low. The CNN santanomics expert agrees....

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