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Auditing Service Viable?
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Infinity Karr
Viziam
Amarr Empire
#1 - 2011-12-07 22:04:40 UTC  |  Edited by: Infinity Karr
I am relatively new to eve but I am thinking about offering my services to the business sector of eve.

Is there a market for this service?

My background
I am an accountant in real life studying for the CPA exam. I have worked as an auditor both in the public and the private sector. For some reason I find joy in numbers reconciling accounts and seeing revenue accounts really gets me excited. This leads me to my business in EvE.

I am offering a service to all EvE business entrepreneurs (if you can afford me).

Initial Service
- Verification of Character through API including skill evaluation, assets, and market orders.
- Evaluation of Business Plan
○ Extensive questionnaire filled out by entrepreneur
○ Evaluation of Expected Revenue
○ Evaluation of Cost of Goods Sold
○ Verification of Profit Margin
- Evaluation of terms

On going Audit Service
Weekly/Bimonthly verification of revenue and expenses. Provide an ongoing opinion of liquidity and the corporations/individuals obligation to repay loan/dividend.

Risk
Please note that as an auditor I do not secure business ventures I can only provide the best analysis of someone's ability to carry out their proposal.

Benefit
Reduce the liability of fraud thus allowing the investor greater security. An audited plan could also allow the entrepreneur the ability to charge less interest due to less risk.

Cost
Services will vary depending on job but will usually be 1-5% of the initial requested investment amount.

Are these costs reasonable? Could I invest in a Corp I audited and still give my opinion on the business plan?
Shar Tegral
#2 - 2011-12-07 22:19:36 UTC
Your accounting experience will mean little to nothing. Auditing in Eve is not just about numbers but it is about verification. While you may verify facts no one knows you worth a single isk to know if you, yourself, are worth hearing. Charging for this service is simply one of two things: paying someone for their reputation to bother being involved or simply someone to help cook the books while pacifying the investors.

Your ongoing auditing will accomplish nothing in the way of security might I add.
If you don't understand why, you really should not be offering this service.

PS: Mind you I'm not against people trying to do this however I'm just giving you the benefit of my experience. I was, after all, the first person to provide this service and the first person to quit it for its inevitable futility.
Florestan Bronstein
Ministry of War
Amarr Empire
#3 - 2011-12-07 22:33:44 UTC  |  Edited by: Florestan Bronstein
There can be a market for this service - there has been a market for this service in the past (although at an almost symbolic price point) and it is presently unclear whether that market has collapsed because of fundamental concerns or because of all qualified "MD auditors" quitting the game/no longer providing their services.

Infinity Karr wrote:
Could I invest in a Corp I audited and still give my opinion on the business plan?

Yes and no.

The origin of "audits" in MD was well-known investors asking for API keys from potential investees and summarizing their findings in a few lines for other interested parties.


I would suggest to avoid investing in offerings you have audited - a key problem of past MD auditors was that investors tried to delegate all risk assessment & evaluation to the auditor.

Given how incomplete the auditor's access to important information is, how easily this system can be gamed with some preparation and considering the occurrence of not-premeditated "scams" (burnout, business failure, impulse, ...) , an auditor would be very unwise to put himself into a position in which he can be made responsible for other people's (ex post bad) investment decisions.
From this point of view the auditor would do good to report and summarize facts as objectively as possible with little to none interpretation or opinion attached. His main purpose is not to judge the offering but to provide a middle ground between the business manager disclosing his (secret) business details to all potential investors (unacceptable to most managers) and the business manager providing no verifiable details about his business at all (unacceptable to most investors).


An opposing view would be that the MD auditor is not really asked to act as an auditor but as a rating agency.
Putting his money where his mouth is could increase public confidence in his assessments (although if his available investment funds are limited he might run into trouble to explain why he invested in some "good" offerings while staying away from others that he wrote equally favorable reports about).


In any case you will need thick skin and probably quite some time to enter this market.
At the moment your word counts as much as the word of those you would audit and there is no "easy" way to resolve this issue (however, history shows that this barrier can be overcome, the way and time necessary just varies from person to person).
Callduron
Dreddit
Test Alliance Please Ignore
#4 - 2011-12-08 01:55:53 UTC  |  Edited by: Callduron
It sounds like an interesting service that may be used by IPO launchers to add the appearance of respectability and to facilitate investor scrutiny.

Just be careful that some of your clients may be ponzi schemes - you're as attractive to one of those as you are to a genuine entrepreneur.

Edit: ok, thinking about it you may be able to verify that money alleged to have been invested really has been invested. This eliminates the simplest form of ponzi, where no money is ever invested and dividends are paid directly from investment capital. A more complex scheme, where they do invest the money but once the business hits a certain size run off with the cash is something harder to prevent.

I write http://stabbedup.blogspot.co.uk/

I post on reddit as /u/callduron.
VB Sarge
Revenue Retrievers
#5 - 2011-12-08 02:36:49 UTC
Be very wary of getting into the auditing market. From personal experience, while you may love numbers in real life, eve isn't about numbers, it's about reputation in this line of work.

If you audit for something that turns into a scam before you have a reputation built up, you will never be able to be credible in this (auditing) industry again inside of Eve.
Your name will be tied in with the scam, and people who invested and were robbed will blame you just as much as the originator of the scam. Then, whenever your name comes up as auditing another IPO or whatnot, you will be flamed back to the stone age, further tarnishing your reputation and ruining the chance of whatever you were trying to audit to succeed.

If you look back into the history of Eve and MD and audits, you'll see most of the audits were done by a very few people in eve, and all of them had gained their influence by being successful yourself.

Best of luck, but know that reputation in Eve is a very slippery slope.
VB Sarge
Revenue Retrievers
#6 - 2011-12-08 02:37:07 UTC
double post is fail
Breaker77
Reclamation Industries
#7 - 2011-12-08 02:51:38 UTC
VB Sarge wrote:

If you audit for something that turns into a scam before you have a reputation built up, you will never be able to be credible in this (auditing) industry again inside of Eve.
Your name will be tied in with the scam, and people who invested and were robbed will blame you just as much as the originator of the scam. Then, whenever your name comes up as auditing another IPO or whatnot, you will be flamed back to the stone age, further tarnishing your reputation and ruining the chance of whatever you were trying to audit to succeed.

If you look back into the history of Eve and MD and audits, you'll see most of the audits were done by a very few people in eve, and all of them had gained their influence by being successful yourself.


QFT!!

I can say that it doesn't matter if you have 100 audits where the offer ended successfully. If the 101st audit ends in a scam, thats pretty much it. Even though most people would be willing to overlook 1 bad result out of all those, it's that 1 bad offer that will get quoted, linked, and talked about from then on out.

I don't even want to get started with what happens when you work for one of the largest "Banks" in EVE and it goes belly up.

There is a reason auditors such as Shar, VV, Brock, myself, and others didn't do the job for very long. It's hard work, long hours, dealing with nonstop bullshit, and you can make more ISK per hour mining veldspar in highsec.

Auditing in EVE is not a way to make ISK. It's something you do because you enjoy being treated like a piece of ****!
Shar Tegral
#8 - 2011-12-08 22:08:58 UTC
As I was going about my affairs today I realized that I forgot to add something in my post:

For the most part your service needs to be "value added" or it leeches.

In Eve, accounting is easy.
Accounting in accordance with GAAP is NOT easy.
In Eve, accounting is easy.

So:

  • Verification of Character through API including skill evaluation, assets, and market orders.
  • Evaluation of Business Plan
  • Extensive questionnaire filled out by entrepreneur
  • Evaluation of Expected Revenue
  • Evaluation of Cost of Goods Sold
  • Verification of Profit Margin
  • Evaluation of terms


I looked through your list of services and do you have any idea what you are asking for in the way of trust? Firstly, if you have not proven yourself by running your own Eve business how can you hope to evaluate the plan's of someone else. Questionnaires are a scam artists checklist (in case you did not already know).

Additionally, entrepreneurs who disclose their plans before they act on them are usually out of business before they start. So how are you going to tell the difference between a wisely closed mouth business aspirant and some cagey pyramid scheme artist. Without reputation, no one knows if you can be trusted on either end of the transaction.

IMHO you have come to Eve thinking that your current goal is applicable to Eve - a niavete not unique to you. Hexxx has been trying to grapple with this for years. We are all still waiting for the unveiling of his efforts... and waiting... and waiting
Callduron
Dreddit
Test Alliance Please Ignore
#9 - 2011-12-09 06:13:16 UTC
Or perhaps to put it a slightly nicer way.

Try trading for a bit. At least double your capital. Get a handle on how to do it.

Ask here for some capital. Do more trading and pay off your investors.

Then launch an auditing service or another bond.

There are oddities in Eve trading that you wouldn't be aware of from training in real life accounting.

I write http://stabbedup.blogspot.co.uk/

I post on reddit as /u/callduron.
Hexxx
Sebiestor Tribe
Minmatar Republic
#10 - 2011-12-29 14:47:31 UTC
It's been a while, and as Shar said, this has been something I've struggled with for some time. The following is an excerpt from a draft of a post I'm working on that I hope to post in entirity in the next month or so. In paticular, I need to work further on the expense/revenue ledger entries and account for manufacturing, research, and contracts as well as non-traditional business operations. This is complex to build, but doesn't have to be complex to run.


WORKING DRAFT

The following is a porposed method for financial accounting on businesses. This is not the result of a single day's work but the evolving product of many discussions and exchanges with the community over the span of nearly 3 years. It is not perfect nor final. My hope is that it serves as a starting point for solving the twin challenges of properly reporting on the profitability of an IPO and an inexpensive/reliable audit of that reporting.


Summary of Phases

There are phases of financial accounting, they are not perfect. I will list out in summary the pros and cons that may be worth further discussion.

Phase 1 - Initial Balance Sheet

A complete inventory of all assets (ships, ISK, BPC, etc) is made. Using an agreed-upon method, a conservative market valuation for all items is determined. This valuation becomes the cost of each item.

No ledger actions are neccessary.

An Inventory table stores the non-cash assets (ships that shoot missles, missisles to shoot ships, etc). It includes the asset information, cost (conservative market valuation), quantity purchased (how many you have), purchase date (the day you do valuations), and quantity remaining. The last piece of information is important for the purposes of cost accounting.

A simple balance sheet can now be produced that lists converservative values of cash and non-cash assets.

Phase 2 - Running the Business

Now that an inventory is established, the business can begin. Please note, the business may have already been running prior to this however for the purposes of accounting this will be when you begin proper financial accounting.

Ledger Action #1 (purchase of inventory):
- Credit to Asset Ledger (Cash Spent)
- Debit to Asset Ledger (Inventory Received)
- Debit to Expense Ledger (Taxes/Fees)
- Additional Action: Record of sale in a Sales table which includes a Cost of Goods sold (CoGs) based on information derived from the Inventory table.
- Additional Action: Update remaining quantity (if any) of the item sold.

Ledger Action #2 (sale of inventory):
- Debit to Asset Ledger (Cash Received)
- Credit to Asset Ledger (Inventory Sold)
- Debit to Expense Ledger (Taxes/Fees)
- Additional Actions: Add a new record to the Inventory table, including the purchase price and quantity.

Phase 3 - Paying Yourself

After a period or several periods of time, you, the manager of the business decides to pay yourself. You do this simply by crediting the Asset Ledger (cash removed) and debiting the Owner's Equity (or Shareholder Equity) Ledger.
Vaerah Vahrokha
Vahrokh Consulting
#11 - 2011-12-30 01:28:27 UTC  |  Edited by: Vaerah Vahrokha
Breaker77 wrote:

There is a reason auditors such as Shar, VV, Brock, myself, and others didn't do the job for very long. It's hard work, long hours, dealing with nonstop bullshit, and you can make more ISK per hour mining veldspar in highsec.

Auditing in EVE is not a way to make ISK. It's something you do because you enjoy being treated like a piece of ****!



Well I quit EvE so I could not really audit anyone. I still got people emailing me about auditing for weeks after I left Lol

Now, is auditing even still possible? I mean, before I left CCP did some stupid change to the APIs that shortened transactions history by a LOT making it pointless. Did they undo / change that?

I think I am one of the ones who audited for the longest time and *stupid me* I still like doing it for some reason.

I say stupid me because I can earn more by farting, and without the billion hassles and flames auditing involves. But still... if it's possible and someone asks kindly I love to produce audits like this one. It took so much work to make it but it's so awesome!

To the OP: EvE audits <> RL audits. In EvE they have to trust YOU with no "brand" behind your back, you have to know a lot of the game and the many, many tricks the scammers will try to fool your reports.

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Avensys
The Waterworks
#12 - 2011-12-30 07:41:33 UTC  |  Edited by: Avensys
Vaerah Vahrokha wrote:

Now, is auditing even still possible? I mean, before I left CCP did some stupid change to the APIs that shortened transactions history by a LOT making it pointless. Did they undo / change that?

I think you are referring to a one-time reset of transaction history.

IIRC journal/transaction history can (in theory) actually be queried further than it used to be.

As far as I am concerned the customizable API keys have done a lot to make auditing viable again (finally a way to exclude evemails completely).