Small Businesses Should Outsource

For small businesses, it is often better to outsource certain tasks rather than to hire someone to execute them internally. When it comes to certain roles, like marketing, IT or accounting, it may be less expensive to hire an outside firm to carryout tasks typically assigned to an employee in one of these roles. Think about the cost savings involved with outsourcing, no health insurance, payroll and worker's compensation.

How does a business know when to outsource? For all businesses the right time to outsource is different, however for all businesses, there are a handful of situations where it is most cost-effective to do so. For example, if a large project arises that will only take a couple months to execute, and then once the task is complete, additional work for a full-time employee would be lacking, hiring a contract worker would be the best option. Another time to consider outsourcing is if a business's current employees are not able to complete tasks in a satisfactory manner. Outsourcing in this case may help full-time employees be more efficient and get more done overall.

There are also some tasks that are always best outsourced. For starters, payroll is one task that is best handled by an outside accounting firm, unless your business is an expert in this area. Along with that, bookkeeping is a task that can be difficult without expertise in the subject area. Both of these tasks, classified as back office services, can be outsourced to one firm. These are non-core tasks that a company with expertise in back office services will be able to handle best.

Marketing is another task to outsource. If a business does not have the budget to bring on a full-time marketing associate, the best way to have important company promotions completed is through outsourcing. While it might seem that marketing can be left out completely, it is the task that fuels the sales team with leads. When it comes to outsourcing marketing, a consultant or a PR firm can be hired. They will be able to develop downloadable content for your website, compose blogs, manage your social media accounts and maintain email marketing campaigns. With the importance of the Internet, digital marketing is imperative. That means if a business cannot afford to hire a full-time employee, outsourcing marketing is the next best thing.

Outsourcing is a great way for small businesses to carryout non-core tasks. Outsourcing accounting tasks, such as payroll and bookkeeping, or hiring a marketing consultant are two great ways to save money and receive topnotch services for a small business.

Prepare Your Accounting Tasks in a Flawless Manner

Outsourced accounting firms in India are considered privilege with other nations of the world. The reason is qualified workforce which is skilled in complex projects like accounting and bookkeeping. For any organization, these are vital engines that keep the company going. The job involves keeping an expert eye on the financial details which is time-consuming. Nevertheless, the job has to be performed upto the utmost satisfaction of business owner, so that the necessary growth rate is achieved. Hiring the accounting professionals from India is thus, considered a better option because of the timely project execution. The cost factor is an attractive feature of receiving the accounting outsourcing from the oriental countries because of the vast available manpower.

A number of services like accounting outsourcing and tax return are undertaken by the accounting professionals in India. Outsourced accounting is profitable for the organizations worldwide due to its excellence in completing the accounting projects. Innumerable accounting firms in India are in the fray today to help the companies reach their full potential. As known already, the latest software utilized in the accounting tasks is a boon for the reputed and other organizations. The limited sources at any organization often act as a barrier towards the full growth of a company. Moreover, these also divert the focus and the energy of a business owner from his important tasks. Outsourcing firms understand every requirement of their client companies and provide suggestions for the maximum growth of a company. Therefore, it pays in the long run to go for outsource accounting services which is perfect in keeping with the needs of established as well as an upcoming organization.

Accounting services are profitable for a number of accounting firms due to the speedy execution of the tasks involved. Speed is the key with these organizations ands the accounting tasks are completed with the help of vast experience of these professionals. The service providers from outsourced accounting firms specialize in keeping and maintaining the records afterwards. The accounting data is kept flawless and the solutions suggested by them change the face of your business forever. A support structure which precisely records the accounts data is present at the outsourcing firms which can find solution to any nagging accounting problem. Since their demands are minimal in nature as compared to the in-house accounting staff, an organization benefits immensely form them.

Mostly, upon not getting the desired output from the in-house accounting system, a company takes the assistance of outsource accounting. This is a proper way to complete important projects because of the quality output you get form these firms. The statements which they prepare, either the tax statements or other financial documents are flawless because of their razor-sharp accounting skills and a hawk's eye for detail. Efficiency and accuracy are the hallmarks of outsourcing services which often set the business owner free from other tasks. Maximum benefits are ensured upon associating with such firms because the responsibility of difficult accounting tasks is undertaken with finesse and ease. Following regulations and practices to complete the reports and regularly update them as well is what these firms are adept at. People to people contact are emphasized, so that a healthy interaction for the purpose of smooth execution of tasks takes place.

Reasons of Hiring an Accounting Firm

The roles of an accountant include bookkeeping, taxation and auditing. Economic policies have changed ever since the accounting concepts were introduced. Companies have with time seen the need for hiring qualified and experienced limited company accountants to facilitate these functions. Accountants are recommended for small and large companies as well as local and multinational companies. Depending with the size of the company, a team or a single accountant can be hired. Larger companies often hire a bookkeeper and outsource the rest of the roles to accounting firms. The reasons for hiring an accounting firm include:

· Performs important financial roles
Professional accounting firms are recommended because they possess the necessary skills and experience in handling many roles. They play an oversight role in handling assets and preparing financial accounts. They also help with business planning, made possible by forecasting. They recommend viable transactions and thus these accounting firms are a trusted confidant of many companies.

· Prepare tax returns
The accounting firm plays an important role in preparing tax returns and submitting the same on a timely basis. This ensures the company is up to date on their tax return and thus they avoid being penalized for late submissions or failing to submit tax returns according to the law. Therefore, the accounting firm keeps you from the worries of tax and in the process saving the company money.

· Offer financial advice
The accounting firm offers financial advice on a regular basis- they advice the company on better ways of managing assets and cutting down on costs. Furthermore, they advise the company against items that contribute to costs and recommend transactions that contribute to increased profits. They help to review the business transactions before management reports are prepared. The right firm helps to review business deals and leases to make sure they are appropriate for the company.

· Provide networking contacts
Many of the accounting firms have been in business for many years and have served many clients in the industry. As a result, they have over time gathered useful contacts. Therefore, they are able to provide useful contacts to the company. The company can reach out to these contacts to help grow the business.

· Plans your financial future
Although a company has its own assets that are separate and distinct from those of the owners, the firm can play an important role in advising the owners how they can go about planning their financial future. They can assess the owners personal assets to advise them how they can go about ensuring their financial security.

Summary of Revised Exposure Draft

Well, my plans for a step by step review of the Revised Exposure Draft were overrun by life this summer. A variety of events left me with little time for blogging. We're now just two days away from the end of the comment period, so I'm going to post a summary that is basically what we've provided to users of our EZ13 Lease Accounting software.

As we’ve mentioned in the past, the FASB & IASB are working on a joint project to revise the lease accounting standard. You may remember that they released an exposure draft in 2010. That draft received a great deal of criticism, and over the last three years, the boards have reviewed and altered a number of their proposals.

In May, the boards released a Revised Exposure Draft (RED). The text, including the actual proposed standard as well as implementation guidance, background, and alternative views from board members who weren’t happy with the result, is available both on the FASB and IASB web sites. While the text is virtually the same between the two boards (they worked hard to maintain “convergence”), it is formatted very differently: The FASB text is structured according to the new Accounting Standards Codification methodology, with insertions to various topics in the ASC structure. The entire RED is proposed as a new Topic 842 (the existing lease accounting standard is Topic 840). The IASB text looks more like the existing IAS 17 or FAS 13.

Quick summary
·         All lessee leases (except those with a maximum term of 12 months or less) will be capitalized.
·         Most equipment leases will be accounted for similarly to existing capital leases.
·         Most property leases will be reported with the asset and obligation equal throughout the life of the lease, and a single lease expense that is normally straight line over the life of the lease.
·         Lessors will account for most equipment leases by recognizing receivable and residual assets, and most property leases similarly to current operating lease accounting.
·         Options will be recognized in the lease term if there is a “significant economic incentive” to exercise.
·         Contingent rent is recognized in the capitalized rents only if based on an index or rate, and without any projection of future changes.
·         The new standard will (absent further delays) likely take effect in 2017, with a restatement for existing leases required back to 2015.
Overview

The fundamental concept of the new approach to lease accounting is that any lease represents an incurrence of assets and obligations, reflecting the transfer of an asset and a promise to pay rent. Rather than capitalizing a lease only if it reaches the high threshold of transferring “substantially all the risks and benefits of ownership,” now an asset and obligation are to be recognized that represents the portion of the underlying asset used during the lease, using the concept of “right of use.” The value is based on the present value of the rents, as is the case for current capital leases.

This fundamental concept has not changed from the original draft to the RED. However, there has been a major change in the determination of what rents need to be included. The original draft called for including an estimate of all contingent rents (those rents whose amount is not known in advance, such as changes for CPI, percent of sales, usage charges, and the like), as well as including any option periods that were judged “more likely than not” to be exercised. Incredibly, preparers were supposed to estimate future changes in CPI or interest rates and factor that into the contingent rent calculation. Thus, crystal ball prognostications for decades were to be placed on the books.

Both of these requirements received severe criticism, and the boards pulled back substantially. Now, contingent rents (now called “variable lease payments”) need to be included only when based on an index or rate, valued at the current level, or when they are “in-substance fixed payments,” that is, the variability is more artifice than reality. Other variable payments, such as percent of sales or excess usage, are to be expensed when incurred, as is the current standard. Options are now to be included when there is “a significant economic incentive” to exercise the option. Guaranteed residuals are only recognized to the extent that they are expected to be incurred.

To reduce the burden of insignificant leases, any lease with a maximum lease term of 12 months or less, including renewal options, may be expensed as incurred, like a current operating lease. There is some uncertainty about how month-to-month leases would be treated under this provision; probably if both lessee and lessor have the right to terminate the lease at any time without penalty, it would be considered a short-term lease, but if the lessor guarantees renewability at a specific price for more than 12 months, that would probably need to be treated as a regular, not short-term, lease, and determining an appropriate lease term for which a “significant economic incentive” to renew exists would be a judgment call for management and auditors to make.

For lessees, any lease above 12 months must be capitalized. An asset and liability are placed on the balance sheet, based on the present value of the rents. The present value is preferably calculated using the interest “rate the lessor charges the lessee.” This is typically the implicit interest rate, but could also be a property yield value. If unknown, the lessee is to use its incremental borrowing rate, as currently.

While all leases (except short-term) are capitalized, leases are still classified. Using the non-descriptive names of “Type A” and “Type B,” the boards separate those that are more like a purchase in that most or all of the value of the underlying asset is consumed during the term of the lease, from those that are more like a rental. If you think you hear an echo of the current capital vs. operating test, you’re right. However, the dividing line has changed, as have the implications.

The boards effectively start with the assumption that equipment leases should be presumed to be like a purchase and property leases should be presumed to be rentals. Only leases whose terms clearly contradict the presumption get the opposite treatment. Therefore, an equipment (formally, “not property”) lease is Type A unless the lease term is for an “insignificant part of the total economic life of the underlying asset,” or the present value of the rents “is insignificant relative to the fair value.” Conversely, a property lease would be presumed Type B unless the lease term is “for the major part of the remaining economic life” or the present value “accounts for substantially all of the fair value.” The terms insignificant, major part, and substantially all are not defined, and are intended to be judgment calls, not arbitrary lines like the 90% test in FAS 13.

A Type A lease is accounted for largely the same as an existing capital lease, with the asset depreciated straight-line and the liability amortized using the interest method, which results in more interest expense in the early months/years of the lease than at the end. A Type Blease reports a single lease expense number which is intended to combine interest and depreciation; the liability is amortized using the interest method, and the asset is effectively depreciated by whatever number is needed to make the single lease expense equal over the life of the lease.

For lessors, the dividing line is the same, but accounting treatment is different: Type A leases result in the underlying asset being replaced on the books with a receivable and residual. The residual is booked at its present value, and is accreted over the life of the lease. (In FAS 13, it is shown undiscounted, though it is present valued to calculate the receivable and income.) Type B leased assets remain on the owned assets books and the lease is treated like an existing operating lease. Leveraged lease accounting is eliminated (with no grandfathering); sales-type leases divide profit recognition between the start and end of the lease according to the value of the receivable and residual.

Initial direct costsare added to the asset and amortized over the life of the lease (for both lessees and lessors). Lessees previously expensed initial direct costs.

Sale-leaseback accounting is now permitted only if the sale can be recognized under the new Revenue Recognition standard (which is also currently in draft form). In particular, if the seller-lessee (now called “transferor”) has the ability to obtain substantially all of the remaining benefits of the asset, sale-leaseback accounting is prohibited, and the transaction is accounted for as a financing.

Subleases are treated pretty much identically to lessor leases, though they are to be reported separately.

Revisions for variable lease payments: Under FAS 13, contingent rent payments are always expensed when incurred, and don’t affect the calculations of asset, obligation, and future minimum rents. Under the proposal, an adjustment is required annually when there are variable lease payments based on an index or rate, such as CPI or LIBOR. The recalculation is based on assuming the new index or rate to the end of the lease. So, for instance, if a real estate of 20 years calls for CPI changes each year, then at the end of the first year, the rent for years 2-20 would be recalculated based on the new CPI level (not assuming any future inflation).

Reporting: Type A & B leases are reported separately, with assets and liabilities in the Statement of Financial Position (balance sheet). They can be merged with other assets, but if so, the detail must be reported in footnotes. On the Statement of Comprehensive Income, Type A leases show interest expense and asset amortization separately; Type B leases show a single lease expense combining the two components. On the Statement of Cash Flows, Type A leases list repayment of principal as a financing activity and interest payments as an operating activity. Type B leases show their rental payments as an operating activity, which is also how variable payments and short-term lease rents are shown.

Disclosure (that is, footnotes to financial statements) must now include a reconciliation of opening and closing balances of the lease liability for Type A and Type B leases (separately). Private companies may choose to skip this disclosure. The future minimum rent disclosure is now by year for at least 5 years (the current standard), and can continue by year for a longer period if judged useful, before grouping remaining years.

Additional descriptive and quantitative disclosure about the nature of leasing activity, variable lease payments, options, residual value guarantees, and judgments used in lease accounting, are all required but not detailed here.

Transition: Current capital leases will transition to the new system essentially unchanged, for both lessees and lessors (except leveraged lessor leases, which must be restated from inception). If a lease is later substantively modified, the lease must be treated as a new lease using the provisions of the new standard.

Current operating leases will need to be restated back two years from the effective date (the application date), so that comparative financial statements in the annual report will be prepared consistently. The lease liability will be the present value of the remaining rents, using the incremental borrowing rate at the effective date. For a Type A lease, the asset is calculated by extrapolating the liability back to inception, then taking the fraction for the remaining life of the lease. For a Type B lease, the asset is equal to the liability. In either case, the asset is adjusted by any deferred rent liability or asset due to previously recognized rent leveling. (Any leases that expire between the application date and the effective date do not need to be restated.)

For lessors, current operating leases that become Type A leases must be replaced with a receivable and residual, with the underlying asset derecognized. The residual is based on the value known at the effective date. Type B leases transition unchanged.

Timing: The RED was released on May 16. The comment period is open until September 13 (to be submitted at http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1175801893139or by emailing director@fasb.org using File Reference No. 2013-270). The boards have included 12 questions in the RED that they particularly would like respondents to address. After comments close, one can expect a month or two for the staff to compile responses, followed by several months for the boards to review contentious topics and confirm or revise the current proposal.

A date has not been announced for implementation. However, the general expectation at this point, if the current draft is accepted without major revisions that would require another exposure draft, is that the new standard would be released in 2014, with implementation required in 2017. In the U.S., where companies normally report two prior years of comparables in their annual reports, that would mean leases would be restated effective 2015. During 2015 and 2016, one could expect companies to be internally tracking their leases both ways.

Alternative views
The RED was approved by the FASB by a bare 4-3 vote (the IASB voted in favor 12-2).  The biggest complaint of those who voted against the proposal is the two types of leases, which they consider to result in excessive complexity. The two models are meant to provide for the varying business reasons for leasing, and in particular the fact that lessees of real estate leases are very opposed to the front-loaded nature of expense recognition with current capital lease accounting (since interest on a loan is greater at the beginning of the term). However, the dissenters question the conceptual basis of the Type B methodology as well as the potential for structuring and the inherent complexity of having two forms of leases. Some commented that different users of financial statements want to view lease information in different ways, and that it would be better to provide a single lease methodology with more disclosure which would allow users to make their own adjustments as desired.

Some outside comments have focused on the fact that leases can be terminated in bankruptcy, and conclude that they therefore don’t have the same significance as other debts, and should be reported distinctly. The boards are taking the position that financial statements are intended to represent a going concern, and that adjusting reporting for bankruptcy provisions would open up more issues in other areas.

How FCS will help you meet the new standard
We have been meeting the requirements of lease accounting for over 35 years (FCS slightly predates the announcement of FAS 13, first founded to meet the earlier requirements of ASR 147). We are committed to making the transition to the new standard, and assisting you in that process. We are mapping out the best way to do the transition to the new requirements with a minimum of inconvenience. In some cases, new information will need to be entered for leases, particularly to handle CPI-based and other variable lease payments. We plan to have EZ13 ready to meet the new standard well in advance of its effective date, at no charge for all users with a current support contract. Right now, you can create reports capitalizing operating leases in Type A form, selected from the Special Options window of reports setup; Type B accounting will be developed in the near future, assuming it remains in the standard.

Revised Exposure Draft released

At long last, the Revised Exposure Draft (RED) for the proposed new lease accounting standard has been released by the IASB and FASB. A press release is available here; the actual RED is available from either the IASB or FASB.

The public comment period lasts until Sep. 13, 2013. Comments may be submitted here or by email to director@fasb.org; email submissions should include File Reference No. 2013-270. (You can also submit comments via the IASB web site if you're a registered user; it all goes into a single compilation.) There are 12 specific questions that the boards are asking for responses to. The FASB online response form is structured with boxes to respond to each question (plus a box for any other issues that someone may want to comment on).

The boards will have public webcasts to discuss the RED on May 20. The IASB will hold one at 8:30 BST (British Summer Time, GMT +1); registration is available here. A joint FASB/IASB webcast will be held at a more reasonable hour for Americans, 10:30 AM EDT; registration is available here.

One interesting thing that jumps out is that FASB has assigned a new topic number in the Accounting Standards Classification. Leases currently is Topic 840. The new proposed standard is Topic 842. The use of a new number may reflect the fact that the two of them will be active simultaneously. There's no indication from the IASB whether they will keep IAS 17 as the standard number for Leases.While the boards say that the texts are almost identical, with the differences "primarily related to existing differences between U.S. GAAP and IFRS and decisions the FASB made related to nonpublic entities" (quoting from the press release), they're formatted quite differently, as the FASB has structured the RED to fit the format of the ASC, with four multidigit numbers separated by dashes defining the hierarchical structure (it starts at 842-10-05-1), and various changes to related current standards are shown with strikeouts of existing text and underlined new text. Frankly, the IASB version is far easier to read; I haven't liked the ASC ever since it came out, because the structure makes everything so choppy (especially if you don't have a paid subscription to the online ASC).

Another item that immediately jumps out is that the boards haven't been able to come up with a good name for the different types of leases: A "Type A" lease uses the current capital/finance lease accounting methodology, while a "Type B" lease uses the straight-line expense methodology. Couldn't they use slightly more descriptive titles? I suppose over time we'll get accustomed to them, but do we really need more monikers that have no inherent meaning? Some people have been referring to the two types as I&A (interest and amortization) and SLE (single lease expense), which focuses on the most noticeable difference between the two types; I think something like that would be far less confusing.

While the pieces of the proposal have been discussed here in numerous prior posts, we'll take some time in coming weeks to look at the RED systematically.

Let the comments begin!

Revised exposure draft coming in May

On April 10, the FASB met for a final go/no-go decision on the revised exposure draft (RED) for the new lease accounting standard. The board members were asked, as part of the FASB's standard due process, whether they have concerns about financial reporting complexity in the draft. Three members consider the draft to have too much complexity, and favor various alternatives; four, however, favor going forward with the draft as it stands. Even some of the supporters mentioned reservations (Chair Leslie Seidman, for instance, would like a different point for drawing the dividing line between rental and financing lease types), so there is definitely potential for further changes to the standard based on the responses received during the upcoming exposure draft's 120-day comment period.

The RED will include the alternative views, inviting respondents to comment both on the main proposal and on the alternatives (and, of course, anyone is free to offer their own suggestions as well). The staff announced that they expect the RED to be released in May, with the comment period then extending to September. We could then expect the boards to start discussing the comments possibly in October, but more likely in November (assuming the RED gets a similar number of comments to the original ED, and that most come in very close to the deadline, it'll take a few weeks for the comments to be reviewed and summarized).

Indications are that members of the IASB are not as reluctant to support the RED. Both boards have been making compromises for the sake of convergence (i.e., a common standard promulgated by both boards), but it remains to be seen how the dynamics of convergence, complexity, constituent pressure, consistency with the overall accounting framework and other standards, and the other matters that come into a vote will shape the final outcome.

A fundamental issue is that leasing serves different purposes for different companies (both lessees and lessors). On one extreme, a 4- or 5-year computer lease is clearly a purchase executed over time. On the other, a 12-month real estate lease uses only a negligible portion of the value of the underlying asset. To treat those as the same type of transaction seems inappropriate. But there are leases that fall at every point of the spectrum in between, and any dividing line will inevitably be either arbitrary or inconsistent. Individual reporting entities, as well as users of financial statements, are going to advocate for what works best for them, but the boards have to make a decision that works reasonably for all and that limits the potential for problems, particularly in the off-balance-sheet burying of material financial information which was the primary original impetus for the rewrite in the first place.

The timeline for implementation seems to be slipping again. Even if the boards don't make any significant changes between the RED and the final standard (which seems increasingly unlikely), it's doubtful they could finish before the end of this year. Given the complexity of the changes (the boards have been clear that they're going to allow plenty of time for implementation), and the need for a 2-year lookback for U.S. companies, it seems that 2016 is becoming infeasible as an implementation date, and 2017 is more likely. It's astonishing when you remember that the project was announced in July 2006. For one thing, it will mean that not a single FASB member who voted to start the project will be in office when it actually takes effect (since members serve a maximum of 10 years). In fact, I'm not sure that any of the board members at the announcement date will even vote on the final standard; Thomas Linsmeier joined the board right about that time, but he's the only one (other than Leslie Seidman, whose second term expires this summer) going that far back.

More decisions, more delays

The slow march to a new lease accounting standard has been drawn out yet again. On January 29 & 30, the FASB and IASB met to discuss issues that had arisen during the drafting process for the Revised Exposure Draft (RED). Details of those issues are below, but the most important news out of the meeting is that the staff announced that the exposure draft is "planned for publication in the second quarter of 2013." Up to now, the (most recent) plan had been to release it during Q1. I'm not aware of reasons for the further delay.

At this point, it seems unlikely that a new standard will be released before the end of the year, given the time required for the next steps of the process (4 months for comment period, a month to compile the comments, time for the boards to review the comments and decide to make any changes, then time to draft the final standard and release it). And that's even if they don't make major changes; with several influential bodies expressing reservations about aspects of the RED, that's by no means assured.

Decisions at the Jan. 29-30, 2013 meeting

A lease sometimes includes multiple types of assets. Building leases, for instance, inherently include land (perhaps just the land the building is on, but often a larger area, some of which might be used as a parking lot). A factory might be leased with associated equipment (beyond just the equipment inherent in a building, like HVAC, elevators, etc.). Since the RED proposes to classify leases with a substantial part of the determination based on the type of underlying asset, how should the type of asset be determined in these cases? When should the lease be broken up into multiple pieces, accounted for separately?

The boards agreed with the staff proposal to use the same methodology as is in the draft Revenue Recognition standard (currently also working through the deliberative process), that components would be separated if they can be used independently (either as is or using other resources that are readily available). For instance, a building with land for a parking lot would be a single lease, while a lease that includes a second plot of land that could be developed separately would be separated into two components. Another example the staff presented is a manufacturing plant with two large pieces of manufacturing equipment installed, equipment that is available separately (perhaps from other suppliers), which would be considered three lease components, each to be accounted for separately.

If a lease contains both property and non-property elements, the decision of whether to treat the lease as property or not for purposes of applying the classification tests should be based on the "primary asset." An example given is an oil storage tank, which is considered equipment. The lease includes the land the tank is on, but the tank is the purpose of the lease, and the land is simply necessary to hold the tank. The lease would be classified according to non-property rules.

Current accounting separates buildings and land when the building is capital; the land is always operating (unless the lease contains an ownership transfer or bargain purchase option). The boards decided that there is no need to separate them in the new standard.

The staff introduced a new set of terms for the different types of leases. "Type 1" leases are those to be handled like current capital (finance) leases, with a front-loaded expense profile (interest expense is higher in the early months of the lease, while depreciation is recognized straight-line). "Type 2" leases are those that will use the single lease expense methodology (primarily those that are operating leases under the current standards). It's not clear whether this terminology will become official, or is simply a temporary placeholder.