Subject: IASA BCP Issue: Budgeting process and financial oversight

From: Bernard Aboba <[email-masked]>
Date: Tue, 23 Nov 2004 23:32:29 -0800 (PST)

In reading section 3, I believe that there are some issues with respect
to separation between the IASA and IAD responsibilities.

My overall comment on Section 3 is that co-mingles sections relating to
the responsibilities of the IAD and the IAOC.  Since the IAOC
constitutes the management, while the IAD is an (ISOC) employee, these
responsibilities need to be separated, both editorially and logically.

I would prefer if Section 3 focussed solely on the IASA, and another
section was devoted to the IAD and the associated support functions.

However, beyond the editorial separation, I think the logical
separation of responsibilities is not well articulated in Section 3.

The IAOC is the body that reviews the operation of the IASA
as well as the IAD. In order to ensure that the IAOC can carry out that
mandate it needs to maintain the oversight function independent of the
IAD.

Section 3.2 seems confused on this point:

"The IAD may constitute special-purpose, chartered committees to bring in
expertise (on topics such as finance, IETF process, or tools), to engage
volunteers in IASA activities, or to gain additional perspectives. These
committees may consist of subsets of the IAOC, IAB or IESG, selected IETF
participants, or external experts, depending on the need. These committees
are advisory in nature -- the IAD is responsible for the outcome,
including presenting and supporting any decisions or work items to the
IAOC and the IETF community, as appropriate."

While it is appropriate for the IAD to attend finance committee meetings,
the finance committee function is inherently a responsibility of the IAOC,
given its role in review of financial reports as described in Section 3.3.
Therefore it seems like the finance committee function is part of the
IAOC, not the IAD, in order to ensure proper oversight.

Similarly, if the desire is to keep the IETF process separate from the IASA,
then the IAD should not be chartering committees relating to the IETF
process.

Given this, I'd suggest that somewhere in Section 3, it should be stated
that the IAOC can form subcommittees in order to help it carry its work,
such as the finance committee.

I'd also suggest that the timeline described in Section 6,
describes a "throw it over the wall" budgeting process that is unlikely to
prove workable in practice.  An arrangement that brings together input
from the IAOC, the IAD and the ISOC from the start is likely to work
better.

"The IAD is likely to draw on financial, legal and administrative support
furnished by ISOC support staff or consultants. Allocation of costs for
ISOC support staff and consultants will be based on an actual expenses or
on some other allocation model determined by consultation between the IAOC
and ISOC."

In practice it is likely that the IASA will incur considerable ISOC
overhead, and therefore that the overhead allocation (including the
overhead associated with fund raising) will turn out to be a
large budget item.  I therefore think it is quite important that the level
of ISOC administrative support as well as the associated overhead be a
part of the early budgeting process, and that will require early ISOC
input.

Another example where early cooperation will be required is in the
development of a service level proposal for the fiscal year, which will
impact the budget.  At the plenary, Bob Kahn raised the issue of how the
IETF community determines the required services, and how service level
changes are adjusted to take this into account.

As described in Section 3.3, the IAOC is responsible for the determination
of whether the IASA functions are meeting the IETF community's needs.  I'd
assume that service levels are part of that function and if so, then the
IAOC plays a critical role in the budget process, which is not described
in Section 6.

I'd suggest that more important than listing specific milestones for the
budget process (which I hope the IAOC, ISOC and IAD could adjust as
required) is to articulate how the IAOC, ISOC and IASA are expected to
work together to prepare the budget.  For example, I'd assume that the
IAOC will work with the IESG and IAB as well as the IETF community to
determine the appropriate services, and that recommendations will be
provided as input to the IAD.  Also, the ISOC will provide early input on
available resources and overhead charges, so as to ensure that this is
taken into account within the budget.

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From: Harald Tveit Alvestrand <[email-masked]>
Date: Wed, 24 Nov 2004 16:33:59 +0100

Bernard,

I don't agree with your terminology here.....

> responsibilities need to be separated, both editorially and logically.

The IAOC constitutes (as I see it) the oversight of the IASA, not its 
management.
The IAD is the management of the IASA function.

This may be just terminology - I find several of your later points quite 
reasonable, and want to encourage you to "send text"..... it's hard to 
describe these things in such a way that everyone reads the same thing.

               Harald

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From: Carl Malamud <[email-masked]>
Date: Wed, 24 Nov 2004 12:40:41 -0800 (PST)

Bernard -

Good comments.  I went back and re-read section 3, and I agree
that it is somewhat unclear.  (That's sometimes good, of course,
but probably not in this case).

>From what I read, the idea is that the IAOC sets policy: it
has a large say in how finances are done, reporting to the IAOC
is done in a way that they can operate the IASA as a "seperate
business unit", etc...  That says to me "strong committee" which
is a bit more than oversight.

The IAD is a member of the IAOC.  (IMHOW, this person should
have a vote, but ymmv ... I've been on boards where I'm a
voting executive and on boards where I was non-voting, and
it was always frustrating to be have only a half-voice at the
table.  :).

It seems to me that in most of section 3 where it says the
"IAD shall," you could probably simply change that to the

> expertise (on topics such as finance, IETF process, or tools), to engage

This simply becomes "The IAOC may constitute ..."

A lot of the stuff  in the "IAD responsibilities" and "IAD committees"
becomes "IAOC ...".  And, a separate section merely states that the
IAOC shall hire an IAD who will serve as the chief executive
and be a voting/non-voting member of the committee and shall
serve as the executive director/staff for the committee.

Does that make sense or are people envisioning the "Office
of the IAD" having some more distinct powers and responsibilities
rather than simply reporting to the board?  (In a corporation,
it is rare for the ceo to be defined in the chartering
document, except for a mention that they are a voting/non-member
of the board and, as an officer, have certain fiduciary
and other legal roles (e.g., can sign a check)).  Things
like "shall do the budget" aren't usually stated at the level 
of the chartering document as a job duty, they are simply
a responsibility of the entity as a whole as represented
by their board of directors.

Regards,

Carl

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From: Bernard Aboba <[email-masked]>
Date: Wed, 24 Nov 2004 16:17:29 -0800 (PST)

> rather than simply reporting to the board?

Yes, this makes sense to me.

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From: Harald Tveit Alvestrand <[email-masked]>
Date: Thu, 25 Nov 2004 08:19:33 +0100

it doesn't make sense to me..... but then the corporate boards I have 
served on (Unicode Consortium and .no registry) seem to function very much 
in the mode of "oversight and strategy direction" - it would be bizarre for 
either of those boards to attempt to create a budget; in both 
organizations, that's the administration's job, as represented by the CEO - 
including answering all the hard questions about why the budget looks that 
way, and modifying the budget based on feedback from the board on what 
strategy it wants supported.

Quoting from section 3:

>    The IASA will initially consist of a single full-time ISOC employee,
>    the IETF Administrative Director (IAD), who will be an officer
>    entitled to act on behalf of the IASA at the direction of the IAOC.
>    The IAD is likely to draw on financial, legal and administrative
>    support furnished by ISOC support staff or consultants.  Allocation
>    of costs for ISOC support staff and consultants will be based on an
>    actual expenses or on some other allocation model determined by
>    consultation between the IAOC and ISOC.

I think that is the right division of labour (the IASA *does* the work, the 
IAOC *oversees* the work, and the IAOC is *not* part of IASA).
So any power that implies *doing*, including chartering committes that help 
define or refine the support for the IETF, should be given to the IAD, not 
to the IAOC. Any committee that does *oversight* (for instance an audit 
committee) should be chartered by the IAOC.

Your mileage may vary.

                Harald

--On 24. november 2004 16:17 -0800 Bernard Aboba <[email-masked]> 
wrote:

>> > "The IAD may constitute special-purpose, chartered committees to bring
>> > in expertise (on topics such as finance, IETF process, or tools), to
>> > engage
>>

---

From: Carl Malamud <[email-masked]>
Date: Thu, 25 Nov 2004 07:25:13 -0800 (PST)

I actually think everybody is in agreement.  The ceo definitely
does the budget.  There is no doubt about it.  And, the paragraph
you quoted was actually one that is fine as is.

But, there are a few places in section 3, as Bernard pointed out, 
that we're making some unnecessary distinctions between iaoc
and iad.

There is a board, which is responsible for iaoc.  It has the
"buck stops here responsibility" on how the iasa operates.
The iad is the officer of the activity/business/entity and
carries out the policy as an executive, as well as providing
the "staff support" that the board needs to make decisions. 
I think everybody agrees on that.

All I think Bernard is objecting to is some sloppy draftsmanship.
Why don't we let Bert/Rob try and clean that up in their next
draft?  I know they've got this section down as an issue.
I suspect they can clear this section up with a little surgery.

Carl

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From: Bernard Aboba <[email-masked]>
Date: Thu, 25 Nov 2004 08:39:48 -0800 (PST)

Correct, Carl.  The issue is oversight -- who leads the committees that
review the financial statements and the IAD performance.  Allowing the IAD
to lead the review of his/her own performance does not make sense.

And I'd also argue that while it is the IAD's job to come up with the
budget, that does not happen in a vaccuum -- the ISOC, IAOC and IETF
community need to provide input into the service level that is expected,
and those changes need to be explicit.  That was, I think, Bob Kahn's
point at the plenary.

Rather than focussing on timelines (which after all, may change), I'd like
to see more discussion of the expected working relationship.  I don't
think we want the "throw it over the wall" process that seems to be
implied.

---

From: Harald Tveit Alvestrand <[email-masked]>
Date: Thu, 25 Nov 2004 21:43:59 +0100

> to lead the review of his/her own performance does not make sense.

And I don't think anyone expected that. As I said before - IAOC has to make 
committees that do review; IAD should make committees that perform actions.

> and those changes need to be explicit.  That was, I think, Bob Kahn's

Agreed - and I do think the "vacuum" is a red herring (or bad drafting). 
Again, nobody wants that.

> think we want the "throw it over the wall" process that seems to be

Send text.....

---

From: Sam Hartman <[email-masked]>
Date: Fri, 26 Nov 2004 22:05:55 -0500

>>>>> "Harald" == Harald Tveit Alvestrand <[email-masked]> writes:

    Harald> Quoting from section 3:

    >> The IASA will initially consist of a single full-time ISOC
    >> employee, the IETF Administrative Director (IAD), who will be
    >> an officer entitled to act on behalf of the IASA at the
    >> direction of the IAOC.  The IAD is likely to draw on financial,
    >> legal and administrative support furnished by ISOC support
    >> staff or consultants.  Allocation of costs for ISOC support
    >> staff and consultants will be based on an actual expenses or on
    >> some other allocation model determined by consultation between
    >> the IAOC and ISOC.

    Harald> I think that is the right division of labour (the IASA
    Harald> *does* the work, the IAOC *oversees* the work, and the
    Harald> IAOC is *not* part of IASA).  So any power that implies
    Harald> *doing*, including chartering committes that help define
    Harald> or refine the support for the IETF, should be given to the
    Harald> IAD, not to the IAOC. Any committee that does *oversight*
    Harald> (for instance an audit committee) should be chartered by
    Harald> the IAOC.

This makes sense to me.