Editor's Letter
By Kathy Williams

Cost Allocation-From the Simple to the Sublime
By James B. Stinson, Ph.D., CPA
When companies allocate costs from one department to another, they usually use three common methods--the direct method, the step or sequential method, and the reciprocal method--which vary in complexity and accuracy. Standard spreadsheet tools help make the process easier and more efficient.

Privacy Protection: The Safe Harbor for E-Marketing
By George Benjamin Thompson, J.D., and Lynda S. Hamilton, J.D.
The United States is urging Internet businesses to adopt the Safe Harbor Privacy Principles developed by the Department of Commerce in order to align with the European Union's strict Internet requirements and foster the free flow of commerce. Here is a discussion of U.S. and E.U. policies.

"Tracking" Common Stocks and the Potential Misuse of the Two-Class Method of Calculating Earnings Per Share
By Robert L. Maddox III, Esq.
When calculating earnings per share (EPS), issuers of tracking stock have tended to reject the standard calculation method in favor of the more complex two-class method. What many of them fail to recognize is that the two-class method is appropriate only when the tracking stock and the nontracking stock have different dividend participation rights as a matter of law. See Statement of Financial Accounting Standards (SFAS) No. 28 and International Accounting Standard (IAS) 33 for the correct rules.

Activity-Based Benchmarking and Process Management--Managing the Case of Cardiac Surgery
By Bea Chiang, Ph.D., CPA
Activity-based benchmarking and process management focus on in-depth identification of best processes and practices through a study of resource consumption. From them, hospitals can get a more accurate picture of how various practices are linked to costs.

Would Better Strategic Financial Monitoring Have Saved Thomas Jefferson's Fortune?
By Sid Ewer, CMA, Ph.D.
Thomas Jefferson is revered as one of the United States' founding fathers, but few people know that he died deep in debt. Even though he kept meticulous details regarding his financial dealings, he rarely converted those records into meaningful, strategically useful reports. His mistakes offer financial lessons for today.