155,000 Public Servants On Strike

Posted by & filed under Financial Accounting, Personal Tax, Student life.

Description: On Wednesday morning we woke to the news that 155,000 federal public servants had gone on strike. While the union has been asking for a 13.5% increase spread over three years, the federal government’s best offer is pegged at 9%. The striking workers include 35,000 from the Canada Revenue Agency (CRA), raising potential problems for those Canadians seeking information to deal with taxation matters.

Date:  April 18, 2023

Source:  thestar.com

 Link: https://www.thestar.com/politics/federal/2023/04/18/psac-announces-more-than-155000-public-servants-going-on-strike.html?source=newsletter&utm_email=760BE779956395955CFBBA5C497D22A3

Discussion points:

1) Are you or any of your classmates slated to work for the federal government for the summer? How might this strike impact this employment?

2) Do you require any services (a passport, for example) that might be interrupted by this strike action?

3) Page 6-25 of Wiley’s Understanding Financial Accounting includes an inset box “Ethics in Accounting” that discusses how the Canada Revenue Agency treats credit losses by companies. What approach does the CRA take on this issue?

Tax Decisions with Living Together

Posted by & filed under Auditing, Personal Tax.

Description: With tax season in full swing – despite the strike in effect at the Canada Revenue Agency (CRA) – experts agree that it is important that Canadians know how living together can impact your taxation status. With societal trends indicating that common-law relationships are especially prevalent among those 20-24 years old, many may be unaware that living together for one year drops the two of you into a household status. This could mean that you lose some government benefits, while you gain others. One big problem is that if you continue to file as a single person after the one-year mark, you are essentially filing a fraudulent return. That may cause a CRA reassessment for both partners and a tax bill you probably have not budgeted for.

Date:  April 20, 2023

Source:  thestar.com

 Link: https://www.thestar.com/business/personal_finance/advice/2023/04/20/how-becoming-common-law-or-getting-hitched-changes-tax-filing-season.html?source=newsletter&utm_email=760BE779956395955CFBBA5C497D22A3

Discussion points:

1) Were you aware of the one-year rule regarding common-law relationships?

2) How do you think the CRA strike may impact the tax preparation process this year?

3) Chapter one of Wiley’s Auditing: A Practical Approach discusses several different types of audits in section 1.3. When the CRA comes calling on a taxpayer, what type of audit is being performed?

13 Billion on Batteries

Posted by & filed under Accounting Careers, Canadian Government, Internal control, Student life.

Description: The Government of Canada is offering $13 billion in subsidies to Volkswagen to build the first auto battery plant in North America. The federal assistance is to be delivered through tax subsidies, contingent upon Volkswagen meeting agreed upon output targets. VW’s planned plant in St. Thomas, Ontario, is slated to open in 2027. It’s a massive project, meant to cover an area of 350 football fields, while employing 3,000 workers once operational. Volkswagen is spending $7 billion on the project.

Date:  April 21, 2023

Source:  cbc.ca

 Link: https://www.cbc.ca/news/business/volkswagen-battery-plant-analysis-1.6818025

Discussion points:

1) Have you ever driven an electric vehicle? Do you aspire to purchase one when you graduate?

2) How do you feel about the Government of Canada providing assistance to this venture?

3) On page 1-6 of Wiley’s Managerial Accounting: Tools for Business Decision-Making we read about Volkswagen and its emissions scandal. What was the nature of this scandal and what sort of controls would you recommend a company develop to protect against such an occurrence?

Tough Times at Tupperware

Posted by & filed under Accounting Principles, Student life.

Description: For much of its 77 year history, Tupperware was the go-to storage container for many families putting away leftovers or meeting other food storage needs. The multi-coloured plastic devices were sold by Tupperware’s independent representatives in parties held in customers’ homes. But the in-person sales technique had fallen out of favour in more recent years, sending down Tupperware’s fortunes and its stock price, although it did have a surprising uptick in the early part of the pandemic as eating at home became a necessity. Given its current debt and liquidity issues, Tupperware has “concluded there is substantial doubt about its ability to continue as a going concern.”

Date:  April 11, 2023

Source:  cbc.ca

 Link: https://www.cbc.ca/news/business/tupperware-bankruptcy-1.6806751

Discussion points:

1) Do you or your roommates have any Tupperware in your kitchen there in your university town? What about in your family kitchen back home?

2) Why do you think investors bid the shares to close to $40 in 2021 whereas they had been only $1.40 in March 2020?

3) Page 2-8 of Wiley’s Understanding Financial Accounting introduces us to the Going Concern assumption. What does this assumption mean and why is it so important to financial reporting?

Save Hard; Then Splurge

Posted by & filed under Marketing & Strategy, Student life.

Description: Jennifer Anchan drives a 2001 Honda Accord that she bought for $1,700 cash; she also purchases used items off Kiiji, and shops more often at dollar stores these days. But she is willing to spend big for travel and concert tickets, savouring experiences with friends over acquiring new things. Recent data from the Royal Bank of Canada (RBC) shows Canadians are cutting back spending on restaurants and clothing, and focusing discretionary dollars on flights and hotel rooms instead. Queen’s University marketing professor Tandy Thomas is calling this phenomenon “revenge spending,” a not-so-surprising outlet for having missed vacations and concerts during the earlier stages of the pandemic.

Date:  April 15, 2023

Source:  cbc.ca

 Link: https://www.cbc.ca/radio/costofliving/scrimp-and-save-rbc-spending-tracker-1.6810036

Discussion points:

1) How many of your fellow students are planning a travel vacation after school finishes this term?

2) Have you adopted the strategy to scrimp and save, then spend that “little pot of gold?”

3) On page 6-18 of Wiley’s Managerial Accounting: Tools for Business Decision-Making we see that Air Canada has a higher contribution margin on its first-class tickets than it earns on economy-class sales. Given the revenge spending trend, what might Air Canada do to increase its sales of first-class tickets?

Meteorite Money

Posted by & filed under Accounting Careers, Financial Accounting.

Description: Sonic booms and a bright fireball that could be seen in broad daylight marked the crashing meteor that left a trail somewhere near the Maine-New Brunswick border last Saturday. And now, all you have to do is find a one kilogram piece of the space rock in the woods to earn yourself a $25,000 fee from the Maine Mineral and Gem Museum. Of course, there’s no guarantee that anyone will find a one kg fragment, but the museum advises the searchers to familiarize themselves with what a chunk of a meteorite might look like before embarking on the treasure hunt.

Date:  April 12, 2023

Source:  ctvnews.ca

 Link: https://www.ctvnews.ca/sci-tech/maine-museum-offers-us-25k-reward-for-meteorites-recovered-near-canadian-border-1.6352567

Discussion points:

1) Have you ever witnessed a meteor crashing to earth or found a meteor fragment?

2) How do you think an organization would go about setting a price for a rare object like this?

3) Chapter nine of Wiley’s Financial Accounting: Tools for Business Decision-Making includes the concept of depreciation of long-lived assets. If you were an accountant at an institution like the Maine Mineral and Gem Museum, would you apply depreciation to their special collection of unique items for exhibits?

Nice Raise, If You Can Get It

Posted by & filed under Managerial Accounting.

Description: Fresh off his appearance with other grocery chain executives in front of a parliamentary committee examining food prices, comes news that Loblaw’s Galen Weston received $8.4 million in remuneration of various types in 2022. While this is up from $5.4 million in 2021, Catherine Thomas, speaking for Loblaws in defense of the move, noted that the increased amount “reflects the fact that in 2021 he transitioned back to Loblaw full-time mid-year.” It could be fascinating to see if the raise gains any traction with Canadian consumers fed up with the rising costs of food in this inflationary cycle.

Date:  April 5, 2023

Source:  cbc.ca

 Link: https://www.cbc.ca/news/business/grocery-executive-compensation-1.6802091

Discussion points:

1) How do you respond when your hear about CEO pay?

2) Have you ever had a class where you had some discussion about setting pay for CEOs? If so, how did the discussion go?

3) On page 2-5 of Wiley’s Managerial Accounting: Tools for Business Decision-Making we learn about the differences between product costs and period costs. In which of these categories would you place a CEO’s compensation?

A Tough End to the School Year

Posted by & filed under Accounting Careers, Internal control, Student life.

Description: In my small university town, Sackville, New Brunswick, Friday saw a tough end to the university year as a major fire not only left several Mount Allison University students and a university staff member homeless, it also wiped out a major social landmark by destroying Joey’s Pizza and Pasta, a restaurant favoured by students, faculty, staff, and town residents. The day started a bit surreal for me. I looked out my apartment window at breakfast time to watch the first few firefighters arrive and enter the upstairs apartment with hoses. It wasn’t long before they began waging war on the smoke and flames from outside, crashing down walls in the process. With all the normal stresses of end of term, this group of students has moved to a different level, though they have noted how a well-organized emergency response by the university helped right away to meet their needs.

Date:  April 8, 2023

Source:  ctvnews.ca

 Link: https://atlantic.ctvnews.ca/popular-restaurant-apartment-buildings-destroyed-in-sackville-n-b-fire-1.6347855

Discussion points:

1) Has your university ever suffered a similar crisis for students during your time at school?

2) What tips do you and your classmates have for dealing with exam stress at this time of year?

3) On page 7-3 of Wiley’s Financial Accounting: Tools for Business Decision-Making we see that risk assessment is one of the five components of a company’s system of internal control. If you were a financial officer at a chain of restaurants, what might be some of the key risks you would see?

Falsifying Business Records

Posted by & filed under Ethics, Financial Reporting and Analysis.

Description: One of the biggest news items this past week had to be the indictment of former US president Donald Trump in a New York City courtroom. Though there was lots of debate about the event, from an accounting perspective, the interesting notion is that the charges revolve around the falsification of business records. One key element of this type of crime is that it’s not just the act of making the wrong entry onto a document: in addition, the crime requires some intent to deceive in search of a benefit. Examples include companies falsifying financial reports to fool creditors or understating income on tax forms to reduce the amount of tax paid.

Date:  April 7, 2023

Source:  cbc.ca

 Link: https://abcnews.go.com/US/donald-trump-indictment-falsifying-business-records/story?id=98377002

Discussion points:

1) Did you and your classmates follow the news around this first indictment of a former US president?

2) Have you ever been the victim of false statements on a business document or some other important document?

3) On page 10-7 of Wiley’s Understanding Financial Accounting you will find an inset box dealing with ethics related to debt covenants. What might be some types of false statements users of financial statements need to be wary of when the company faces a debt covenant?

WestJet Strike?

Posted by & filed under Marketing & Strategy, Student life.

Description: It’s probably not the news you wanted to hear as you wind down the winter term at university and get ready to travel back home for the summer break: WestJet’s pilots’ union is set for a strike vote. Bernard Lewall, a union representative, is frustrated by the results of the last six months of negotiations, noting that “WestJet used to be a place where young pilots wanted to come and work. That’s not the case anymore.” It is not clear exactly when a strike could begin, but the plus for students is that it appears there may be no interruption of travel until around the long weekend in May.

Date:  March 31, 2023

Source:  cbc.ca

 Link: https://www.cbc.ca/news/canada/calgary/westjet-pilot-union-alberta-1.6797805

Discussion points:

1) What are your end-of-term travel plans?

2) Have you ever had your travel plans affected by a strike?

3) On page 9-1 of Wiley’s Financial Accounting: Tools for Business Decision-Making we see a vignette that discusses WestJet’s launch of a discount carrier known as Swoop, something that is also mentioned in the accompanying article. What are the strengths and the weaknesses of starting up Swoop while also running a regular airline carrier like WestJet?