Posted April 22nd, 2012 by Gerry La Rocca & filed under Canadian Economy, Corporate Restructuring.

Technology for Performance Measurement

Performance Management and reporting is critical for every organization whether small or large, Private or Public. It’s also the source of many questions and assignments we work on in assisting our clients.

There is little doubt that leveraging technology to help deliver
an organization’s performance measurement framework can be very beneficial. Technology can automate many manual processes including the transfer, reconciliation and reporting of data so that more time can be devoted to providing value added analytics on the information that is produced. In order to enhance the benefits of utilizing technology for a performance measurement program, an organization should employ the following four steps when undertaking this initiative:

1. Identify data requirements and potential source applications

Once the organization has decided what it is going to measure, the key first step in leveraging technology is understanding what data is needed to produce the measure and where this data will come from. An example is where an organization decides that it needs to measure customer profitability in order to determine the cost to service a customer. In order to produce this
information the organization will need margin visibility for all customers by
brand and channel.

2. Develop Conceptual Data Model

It is useful to develop a conceptual data model (CDM) once you have determined what data you need and where you will get it from. The CDM creates a single, high level view of the performance measure that you are trying to capture. This can be done in a strategy session with key
stakeholders to understand key concepts, definitions and data sources/flow.

3. Conduct Data Quality Assessment

Data quality can prove to be one of the most significant obstacles to completing a technology implementation for performance measurement on time. It is usually during an implementation that an organization will discover that their data is of poor quality and the underlying reason why the organization spends so much time reconciling data rather than performing value added analysis. One cause of poor data quality lies in the entry of data into the system. For example, if an employee is entering a labour expense which should be an entry into direct cost, but instead they enter the transaction into salaries & wages, this will inevitably change gross margin
calculations. In some cases, the data may not be poor, but it is just not structured in a way that the system requires in order to produce the desired reporting.

4. Gap Analysis

Once the above steps are completed, the organization should conduct a rigorous gap analysis to understand, from a technology perspective, where you are now versus where you need to go in order to deliver the desired
information.

Myth:

One of the biggest business myths is that having more data will automatically improve performance. As a result, executives are drowning in a sea of data, when what they really need is useful information and great insight.

Conclusion:

Information is only useful if it helps you make better decisions. By aligning your key performance indicators with the strategic objectives, you create a
foundation for better performance management, competitive intelligence and effective decision making.

Discussion Questions:

1.Do you agree that too much information is not necessarily good?
2. How should a company determine Key Information?
3. What Key information would you need to manage RIM? Click on RIM for more information.

Read the complete article from KPMG: Finance Function Insights

Posted April 15th, 2012 by Gerry La Rocca & filed under Auditing, Corporate Restructuring, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Uncategorized.

How BIG is Facebook?

We knew Facebook was big : you don’t get to 800 million
users without making a few bucks — but until today, we didn’t know just how
big.

Facebook filed papers for an initial public offering on Wednesday, pulling back the curtains on the inner workings of the world’s largest social networking site and opening a new phase in the company’s ambitious plan to compile, and make money off of, our personal information. Facebook seeks to raise $5 billion in an IPO that looks likely to be the largest by a web company since Google in 2004 and could place the social network’s value as high as $75 billion to $100 billion.

Facebook Expansion will it continue to Grow?

Facebook looks more seasoned than many of its Silicon Valley peers had when they announced plans to go public. According to the prospectus it filed with the SEC, Facebook has been profitable for the past three years. The company reported revenues of $3.7 billion last year, an 88 percent increase over the prior year, and earned a $1 billion profit, more than Google’s total revenue the year it debuted on public markets. Facebook’s income also dwarfs that of other internet companies that recently completed their IPOs. Zynga’s profits totaled $90.6 million in 2010, for example, while LinkedIn had barely flirted with profitability when it filed for its IPO and Pandora was still hundreds of millions of dollars short of breaking even.

Advertising comprises a full 85 percent of Facebook’s revenues, down from 98 percent in 2009. Zynga alone accounts for 12 percent of Facebook’s total revenues, as the social gaming company must pay Facebook a cut of purchases made in Zynga’s Facebook games.

Facebook revealed impressive statistics about its growing and active userbase, which totals 845 million members, more than half of whom, or 483 million, return to the site daily. These hundreds of millions of users have shared more than 100 petabytes (100 quadrillion bytes) of photos and videos with Facebook, and produced an average of 2.7 billion “likes” and comments a day in the final three months of 2011.

The company’s stunning growth will prove difficult, if not impossible, to sustain, however. Facebook has reached a 60 percent penetration in the U.S. and U.K., according to the company’s own estimates, and Facebook warned investors to expect its expansion to slow.

Discussion Questions:

1. Read and review the IPO, click on this link: Is this what you imagined an IPO would contain as investors information?

2. In your opinion will Facebook continue to grow?

3. Do you believe that the market capitalization of $100 billion is realistic?

To read more about the Facebook IPO: Visit Huff Post Tech Canada

Posted April 9th, 2012 by Gerry La Rocca & filed under Accounting Careers, Financial Accounting, International Accounting, Managerial Accounting.

Montreal, March 28, 2012 – Today, Jean-Marc Fournier,
Minister of Justice and Minister responsible for the application of
professional legislation, tabled Bill 61, Chartered Professional Accountants
Act, that will constitute the Ordre des comptables professionnels agréés (CPA)
du Québec. The CA Order, the CGA Order and the CMA Order welcomed the news.

Another milestone in the process to unify the accounting
profession in Quebec has therefore been reached. The bill will have to follow
the normal steps in Quebec’s legislative process before the Ordre des CPA du
Québec becomes a reality.

The new single accounting order will encompass all the professional accountants in the province, whether they are currently CAs, CGAs or CMAs. It will result from the pooling of the competencies and expertise of the members of the existing professions. Moreover, the regulations governing the new CPA Order will draw on the best elements of the rules currently in force in the three existing orders, while aiming for the highest professional and ethical standards. Decidedly forward-looking, the accounting profession will be in an even better position to serve the business community and all organizations in Quebec.

The chairs of the three orders are very pleased with this announcement.

“The creation of a single order will enhance the protection of
the public. With a single accounting designation, and especially a single set
of mechanisms to monitor the profession, the new order will clearly be even
better equipped to protect the public,” stated Manon Durivage, FCA, Chair of
the Ordre des CA.

Increased influence:

In addition, chartered professional accountants will enjoy
increased influence on a global scale. “Not only will the new CPA Order have
unprecedented sway with the profession’s regulatory bodies, it will also be
very attractive to future accountants, employers and the business world,” said
Stephan Robitaille, FCGA, Chair of the Ordre des CGA.

Lastly, unifying the CA, CGA and CMA professions also means
strength in numbers. “The future accounting body will have a membership of
35,000 professional accountants and will form the third largest professional
order in Quebec,’’ added Charles Auger, FCMA, Chair of the Ordre des CMA. ‘‘In addition to merging the driving forces of the accounting profession, this
process will result in increased efficiencies and effectiveness that will
benefit the profession as a whole.”

A first in Canada
The tabling of the bill also represents a positive development towards the
unification of the accounting profession in the rest of Canada since several
other provinces are goinsimilar process. It seems likely that Quebec will lead
the way and that other provinces will soon be following suit.

Discussion Questions:

1. We have united three professions, is this good news for our Quebec students and does it really improve your future?

2. Will the rest of Canada follow suit?

3. Is there strenght in numbers, do you agree?

To read more, visit the CGA site: Bill creating the ordre des CPA

Posted April 1st, 2012 by Gerry La Rocca & filed under Canadian Economy, Taxation & Planning.

List of a few Budget Highlights

Hiring credit for small business

Last year’s budget introduced a
temporary Hiring Credit for Small Business of up to $1,000 per employer. The
2012 budget proposes to extend this temporary credit for one year. In
particular, a credit of up to $1,000 against a small employer’s increase in its
2012 Employment Insurance premiums over those paid in 2011 will be provided.

Discussion Question: Why do you think the govenment continued the above hiring credit?

Travellers’ exemptions

The budget proposes to increase the travellers’ exemption to:

$200 (from $50) for
returning Canadian residents who are out of the country for 24 hours or more.
$800 for travellers who are
out of the country for 48 hours or more. This new $800 threshold will replace the current 48-hour exemption of $400 and the current
seven-day exemption of $750.

The new exemption levels will be effective for travelers returning to
Canada on or after June 1, 2012.

Discussion Question:Do you agree with this budget idea to motivate Canadians to spend more outside of Canada?

Old Age Security and Guaranteed Income Supplement

As expected, the budget contains measures affecting seniors’ retirement
income.

Eligibility age
The age of eligibility for Old Age Security (OAS)
and Guaranteed Income Supplement (GIS) will be gradually increased from 65 to 67, starting April 2023, with full implementation by January 2029. This
measure will not affect anyone who is 54 years of age or older as of March 31, 2012. In particular, individuals born on March 31, 1958 or earlier will not be affected. Individuals born on or after February 1, 1962 will have an age of eligibility of 67. Individuals born between April 1, 1958 and January 31, 1962 will have an age of eligibility between 65 and 67.

Discussion Question: Why is the government increasing the age of retirement?

To read more about the budget: See KPMG report

Posted March 25th, 2012 by Gerry La Rocca & filed under Canadian Economy.

The 2012 Canadian Federal Budget

The 2012 Canadian Federal Budget will be presented in the
next few weeks. KPMG is committed to
helping you determine how these changes will affect you and your business.

Finance Minister Jim Flaherty will deliver the Conservative
government’s 2012 federal budget on March 29, 2012. With a majority government
in power and the next election years away, this year’s budget may be an
important one that could include significant changes to the tax system.

What else to expect

The Department of Finance has indicated that we can expect a
focus on so-called “tax integrity” items in the 2012 budget. For example, the
2011 federal budget included new rules that limit the tax deferral
opportunities for corporate partnerships and new anti-avoidance rules for
RRSPs. A senior Finance official indicated at the Canadian Tax Foundation
conference in November 2011 that we can likely expect to see more of these
types of measures to broaden the tax base.

There will be changes to :

International competitiveness and

Personal tax changes such as;

Charitable giving
To encourage greater
charitable giving, the Committee recommends that the government support
initiatives such as the Committee’s study on tax incentives for charitable
donations.

Some witnesses before the Committee advocated a “stretch” tax credit that
would apply to amounts that exceed a donor’s previous highest level of giving.
This measure could provide an extra 10% credit for donations exceeding the
previous highest level up to an annual donation limit of $10,000.

To read more visit the following KPMG link 2012 New Federal Budget

Discussion Questions:

1. Why do governments issue a budget on a yearly basis?

2. Does the Canadian citizen benefit from a Budget?

3. After reading the real budget issued on March 29, by our Harper government, was this budget important to you?

Posted March 11th, 2012 by Gerry La Rocca & filed under Accounting Careers, Accounting Principles, Canadian Economy, Fraud Accounting.

As accountants and financial directors we need to be aware that:Pressures and incentives, opportunity, and rationalization is a common human element which management must be aware of.

Abuse within the procurement cycle (Purchasing Dept.) is common and can be damaging, from the magnitude of potential monetary losses to the reputational damage that can come from a loss of trust of important stakeholders such as investors, customers, and other suppliers.

Example:

Consider a long time employee who is suddenly struggling with making ends meet at home. Through many years of service in the procurement department, he has gained the trust of co-workers, established personal relationships with vendors, and has an intimate knowledge of the controls system and any gaps that may exist. Almost effortlessly, he could approach a vendor to inflate invoices and direct surplus payments to his personal bank account. Such collusion is common in procurement frauds.

Experience shows:

That fraud can flourish in times of economic boom or bust. ‘Change’ can have a significant impact on people at all levels in the organization. As management works through the turbulence, corners may be cut. Less staff resources may be available due to earlier cutbacks and the demands on experienced staff’s time may be split between control responsibilities and managing the integration of newly acquired business units.

In either scenario, the offender will justify their actions: “the company won’t miss this; it’s a small drop in the bucket”, or “I’ll pay it back as soon as I am able”. Perhaps less obvious; but equally alarming, it becomes increasingly enticing to accept gifts from a supplier when the demands on staff’s time is expanded and compensation is frozen or not increasing to the extent of the former ‘glory days’ of growth and profitability when the economy was flourishing.

What Could Happen?

The first step in assessing the vulnerability of your procurement cycle and designing mechanisms to detect and prevent the fraud is to understand the common fraud schemes.

Fictitious invoicing and inflated billing rates – invoices could be generated for processing through Accounts Payable that do not relate to goods received or services rendered. Consider that an employee may generate an invoice payable to a vendor using their home address. Alternatively, unannounced to your diligent procurement staff, a vendor, even one that is regularly providing legitimate services to your organization, may submit an invoice for services that were not provided or at rates that are above those agreed upon.

Conflicts of interest – where procurement personnel have a financial interest in the success of a supplier entity, their purchasing decisions may be biased towards that entity to the detriment of your organization.
Vendor kickbacks and bribery – almost innocently, vendors may send gifts to procurement personnel because of long-term relationships. This can create a conflict where a personal relationship between the buyer and vendor is established that may put pressure on the buyer’s efforts to act in the company’s best interest. Less innocently, vendors may collude with procurement staff in order to ‘work around’ established procurement controls and fraudulently withdraw money from your organization. Suppliers may bribe a buyer in your organization
to purchase from them despite above-market rates or poor product quality. In another scenario, bribes or kickbacks may be offered to procurement personnel to approve fictitious charges.

The above are only a few: To read more see Procurement Fraud , by KPMG

How to Prevent It

The foundation of any fraud prevention program is the ‘tone at the top’, the message that management is conveying to guide how business is to be conducted. It must be ingrained in the way business is conducted in a clear and unambiguous manner through active enforcement of its principles.

Fraud awareness training is also an effective tool in empowering frontline personnel to minimize inappropriate behaviour; but, it also sends the message to potential fraudsters that ‘detection’ is a priority and there are many eyes watching to minimize fraud opportunities.

Finally, invest the appropriate time and due diligence in performing a detailed fraud risk assessment surrounding the procurement process. In your business and industry today, what are the risks that pose the most significant threats? The answer to this question is ever evolving and requires regular evaluation. Focusing the efforts of procurement personnel on the key controls to mitigate these fraud risks is critical. Making staff accountable for the performance of these controls is also fundamental in ensuring their effectiveness.

How to Detect It

Perpetrating these types of frauds often involves the ‘side stepping’ or overriding of controls that are designed to detect inappropriate spending. In these scenarios, it is important to be aware of the red flags that may raise suspicion before too much loss is suffered [see ‘Red Flags’ sidebar]. In KPMG in Australia’s 2008 fraud survey, 22% of frauds reported by respondents were ultimately discovered after many red flags were ignored. In efforts to identify fraud earlier, an awareness of potential red flags and an establishment of reporting mechanisms to detect these indicators will be beneficial.

Many business information systems contain the facts that can point a finger at impropriety if the right lens is applied to the data. Data analytics tools can be used to focus detection efforts. Whether analyzing spending trends, irregular transactions, or potential buyer and supplier relationship indicators, these tools have the capacity to filter large volumes of information [see table]. Efforts to implement a continuous monitoring program with these tools, or response to a suspected fraud are two avenues for leveraging the vast capabilities of data analytics.

Procurement Fraud Red Flags

Round dollar value invoices
Lack of control around the bidding process including poor documentation, absence of appropriate competition
Poor documentation of expenditures or failure to complete a match of invoices to receiving and order documentation
Consistent use of a vendor who is delivering poor quality goods, particularly where this issue is concentrated with one buyer
Duplicate invoice payments
Excessive entertaining of procurement staff by suppliers
Vendors with a post office box as the sole address
Absence of a legitimate GST or HST registration number
Off-hour transactions
Out-of-sequence invoice numbers for a particular vendor
Payments to inactive vendors
Low initial bids followed by excessive change orders
Poor cash management practices (i.e., paying invoices right away despite the accepted practice of 30 to 60 day payment terms in a particular industry)
Cheques set aside for pick-up

Discussion Questions:

1. After reading this article, do you know of any companies that adhere to strict purchasing controls?

2. For a small business what type of controls would you implement.

3. Are Red Flags a key indicator to detect fraud?

Posted March 4th, 2012 by Gerry La Rocca & filed under Accounting Careers.

Women’s Leadership Council

“I don’t think it’s too late for my generation to become leaders in the profession and in business, and I hope my daughter’s generation will simply take it for granted!

Financial Consulting
Chair, WLC Committee , Robin Taub

Progres Made!

Although some progress has been made in the last 20 years, it is discouraging to find that there still aren’t more women partners, CEOs, CFOs and board members. I joined the committee to learn more about why this is, and to become involved in changing the landscape.

Women Representation:

Women represent one-half of graduating Chartered Accountants and one-third of the more than 78,000 CAs who comprise Canada’s leading accounting profession.

The CICA’s Women’s Leadership Council is the voice of women CAs. We act as a catalyst for change, promoting a work environment within the Chartered Accountancy profession that provides for the retention, promotion and advancement of women to positions of leadership without bias, unintended or otherwise, based on gender. Our short term goal is to provide resources and education that further women’s advancement in the CA profession. In the longer term, we will be acting as advocates to enhance the number of women in leadership positions in the CA profession.

Over the coming year, our priorities include:

Publishing a position paper examining why many female CAs take longer, or fail, to reach leadership positions in CA firms, the public sector, academia or corporate Canada
Developing a training program and initiating a webinar series to provide resources to CAs and firms to further women’s advancement in the profession

“Our members accounted for 11 per cent of the individuals honored in the 2010 awards recognizing Canada’s Most Powerful Women presented by the Women’s Executive Network. The awards celebrate and honour women who are proven achievers. The Women’s Leadership Council plays an important role within our profession in encouraging women members to seek leadership positions. The demographics of the profession are changing and there must be a level playing field for all members who want to advance their careers.”

Discussion Questions:

1. This week is International Womens Week: Has the role of women in business evolved?

2. Why do you think there are fewer women in leadership roles?

3. From your present experinces: Is the role of women in busness increasing?

Article taken from the CA magagine: to read more see Robin Taub

Posted February 26th, 2012 by Gerry La Rocca & filed under Canadian Economy.

PwC’s dedication

To corporate responsibility is demonstrated through the actions the public accounting firm takes at work, in the marketplace and in our community.

At PwC, corporate responsibility (CR) is about integrating social, environmental and economic integrity into our values, culture, decision-making and operations in an accountable and transparent manner. Put simply, PwC aspires to be a CR leader.

To achieve this goal

The Global Corporate Responsibility Strategy and framework focuses public companies commitments and actions into four quadrants: community, environment, people and marketplace. We set goals for each of these quadrants and developed a strategy to achieve them as described below:

Community – We are committed to helping build and empower community leadership. We will do this by sharing our time, knowledge and resources, as well as by harnessing the dedication and capabilities of our people.
Environment – We respect the environment. And we are committed to taking the necessary and measurable steps to reduce the environmental impact of our business operations.
People – We are committed to creating a culture of success for our people by engaging and motivating them to do their best and supporting them to reach both their personal and professional goals. We’re focused on developing responsible leaders who can build trust-based relationships with each other and with our clients and stakeholders.
Marketplace – Our goal is to take a leadership role in bringing about positive change and improvements in our profession and the marketplace. We do this first by practising responsible, sustainable business practices, corporate citizenship and good governance. Second, by promoting these among our clients, vendors and other organizations. And third, we take an active role in contributing to the debate on issues impacting our marketplace

Visit the PwC’s website to listen to the commitment to Corporate Responsibility

Discussion Questions:

1. PwC believes in its people and the environment, is this an approach that all comporations should consider?

2. How should a company measure Corporate Responsibility?

3. What are some of the Qualitative and Quantitative considerations that should be considered in a framework, in order to measure the impact that Corporate Responsibility is actually being implemented and effective?

The above article is taken from the PwC website

Posted February 19th, 2012 by Gerry La Rocca & filed under Taxation & Planning.

Case:

A Toronto man trying to write off casino and racetrack losses against his income tax bill has gambled and lost at Canada’s Federal Court of Appeal.

Giuseppe Tarascio claims that gambling is how he earns the bulk of his income. He filed tax returns for several years, claiming both his wins and losses.

By day, Tarascio is a technician with Bell Canada. But on evenings and weekends, he responds to what he claims is his true calling: horses, slot machines, casino games and lotteries.

He claims to have won tens of thousands of dollars. For years he claimed those winnings as income, but he also deducted his losses and expenses.

In his income tax returns for 2002 and 2003, he deducted from his gambling winnings his losses and associated expenses: $40,933 in 2002 and $56,000 in 2003.

Luck Ran Out!

Canada Revenue Agency (CRA) stepped in and disallowed those deductions.

Tarascio objected and went to tax court. He presented his books and records, but lost there too.

No ‘systematic method,’ court rules

He claimed that his degree in mathematics — coupled with his experience in probability theory — gave him the expertise to register his gambling as a business.

Decision by the Canadian Court:

The court turned him down, saying Tarascio had no “systematic method” for gambling and had spent no time practising his skills. He was also required to pay court costs of $1,000.

Read the court decision: Federal Court of Appeal

What constitues an allowable business expense?

The Supreme Court was clear that a commercial endeavour, with no personal element, will be able to deduct its expenses, whether showing a profit every year or not, as long as a source of income exists.

Discussion Questions:

1. Do you think Gambling Losses, should be tax deductible?

2. Based on the Supreme court decision as to what constitutes a commercial endeavour: Was the law properly applied?

3. Would the case have taken a different turnabout, if the Appelant had kept perfect records?

Posted February 12th, 2012 by Gerry La Rocca & filed under Financial Reporting and Analysis, Uncategorized.

Online Brokers:

Everyone is interested in investing in stocks! Remember to be careful and do your research before investing.

There is a high demand for the new facebood IPO (initial public offering)

Should mention that the first factor of guessing at the future trends of an industry is something that investors generally do not do well over the long term.

There is a tendency for investors to be overconfident in their own ability to forecast future trends. There have been numerous studies in the financial industry that show that most people believe that they can do better than the overall stock market, yet on average most do not. This is a reason that fundamentals are important in business decisions because, unlike forecasting the future, the numbers do not tend to lie. Although there are some cases of dishonest companies such as Enron in which one cannot trust the numbers, for the most part fundamentals are the component of research that is objective. Somehow, when it comes to buying stocks, I have noticed that many investors tend to skip these boring fundamentals.

Facebook IPO:

Because of Facebook’s recent S-1 filing we can all have a look at much of Facebook’s fundamental information. The S-1 is required by the Securities and Exchange Commission to be filed for a business looking to go public. When this report was first made available on the SEC website, there were so many views that their website temporarily crashed. According to Facebook, it achieved revenue of roughly $3.7 billion in 2011 and their net income was a cool $1 billion. The revenue has about doubled each year since 2007. Clearly this is an impressive growth company with a lot to be excited about long term. The current offering is said to fetch Facebook $5 billion and could value the company at $100 billion. This is a hefty price tag given the company’s current revenue and earnings and I think that it would require sustained and significant growth to justify the price.

To read more: visit Daniel Beckerman

List of online brokerage houses: A few links have been provided, simple google to locate the other links.

National Bank Direct Brokerage

TD Waterhouse

QTrade Investor

HSBC InvestDirect

Questrade

Scotia iTrade

Tradefreedom

BMO InvestorLine

Remember:

1. Do your Research before investing. Visit SEDAR.com for Canadian Companies or EDGAR.com for US companies.