Description: A lawyer friend of mine – who also happens to be a chartered accountant – has told me that roughly every 20 years or so, it seems that the Supreme Court of Canada deals with a case on auditor liability. Well, the 20 years must be up as on February 15, 2017, the Supreme Court is set to hear case 36875 – Deloitte & Touche v. Livent Inc., Through its Special Receiver and Manager Roman Doroniuk. Deloitte has been found liable at a previous trial for over $80 million in damages. The Court’s decision could revisit an earlier 1997 ruling on the Hercules Management case that seemed to vastly reduce the scope of auditor liability.
Date: January 31, 2017;
1) In addition to the Globe and Mail link, search for the Supreme Court of Canada’s website to check out the information on this case. (http://scc-csc.ca/case-dossier/info/sum-som-eng.aspx?cas=36875)
2) Wiley’s Auditing: A Practical Approach discusses the Hercules Management decision. What are some of the main points from this case regarding auditor liability?
3) What decision do you think the Court will make?
Description: This week the Globe and Mail reported that the Minister of Finance did not include information on government expectations regarding future deficits in his November 1st financial updates. Instead, the information projecting decades of future deficits was released to the public somewhat quietly, two days before Christmas. While deficits are expected to continue for some time, the federal government does expect the federal debt to decline as a share of GDP.
Date: February 10, 2017
1) If you were the Finance Minister, when do you think you would have released this information?
2) What would have been the downside to releasing such information earlier?
3) What risk would the government run by not releasing this information in its November update?
Description: Perhaps it should not surprise us when government departments fail to implement a recommendation from the auditor general. But this one seems to defy imagination. In 2011, the federal auditor general informed the government that a consultant hired to manage First Nation finances had been part of an alleged fraud the previous year. Yet the First Nations employing the consultant were not informed until 2016.
Date: February 10, 2017;
1) How do you think this situation occurred?
2) Wiley’s Auditing: A Practical Approach discusses the so-called Fraud Triangle. Do you see any parts of the fraud triangle as having played a role in this failure?
3) As a citizen and taxpayer, what do you think can be done to improve these communication issues?
Description: Snapchat is looking to raise up to $4 billion in an initial public offering (IPO). Snapchat lost over $500 million in 2016 and $382 million the previous year. Yet, the company is expected to have a market value of up to $25 billion.
Date: February 2, 2017;
1) Are you a regular user of Snapchat? How do you think it stacks up against competitors like Facebook and Twitter?
2) Which chapter of Wiley’s Financial Accounting: Tools for Business Decision Making teaches accounting students about IPOs?
3) Snapchat seems to be losing all kinds of money, but it has an incredible market value. What do you think accounts for this situation?
Description: Internal control is important in preventing and detecting fraud and theft. The Royal Canadian Mint found out recently that metal detectors were not sufficient to prevent or detect an employee from stealing over $150,000 in gold by hiding it in a body cavity. Lawyer Gary Barnes noted that controls over the precious metals were surprisingly weak, indicating that “they had pails of gold just sitting around and people could walk by and actually just pick things out of them.”
Date: February 2, 2017;
1) Were you surprised by the ease with which this employee was able to smuggle out the gold?
2) Wiley’s Auditing: A Practical Approach discusses the so-called Fraud Triangle. After reading this story, can you see how one or more elements of the fraud triangle may have been in play?
3) What controls might you recommend to help improve security at the Mint? Hint: Check out Chapter Seven of Wiley’s Financial Accounting: Tools for Business Decision Making.
Description: We often hear of corporate mergers in reading the financial press. But it’s not every day that we hear of the merger of two large charitable organizations. That did happen this past week, however, when the Canadian Cancer Society and the Canadian Breast Cancer Foundation joined forces. With declining revenues, the merger will help the new combined entity direct funds to research by reducing administrative costs.
Date: February 1, 2017; updated February 2, 2017
1) What do you think about this merger strategy?
2) Many students may have studied consolidations of profit oriented enterprises. But what would be some differences to consider in preparing the consolidated financial statements of not-for-profit organizations?
3) Do you think the merger of these two major charities may signal the start of a trend?
Description: On Wednesday, January 25, 2017, the Dow Jones Index busted through the 20,000 barrier for the first time ever. In March of 2009, the financial crisis drove the index to 6,440. But growth has been consistent for several years and the election of Donald Trump seems to have boosted investor confidence.
Date: January 25, 2017;
1) What is the significance of busting through the 20,000 barrier?
2) Which chapter of Wiley’s Financial Accounting: Tools for Business Decision Making teaches accounting students about shares and shareholders?
3) Do you think the stock market will continue this upward trend?
Description: Many consumers carry that little blue Air Miles card in their wallets, racking up points at retail stop, gas stations and service providers. But Air Miles has reduced the redemption value of the points bank for some vacations, causing angst with Air Miles collectors. Allison Peters decided to book a trip to Mexico, only to find out that she had lost about $2,000 worth of travel value on her account. Needless to say, Allison and other collectors are not pleased by the news.
Date: January 27, 2017; updated January 28, 2017
1) Are you an Air Miles collector? If so, did you know about this change? How does it affect you?
2) What would you recommend Air Miles do to handle the public relations impact of this strategy?
3) How will this change in Air Miles strategy be reflected in its financial statements?
Description: This past Tuesday night a major ice storm knocked over 100,000 NB Power customers off the grid, and by weekend thousands of New Brunswickers were still without electricity. With colder winter weather settling in, after a few days near the zero mark, citizens are facing both darkness and cold. A number of communities have declared a state of emergency. The federal government has offered the aid of the military if it is required.
Date: January 28, 2017
1) What is the longest you have ever been without power? What challenges did you face?
2) How would a government account for the costs associated with an emergency like this?
3) What might be some additional risk issues an auditor would have to identify in auditing the expenditures for an emergency situation like this?
Description: Canadian companies are falling behind. Only 6 Canadian companies made the list of the world’s top 100 most sustainable companies. In 2016, 9 companies were there and in the previous year 12 Canadian companies hit the top. Part of the reason for the decline appears to be stronger disclosure requirements for companies in other jurisdictions.
Date: January 17, 2017
1) What do you think are the causes behind this decline in the sustainability ranking of Canadian firms?
2) Do you think that Canadian regulators should increase the sustainability reporting requirements for Canadian companies?
3) Chapter One of Wiley’s Auditing: A Practical Approach refers to audits which deal with this issue of sustainability. What are these audits called?