Posted by & filed under Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis.

LONDON, Ont. – A stunning $456-million judgement in a class-action lawsuit against insurance giant Great-West Lifeco (TSX:GWO) is a sign the courts are being more aggressive in keeping tabs on how corporate Canada conducts its affairs.

The Judgement:

Justice Johanne Morissette ruled after a 45 day trial in London, Ont. that Great-West breached sections of the Insurance Companies Act by transferring money from the accounts of subsidiaries London Life Insurance Co. and Great-West Life Assurance Co. to finance the 1997 takeover of London Insurance Group, the parent of London Life Insurance Co.

The lawsuit represented policyholders from across Canada, but the biggest concentrations are in Ontario, Quebec, Saskatchewan and Manitoba.

CICA Handbook Section 3290 Contingencies states the following:

¨ The amount of a contingent loss should be accrued in the financial statements by a charge to income when both of the following conditions are met:

(a)     it is likely that a future event will confirm that an asset had been impaired or a liability incurred at the date of the financial statements; and

(b)     the amount of the loss can be reasonably estimated.

The following has been disclosed by Great-West Life co. See their Annual Report 2009:

The trial of the class proceedings in Ontario regarding the participation of the London Life and Great-West Life participating accounts

in the financing of the acquisition of London Insurance Group Inc. (LIG) in 1997 by Great-West Life concluded on January 15, 2010. The Court reserved and a decision is expected later in 2010. Based on information presently known, these proceedings are not expected to have a material adverse effect on the consolidated financial position of the Company.

Discussion Questions:

1. The Consolidated Operating Profits show a Net Income of $443 million, based on the above lawsuit: Is the amount material?

2. Should management have accrued the Loss on their financial statements, rather than simply disclosing the contingency?

3. Why do you think management may have avoided recording the potential liability?

Read more:See the Canadian Press

Review the 2009 Great-West annual report: Read  Note 26 Contingent Liabilities

Posted by & filed under Accounting Careers, Canadian Economy, Corporate Restructuring, IFRS.

The concept of bankruptcy is difficult to grasp and understand. Often the causes are due to Greed , Economic Conditions or Mismanagement. In essence Bankruptcy is a capitalistic concept-it is the loss of capital, an inability to pay a person’s or company’s creditors.

Accounting is a tool that provides information to management, to identify the potential risks or failure to meet creditor obligations.

In brief bankruptcy is a failure to mannge credit risk!

Accountants are often involved in Restructuring bankrupt or near bankrupt companies to their original potential or at least the Accountants will attempt to keep the company alive until deals can be re-structured with bankers and other creditors.

Bankruptcy Law and Accounting  for bankruptcies are two interesting fields that may interest you  as an exciting profession to consider!

Experience with the bankruptcy process can provide considerable leverage in finding effective solutions in avoiding the common and not so common economic pitfalls. This is where Accounting for cash flows, budgeting and pro-active management will reduce the risks of bankruptcies.

When a company is bordering on bankruptcy, accountants must prepare financial statements that disclosure the risks of  whether the company will survive within the next 12 months.

Going Concern Assumption (IAS 1, Framework for preparing Financial Statements)

The financial statements are normally prepared on the assumption that an entity is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the entity has neither the intention nor the need to liquidate or curtail materially the scale of its operations; if such an intention or need exists, the financial statements may have to be prepared on a different basis and, if so, the basis used is disclosed.

Read more: link to ca magazine article by Peter P. Farkas: A capitalist concept.

Very interesting Video on the : Economic Meltdown prepared by the CBC , 45 minute video worth viewing. It presents the economic meltdown that occurred in 2008, and which is still prevalent today.

In Class Discussion Questions:
What happens after bankrupcy?
What are the alternatives to bankruptcy?
In your opinion what are the major causes of bankruptcies?

Posted by & filed under Accounting Careers, Canadian Economy.

The Canadian economy is coming off a “sugar high” and will face four impediments that will slow growth going forward.

1. A weaker U.S. economy

2. Softness in Canadian housing

3. Fatigued consumers and

4. Fading stimulus will all conspire to limit growth to the 1.5% to 2.2% range

  U.S. exposure

U.S employers have been slow to add to payrolls, and that’s creating a pall over consumers — as well as slowing the housing market’s recovery, the TD report said. That means sluggish economic growth, which will affect Canadian sectors like auto and lumber as demand remains weak.

Housing softness

Canadian consumers are already among some of the highest leveraged households in the world, and that doesn’t bode well for the housing market, existing home sales will feel a sharp pinch, hitting a trough of 320,000 units by mid-2011 — a far cry from 2009’s near-record high of 465,000 units.

Fatigued consumers

TD’s report states that household indebtedness has been on what it calls a “sharp and unsustainable climb” over the past few years. Debt-to-person disposable income is now at 144% in Canada, close to the U.S.’s 151%. Four years ago, the gap was 30%.

Waning stimulus

On top of the strain from indebted consumers and a weak U.S. economy, the government is starting to turn off the stimulus tap, slowing the economy even further.


But it’s not all bad news.

“Fortunately, Canada faces a lesser near-term need than other countries for radical fiscal austerity.

Read more:

Courtesy of the financialpost

Watch CBC Video: Canada’s Economy


Discussion Questions:

1. Have you noticed any indications of a slowing economy?

2. Do you think, the economy will pick up by the time you graduate?

3. Should accountants be concerned about the economy?

Posted by & filed under Fraud Accounting, International Accounting, Taxation & Planning.

Big banks may face penalties

The law requires large banks to list the ways in which they are exposed to possible money laundering and to assess that risk.

Earlier this year, funding for the money-laundering watchdog, the federal Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, was increased by $8 million.

On July 20, 2010 word emerged that FINTRAC had fined B.C. Lottery Corp. $670,000 for failing to properly monitor and report possible high cash transactions potentially related to organized crime.

How does money laundering work?

Money laundering is hiding the source of illegal funds from enforcement authorities so it can’t be traced.

Read more.

 COUNTERING OFFSHORE TAX EVASION, by the Organization for Economic Co-operation and Development (OECD)

 How is a tax haven identified?

1) No or nominal tax on the relevant income;

2) Lack of effective exchange of information;

3) Lack of transparency;

4) No substantial activities.

Does the OECD have a list of tax havens?

Over 40 jurisdictions were identified as meeting the tax haven criteria in June 2000.

Do the standards allow for the exchange of information on companies and trusts and their owners and beneficiaries?

Yes. The standards impose an obligation to exchange all types of information forseeably relevant to the administration and enforcement of the requesting country’s domestic tax laws. This could include information on companies and trusts and their owners and beneficiaries. Moreover, a state cannot decline to provide information in response to a request for exchange of information solely because it is held by a person acting in an agency or fiduciary capacity such as a trustee.

Who established the standards?

The principles of transparency and effective information exchange have been articulated and refined through the work of the OECD’s Global Forum. These standards have been endorsed by the G20 and the UN Committee of Experts on International Cooperation in Tax Matters.

Discussion Questions:

  1. Should Tax Haven Countries exist?
  2. Do you think our Canadian Government and the G20 will abolish or dimish Tax Haven Jurisdictions?
  3. Why do you view money laundering as a problem in our present day society?



For more information please contact:

Jeffrey Owens (


Pascal SaintAmans (

of the OECD Centre for Tax Policy and Administration

Posted by & filed under Accounting Principles, IFRS.

“Give us standards that meet the needs of the people who use our financial statements.” That’s the message standard setters have heeded in developing new standards for private enterprises. The profession has been waiting for this for a long time and finally, things are changing. The conventional wisdom in accounting standards used to be one size fits all; people believed that a single, wide-ranging umbrella could cover the needs of businesses of all stripes. Not any more!

Don’t let the word ‘new’ put you off – the proposed private enterprise GAAP is essentially the existing CICA Handbook – Accounting, simplified.

This change in direction reflects a recognition that the financial statements of public and private companies are meant to accomplish different things. A public company’s primary focus is on providing investors with sufficient information to make decisions about whether to buy, sell or hold securities.

“For a private company, you can’t say that’s irrelevant, but it’s much less frequent, because its securities aren’t publicly traded. They’re usually closely held — often passed down generation to generation,” says Toronto-based Paul Cherry, newly appointed chair of the International Accounting Standards Board’s Standards Advisory Council and former chair of the AcSB.

 Significant differences between GAAP for Private companies and Publicly Accountable Enterprises:

  1. 1.We have a standard telling people how to calculate earnings per share (Section 3500). That standard is not applicable to nonpublic companies; it’s only public companies that really provide that information, and it’s only relevant to those sorts of companies. So there’s no need to carry forward that standard and it was just simply dropped.
  2. A greatly reduced number of disclosure requirements for Private companies — the understanding is that Private company shareholders can obtain more as required.

Discussion Questions:

1. What are some of the differences between a Public company and a Private company?

2. Has the accounting profession moved in the right direction in proposing two sets of Accounting Standards? IFRS for Public Accountable Enterprises (PAE’s) and Canadian GAAP for (Non-PAE’s)?

3. Are these companies so different that separate standards are required?

Footnote: On or after January 1, 2011 Private companies have the option to adopt IFRS or Canadian GAAP.

Article written by:  Jeff Buckstein






Posted by & filed under IFRS.

With 2010 weeks away, many public companies are preparing for the changeover to international financial reporting standards (IFRS). Management teams, audit committees and IFRS committees are busy ensuring the transition will be effective and efficient.

And the changeover is no easy task. Its success depends on the availability of adequate tools and resources, as well as a considerable investment of time and money on the part of management.

Planning — crucial for an effective transition audit
The changeover to IFRS in Canada represents a fundamental shift in financial reporting. Changes in the application of new policies, the configuration of systems and maintenance of internal controls will all have an effect on audit risk, significantly increasing the risk of misstatements and fraud. In turn, this will have a considerable impact on how audits are conducted. That’s why it’s important to properly plan the engagement — a step that everyone agrees is the key to a successful transition.

Users’ concerns and professional risk

One thing is certain: the first IFRS financial statements will be closely scrutinized by the various stakeholders, including financial backers, investors, market analysts and regulators. As was the case in Europe, all these stakeholders are concerned about the impact the changes will have and the risk that the standards will be applied inconsistently.

And these concerns are well-founded. Unlike Canadian GAAP, where certain complex accounting treatments are closely modelled on US rules, IFRS is based on much looser and more general principles, which leave more room for interpretation and the exercise of judgment and therefore lead to greater subjectivity in the application of an accounting treatment or standard. In some cases, there is no IFRS equivalent to the current Canadian standards. This issue and its impact on audit engagements will naturally need to be addressed.

Remaining independent
The need for auditors to actively participate in the transition process could lead to certain problems of independence, since clients will ask them to provide opinions, advice and recommendations about the company.

To enforce the rules of professional conduct respecting in-dependence and to avoid placing the auditor in a real or perceived conflict of interest situation, both the company and the audit committee will need to put processes in place to define the extent of the auditor’s involvement and collaboration with the management team.  

The changeover to IFRS is a major challenge, but it is also an opportunity for audit firms new accounting opportunities for students who are considering the profession.

Go to the following link for the complete article:

Posted by & filed under Accounting Principles, IFRS.

Origins of IFRS
A single set of global accounting standards has been under development for over three decades
since the International Accounting Standards Committee (“IASC”) was first established in
It wasn’t until 2005, with the advent of the European Commission’s requirement for public
companies reporting within the European Union (“EU ”) to prepare consolidated financial
statements compliant with IFRS, that IFRS began to be widely applied around the world, and the
IASB could be said to have moved significantly to achieving its goal. Australian and other
standard setters soon followed the EU and today over 100 countries (Includes Canada) either
require or permit the use of IFRS for public company reporting.

IFRSs are expected to apply for Canadian changeover in January 1, 2011.

Rationale for conversion

IFRS will improve accessibility to global capital markets, possibly reduce Canadian
companies’ cost of capital and thereby improve their global competitiveness.

Conversion timeline
The first set of annual IFRS financial statements for Example Ltd. will be for the
year ending December 31, 2011, for public Accountable companies with a December year end.

Next week we will discuss: What has happened to GAAP?

Written by
Rafik Greiss, FCA, CPA (Illinois)
Canadian IFRS Leader, Ernst & Young
Simon Sharp, CA
Senior Manager, Ernst & Young

Posted by & filed under Accounting Careers.

Forget the narrow notion of bean counters and number crunchers. Today’s accountants are an extremely diverse group of professionals whose specialties span an impressive range of financial acumen. And they’re finding that a well-rounded business education capped with significant expertise is making them highly marketable.

“It’s certainly an exciting time to be an accountant,” says Julie Charbonneau, Manager of Accounting Services at Schering Canada. “Whether you’ve just entered the profession or are well-established, you’d be hard pressed to say that you’re not challenged or involved in something new. In fact, in my experience, every year there are more and more opportunities for accountants.”

Corporate governance is more complicated. Financial dealings are increasingly global and fast-paced. Specialized knowledge is highly coveted. It all bodes well for people in the accounting profession.

Abid Hafeez, Financial Analyst at TransAlta in Duffield, says he was getting responses from employers before he’d even completed his CGA Program of Professional Studies.

“After getting my CGA, the responses were overwhelming; for the first time in my career, I had the privilege to accept the offer I liked the most,” Hafeez says.

Hafeez had worked in the banking industry for seven years in his native Pakistan before moving to Canada. He soon realized that if he wanted to succeed here, he would have to get the “best education possible”.

Murray Lee came to same conclusion. He worked in two large companies while earning his accounting designation. The CGA program, he says, is a solid platform on which to build a career in any business. He’s already experienced two mergers.

“With any merger, the structure of a business gets more complex,” says Lee, Director of Finance at Vision Critical in Vancouver since 2004. “My experience and my accounting studies prepared me to meet many new demands, and to adapt and grow with the opportunities. I really believe that my career can be whatever I choose to make of it.”

Jo-Anne Gilman says her accounting designation has been a major contributor to her career success in the automotive sector.

“It’s provided me with excellent skills to respond to changing business conditions, a challenging regulatory environment and operational support requirements,” says the Vice-President of Finance at DaimlerChrysler Canada.

“Working for a large, multinational corporation would be very challenging without the right training and education, and my CGA designation certainly helped to prepare me for all eventualities.”

Gilman notes that the CGA designation is widely recognized as a valuable professional credential. It’s brought her solid returns, both in economic terms and by way of more challenging assignments. How so? She’s held no fewer than 15 finance, accounting and tax positions of increasing responsibility at DaimlerChrysler.

Shabbir Hussain says that being a certified general accountant has helped him to meet an array of organizational needs. Born and raised in Karachi, Pakistan and educated in the United States, Hussain moved to Toronto nearly a decade ago.

CGA’s rigorous professional studies program prepares students to perform with commitment, discipline, a strong business sense and a comprehensive understanding of ethics, says Hussain, Director, Financial Analysis, Planning and Reporting at Rogers Communications. It also recognizes the diverse skills demanded by the best employers.

“Based on my multinational exposure, I maintain that the continuing professional development program offered by CGA is leading edge,” Hussain says.

“There’s no doubt that today’s accountants must be strategic analysts, team players and lifelong learners,” notes Anthony Ariganello, President and CEO, CGA-Canada, which represents 68,000 CGAs and students in Canada, Bermuda, the Caribbean, Hong Kong and China. CGAs work in all segments of the economy as comptrollers, treasurers, tax specialists, analysts and auditors; strategists and consultants, managers and directors; partners and principals, CFOs, presidents and CEOs.

“Without question, the entire accounting field has become much more complex and demanding, but also more invigorating,” Ariganello says. “At every level, accountants need a far wider range of skills than ever before.”

Accountants have become much more high-profile within organizations and are often called on to fill leadership and strategic roles. That makes strong communication skills a must. Additionally, those with so-called soft skills, such as diplomacy and persuasion, are also in demand, industry surveys suggest.

Consider Juliana Guan, a Senior International Accountant with Husky Energy in Calgary. She deals with operations outside of North America.

“It’s important to understand cultural differences, different business and accounting practices,” Guan says. “I have to be familiar with local rules and regulations, such as different tax structures and government reporting. It requires mutual understanding and co-operation from people across continents.”

Heavier workloads, robust business growth and a tight labour market all add up to more opportunities for accountants who continually hone their expertise. According to Robert Half International, a leader in professional staffing and consulting services, employers will be looking to hire people in:

  •  General accounting: Staff accountants do a range of work, from processing journal entries to performing account analysis and reconciliation to preparing tax filing. Senior accountants manage more complex projects, including budgeting, financial statement preparation and risk assessments. Professionals with knowledge of securities regulation will be particularly valued.
  •  Financial analysis: Organizations have an ongoing need for professionals who can evaluate financial data, identify trends and anomalies, and participate in forecasting and budgeting. They may also be asked to help determine how to boost profitability or provide support for strategic decisions.
  •   Internal audit: Internal auditors will continue to remain in strong demand. Both public and private companies are expected to hire aggressively in this area to improve accountability. Consulting firms offering internal audit services will also need these professionals.
  •  International accounting: Globalization will continue to fuel the need for accountants with knowledge of domestic regulations who can work successfully in an international environment. As well, companies adopting International Financial Reporting Standards will need accountants with expertise in international accounting rules who can help their organizations transition to new standards.
  • Forensic accounting: The need for accountants with strong forensic skills is rising. Government agencies, public accounting firms and specialty consulting practices need these professionals to help prevent and detect corporate financial fraud.

Posted by & filed under Taxation & Planning.

Film financing readily available– Lucrative tax incentives and other funding are available to help nurture film and television production in this country, according to KPMG’s global publication Film Financing and Television Programming – A Taxation Guide (Fifth Edition).

(Toronto – February 25, 2010)

These federal and provincial tax incentives, along with government support through loans, grants, equity investment, and corporate funding, provide for a fertile business environment, ensuring that Canada remains a great place for new and aspiring film and television producers.

“These incentives, including refundable tax credits, may not be widely known to newcomers to the film and television industry,” says Ryan Friedman, Tax Partner with KPMG in Canada’s Communications and Media practice. “This ‘hidden money’, along with incentives from film commissions in various provinces and territories, provide location and production assistance that truly help to make Canada ‘Hollywood North’.”

The Canadian Film or Video Production Tax Credit (CFVPTC) is a fully refundable tax credit for qualified Canadian production companies that own the copyright in the production. The Income Tax Act and Regulations outline the tests that a Canadian production must meet to earn this production credit.

The CFVPTC is available to taxable Canadian corporations whose primary business activity is the production of Canadian certified films that are carried on through a permanent establishment in Canada. In order to qualify for this credit, the producer of the production must be a Canadian resident individual or eligible corporation from beginning to end of production.

Non-Canadians who wish to produce films or television shows in Canada are eligible for funding through the Production Services Tax Credit, which is mirrored in certain provinces as well.

Additionally, Canadian provincial governments offer various tax credits to those under their respective jurisdictions. These include:

Ontario Film and Television Tax Credit (OFTTC)

Ontario Production Services Tax Credit (OPSTC)

Ontario Computer Animation and Special Effects (OCASE)

Film Incentive BC (FIBC)

British Columbia Production Services Tax Credit (PSTC)

The Alberta Film Development Program

Saskatchewan Film Employment Tax Credit

Manitoba Film and Video Tax Credit

Quebec Film and Television Production Tax credit

Quebec Production Services Tax Credit

Quebec Dubbing Tax Credit

Nova Scotia Film Industry Tax Credit

New Brunswick Film Tax Credit

Newfoundland and Labrador Film and Video Tax Credit

Film Location Incentive (Yukon).

“It is commendable that our government bodies, both at the federal and provincial levels, are committed to the film industry’s sustainability and, hopefully, its growth. Independent film producers should avail themselves of this non-repayable free financing,” says Kathy Cunningham, Industry Sector Leader, Communications and Media practice, KPMG in Canada. “However, in order to benefit from these incentives, one must first be aware of them. The Taxation Guide provides this essential information.”

KPMG’s Taxation Guide is a useful tool for those looking to learn about accessing these credits. However, it is still recommended that aspiring producers seek the advice of tax professionals.

Posted by & filed under Accounting Principles, All Articles, Cost Accounting, Financial Accounting, Managerial Accounting.

India has developed the world’s cheapest laptop – a touchscreen device which resembles Apple’s wildly popular iPad but will cost just £23.

The prototype was unveiled this week by Kapil Sibal, the country’s human resource development minister, who said 110 million Indian schoolchildren would be the first recipients.


1.  Find the current exchange rates and calculate the price of the laptop in U.S. dollars?  Show your work and the site you found to get the exchange rate.

2. What types of costs do you speculate that the country has been able to cut to achieve the £1,450 Tata Nano car and a mobile phone costing less than £11. 3 and now the £23 laptop?

3. What do you see as the biggest advantages are of this new laptop?



Halliday, J. (2010). India unveils world’s cheapest laptop., July 23 (Retrievable online at