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

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Managerial Accounting.

Contractors should be educating themselves on the impact of the new proposed revenue recognition standards and the recently published (June 24, 2010) exposure draft pertaining to revenue from contracts with customers. Public comments are due October 22, 2010, and it is expected the standards will be finalized in 2011.


1. What are some of the significant changes in this standard that will affect contractors?

2. How will the proposed standard define the economic unit of measure?

3. Explain what the new cost of capitalization rules will mean for contractors.



Henderson, J. (2010). Proposed Revenue Recognition Rules Would Significantly Affect Contractors, BKD Alerts, June (Retrievable online at

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Managerial Accounting, Video Updates.

Given the last year’s trend, is there an end in sight to new record-low interest rates? For example, on July 22, Freddie Mac’s Primary Mortgage Market Survey, which provides a snapshot of national average mortgage rates, reported a national average rate of 4.56% with 0.7 points on a 30-year fixed-rate mortgage. At the same time last year, the rate was 5.2% with 0.7 points. Given these changes and the housing crisis, many are turning to mortgage fair events for additional information.


1. Assume that the women in this video has a fifteen-year $175,000 mortgage with a 7.5% interest rate and a monthly payment of $1,622.28. What is the interest portion of her first payment and how much is her principal reduced by with her first payment? If she refinanced this loan for 30 years at the same interest rate, what elements of her mortgage would change? 
2. The woman at the end of the video said that her mortgage was upside down. What does that mean? Why does she need an appraisal?
3. What do you see as the benefits for having mortgage fair events like these?
4. What is a point that is charged on mortgages and how do these affect the homebuyer?

Fontinelle, A. (2010). All-Time Low Mortgage Rates: Time To Refinance? San Francisco Chronicle, July 26. (Retrievable online at Free Mortgage Fair Help Draws Crowd (Retrievable online at:

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Video Updates.

Bank of America incorrectly classified as much as $10.7 billion in short-term lending and repurchase deals for mortgage securities as sales. This claim surfaced in a May 13 letter to the SEC where the banking corporation alleges that the transactions were immaterial and that it would be beefing up its internal accounting controls.  This letter was sent in response to an SEC request of finance chiefs at about two dozen firms in March, asking whether they employed accounting strategies like Repo 105 used at Lehman Brothers Holdings Inc.


1. In the letter, the bank said its incorrect accounting for the six trades wasn’t intentional. “We do not deliberately structure transactions that are economically disadvantageous simply for the purpose of recording a sale or reducing recorded liabilities.” What must their incorrect journal entries have been?

2. Why did the bank include the phrase that “its incorrect accounting for the six trades wasn’t intentional?”

3. What does “end-of-quarter window dressing” mean in terms of this event? What is Repo 105?

4. Do you agree or disagree that this amount is not material enough to disclose? Explain your answer.


Rebel Traders (2010). Bank Of America (NYSE: BAC) Admits To Hiding Debt, iStock Analysts, July 12 (Retrievable online at

Video: Lehman Brothers ‘Accounting Gimmick’: Repo 105 Lehman Hid Assets (Retrievable online at

Staff reporter. (2010). Bank of America Wrongly Classified Transactions, China Daily, July 12 (Retrievable online at

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

According to market research firm, Apple’s iPhone 4 wireless handset components cost about  $187.51. The iPhone 4 sells for $199 and $299. The most expensive component is the LG display that costs $28.50. According to the consultant, the iPhone has typically hovered around the $170-to-$180 cost range because Apple seems to be trying to hit some kind of budget.


1.  According to the article the firm that put this information together used a teardown analysis.  What is this?

2. What are some of the reasons that Apple would put together this $170-to-$180 cost point budget?

3.  What is the markup on the gyroscope chip? What percent of the total part cost is the display?

4.  What percent profit is made on the iPhone 4 as compared to the iPhone 3GS?

Source:  Hesseldahl, A. (2010). Apple iPhone 4 Parts Cost About $188, Bloomberg Businessweek, June 28 (Retrievable online at