Wiley Accounting Updates

Posted November 7th, 2016 by Brent White & filed under Advanced Accounting, Corporate Strategy.

Description: Coffee chain Second Cup may be looking for a buyer. It is revising its strategic plan in which it had targeted opening up to 85 new stores by 2018. With sales down 1.2 per cent this year, Second Cup might have trouble meeting an upcoming debt payment. But there are a couple of potential buyers who may Second Cup it as an attractive option despite these weaknesses.

Date: October 31, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/second-cup-establishes-special-committee-to-review-options/article32589379/

Discussion Points:

1) What strategies might Second Cup look at in addition to seeking a buyer?

2) Wiley’s Financial Accounting: Tools for Business Decision Making discusses Tim Horton’s in the opening vignette of Chapter 11. How do the results of Tim Horton’s discussed in the vignette compare to those of Second Cup?

3) What would be some of the key accounting issues that a company acquiring Second Cup would have to deal with?

Posted November 7th, 2016 by Brent White & filed under Accounting Principles.

Description: Despite increasing competition from newer low fare airlines such as NewLeaf Travel Co. Inc. and Canada Jetlines Ltd., Westjet Airlines reported third quarter earnings of $116 million this week. Westjet intends to continue its strategy of being a low cost provider in the face of this competition. The airline also noted it is looking to acquire more wide-body jets to support its new routes between Canada and Europe.

Date: November 1, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/westjets-profit-jumps-14-per-cent/article32610227/

Discussion Points:

1) What did you learn about the airline industry from this article?

2) Chapter 9 of Wiley’s Financial Accounting: Tools for Business Decision Making discusses Westjet’s strategy for the airplanes in its fleet. What are the the two methods it uses?

3) What are some of the key costs that the airline industry has to control in order to be successful?

Posted November 7th, 2016 by Brent White & filed under eCommerce.

Description: Last week’s Wiley Weekly Accounting Updates featured a story on job churn: a concept voiced by the Finance Minister Bill Morneau to discuss the world of vanishing permanent jobs. And certainly one cause of job churn has been the so-called gig economy, where businesses like Uber maintain tall those drivers picking up passengers under the Uber app are independent contractors. A tribunal in London though isn’t buying Uber’s story. In ruling that Uber drivers are indeed employees, the tribunal said “The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous.”

Date: November 3, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/rob-commentary/executive-insight/the-true-nature-of-the-internets-puppet-economy-is-being-exposed/article32670394/

Discussion Points:

1) Have you ever used Uber? Do you know any Uber drivers?

2) What is your opinion of this decision made by the tribunal?

3) What do you think about the author’s suggestion that the gig economy should be called the puppet economy?

Posted October 31st, 2016 by Brent White & filed under Accounting Careers, Canadian Economy.

Description: What do you really need to know about job churn? This concept of job churn sounds a bit unpleasant – and indeed it is. Young Canadians are facing increased job insecurity, with jobs offering any sense of permanency fading from the scene. Part time work and jobs with no benefits are a new normal. About 40 percent of Canadians between ages 21 and 29 are still living with parents, up from 27 percent 30 years ago.

Date: October 28, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/economy/jobs/canadian-youth-working-low-paid-temporary-jobs/article32579528/

Discussion Points:

1) Have you heard of this concept of job churn? Are you concerned about it?

2) What does the future look like for the graduating class at your university?

3) Why do we have job churn and uncertain futures for our educated youth in a rich democracy like Canada?

Posted October 31st, 2016 by Brent White & filed under Accounting Careers, Contemporary Business Issues.

Description: How about those co-op placements? Universities and community colleges have been offering them in various forms as the discussion of experiential learning enters the common vocabulary. Everything isn’t always rosy with co-op placements though. Unpaid service and uncertain legal status may be some of the downsides on these attempts to provide students with practical experience.

Date: October 27, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/rob-commentary/the-downsides-of-post-secondary-co-op-work-placements/article32536934/

Discussion Points:

1) Have you ever had a co-op experience? What was it like?

2) Do you think a co-op placement is an effective way to gain experience towards an accounting career?

3) What do you think that colleges and universities could do to improve co-op placements?

Posted October 31st, 2016 by Brent White & filed under Auditing, Corporate Governance.

Description: Cooperation between governments is a good thing. And in Atlantic Canada, the four provinces have cooperated for years as shareholders in one gambling organization, the Atlantic Lottery Corporation (ALC). This week, however, an audit report issued by the four auditors general of the Atlantic provinces concluded that the four provinces need to do a better job in governing ALC. One symptom of this weak governance has been very healthy increases in executive salaries without shareholder oversight.

Date: October 26, 2016

Source: cbc.ca

Link:

http://www.cbc.ca/news/canada/prince-edward-island/pei-new-brunswick-atlantic-lotto-auditor-general-1.3821231

Extended radio interview portion @:

http://www.cbc.ca/listen/shows/information-morning-fredericton/segment/10600842

Discussion Points:

1) What were your impressions from reading this story or listening to the two interviews on the ethics of the giveaways?

2) How do you think the four provinces could work together to improve the way the organization is governed?

3) What might be some of the challenges four different audit offices would face in working together to carry out one audit?

Posted October 24th, 2016 by Brent White & filed under Accounting Careers, Accounting Principles.

Description: Bombardier announced this week that it’s cutting about 10% of its workforce. This is around 7,500 jobs in total, with about 2,000 or so of those at home here in Canada. CEO Alain Bellemare cited competitive pressures as prompting these cuts. Two-thirds of this latest round of layoffs will hit Bombardier’s rail division.

Date: October 21, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/bombardier-cutting-another-7500-jobs-rail-unit-to-be-hit-hardest/article32466387/

Discussion Points:

1) What role do you think the chief financial officer at Bombardier would have played in the CEO’s decision to cut staff?

2) How would Bombardier account for the costs associated with terminating this large group of employees?

3) The article notes that Mr. Bellemare wants to improve Bombardier’s cash flow. What are some of the ways an organization can use to better manage its cash? (Hint: See Chapter 7 of Wiley’s Financial Accounting: Tools for Business Decision Making)

Posted October 24th, 2016 by Brent White & filed under Corporate Governance.

Description: Mountain Equipment Co-op (MEC) has responded to concern from its members and scrapped certain criteria it had proposed for its board members. Given its role as a major retailer, MEC wanted board members who had governance or management experience in large and complex organizations. But this upset MEC’s members who appealed to the principle of democratic governance of the co-op.

Date: October 16, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/mountain-equipment-co-op-eases-board-applicant-rules/article32383675/

Discussion Points:

1) Are you or any one in your family a MEC member? If so, were you familiar with the controversy over governance?

2) What is your take on the controversy? Should democratic principles trump the criteria for directors?

3) The article notes that although MEC’s sales were up, its profits were down. What factors may have lead to this?

Posted October 24th, 2016 by Brent White & filed under Accounting Careers.

Description: The Competition Bureau is running into trouble in its ongoing investigation of Loblaw’s pricing practices. The problem seems to be that Loblaw’s suppliers seem reluctant to talk to the regulator for fear that Loblaws might retaliate against them. One thing the Bureau may be examining is Loblaw’s controversial practice of asking for 1.45 % discounts on bills from its suppliers. This cut, which has been in place since September, has obviously made a lot of suppliers unhappy.

Date: October 17, 2016; updated October 18, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/loblaw-investigation-slowed-by-lack-of-co-operation-competition-bureau/article32400080/

Discussion Points:

1) The food business is known for tight margins. If you were the chief financial officer at one of Loblaw’s major suppliers, what would be your reaction to the 1.45% cut imposed by Loblaws?

2) The article discusses Loblaw’s acquisition of Shoppers Drug Mart. Appendix A of Wiley’s Financial Accounting: Tools for Business Decision Making contains specimen financial statements for Shoppers. What size of an impact would a 1.45% cut on suppliers’ invoices have on Shoppers’ gross profit?

3) Why do you think that suppliers are reluctant to speak with the Competition Bureau on these matters?

Posted October 17th, 2016 by Brent White & filed under Accounting Careers, Advanced Accounting.

Description: After seven long years, it looks like Nortel pensioners will have a better deal as this bankruptcy saga winds down. While pensioners are probably relieved to see issues settled, it has been a very expensive process. The total for legal and professional services paid out of the Nortel funds is over $2.5 billion, making it the most expensive bankruptcy to date in Canada.

Date: October 13, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/nortel-settles-fight-to-divvy-up-73-billion-from-liquidation/article32346673/

Discussion Points:

1) What do you know about the Nortel story?

2) What are some of the accounting issues you might have to deal with if you worked for a creditor of Nortel?

3) Does a career as a bankruptcy trustee appeal to you?