Asset recycling

Posted by & filed under Advanced Accounting, Canadian governments.

Description: Asset Recycling is a fancy phrase  Canadian  governments are now using for what we used to call privatization – another invented word that grated on many when it entered the vocabulary. Asset recycling means that governments will sell off older ‘legacy’ capital assets – like in Ontario’s partial sale of Ontario Hydro – in order to obtain cash for other infrastructure projects. Part of the demand is driven by pension funds searching for returns given today’s low interest rates. Ottawa appears to be next in line for this recycling program, despite the warnings that the federal government may lack the expertise to negotiate good deals when selling off assets citizens have already paid for.

Date: October 7, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/rob-commentary/executive-insight/government-asset-recycling-must-prioritize-public-good/article32300588/

Discussion Points:

1) What do you think about this strategy to sell off assets to provide for new ones?

2) How would a government have to account for ‘asset recycling’ in its financial statements?

3)  What sort of skill sets will the government negotiating teams require in order to protect citizens’ interests?

Luxury and privacy

Posted by & filed under Managerial Accounting, Marketing & Strategy.

Description: Last week’s news featured the rather shocking jewellery robbery at the private hotel of celebrity Kim Kardashian. In addition to all the usual reality television hype, the theft did throw a spotlight on an ‘unknown’ hotel,  L’hôtel de Pourtalè. It’s representative of a growing number of private luxury residences, attracting groups of wealthy travelers seeking an alternative to their normal five star hotels. Of course, as the daring crime illustrates, the private residences may offer less security than the typical five star competitor.

Date: October 6, 2016; updated October 7, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/life/travel/activities-and-interests/wealthy-travellers-turn-to-luxury-apartments-for-private-vacations/article32271402/

Discussion Points:

1) What would be some of the marketing challenges in starting a private luxury residence?

2) What depreciation/amortization rates would you expect to see on the furnishings and fixtures in a private luxury residence? How might they compare to those of large hotel chains?

3)  What might be some of the managerial accounting issues that would be particularly applicable to a private luxury residence? For example, would you expect to see less concern for cost control in this environment?

Voting power

Posted by & filed under Auditing, Corporate Governance.

Description: The Canadian federal government is on its way to giving shareholders increased power to vote against a board director. Under the rules right now, voters can only withhold a vote for a nominee they are unhappy with. This means, theoretically, that a “bad” director could be elected with a single vote if all other shareholders refused to vote for him or her.

Date: September 29, 2016

Source: theglobeandmail.com

Link:

http://www.theglobeandmail.com/report-on-business/proposed-law-would-let-shareholders-vote-against-board-nominees/article32149493/

Discussion Points:

1) Are you or any of your classmates shareholders in a publicly traded corporation? Have you ever cast a vote at a shareholders’ meeting?

2) What is your opinion of this proposed change in the voting process for electing directors of publicly traded corporations? Do you think it will lead to better governance?

3)  What  does Chapter 3 of Wiley’s  Auditing: A Practical Approach tell us are some of the key attributes of good corporate governance?

CRA and the Panama Papers

Posted by & filed under Accounting Careers, Auditing, Taxation.

Description: Look out: the Canada Revenue Agency (CRA) is coming for you. That is, if you are one of the over 2,500 Canadians named in the Panama Papers. It’s too late for voluntary disclosure according to the CRA. This means that those investigated could face penalties if the results of audit indicate taxes are owing for transactions obscured in offshore accounts.

Date: September 26, 2016

Source: theglobeandmail.com

Link: 

http://www.theglobeandmail.com/news/politics/no-deals-for-panama-papers-tax-cheats-canada-revenue-agency/article32045969/

Discussion Points:

1) Do you think interest and penalties are effective tools to encourage tax compliance?

2) Are you interested in pursuing an auditing career? Have you ever thought of working for the CRA?

3)  In Wiley’s  Auditing: A Practical Approach we read about various techniques auditors can use as part of their work. What techniques might be especially useful in auditing those named in the Panama Papers?

Wells Fargo Woes

Posted by & filed under Auditing, Corporate Governance.

Description: Not too many people would  have wanted to be in the shoes of  Wells Fargo CEO John Stumpf last week as he faced a grilling from US politicians over his bank’s tactics.  Employees had been accused of opening customer accounts without their clients’ knowledge in an effort to meet sales targets. In cases, Stumpf conceded, Wells Fargo stole client’s money through unauthorized fees. It has been a costly problem for Mr. Stumpf who has had $41million in stock clawed back by the bank.

Date: September 29, 2016

Source: theglobeandmail.com

Link: 

http://www.theglobeandmail.com/report-on-business/international-business/us-business/wells-fargo-chief-stumpf-heads-to-hill-with-pressure-mounting/article32123253/

Discussion Points:

1) What have you heard about the Wells Fargo ethical issues?

2) If you were an auditor at Wells Fargo, how would these revelations about aggressive sales tactics impact the way you plan for your audit?

3)  In Wiley’s  Financial Accountng: Tools for Business Decision-Making, each chapter features a case dealing with ethical issues. Do you believe these cases will help students develop ethical frameworks that will stay with them in their business careers?

Phoenix fallout

Posted by & filed under Canadian Government, Data security.

Description: It was supposed to be one of the centerpieces of the former Conservative government’s efforts to prove they were the ones to deliver savings and efficiency in the way the public sector delivered services. But now with weeks of stories on how employees have gone without pay cheques or been paid the wrong amount, the bloom is coming off the efficiency rose; the effort to consolidate all government payroll systems appears to be a disaster. Meanwhile, another effort to combine all technology services into Shared Services Canada has been discredited by the resignation of Stats Canada’s chief statistician, citing issues of independence because of the decision to move  Stats Can tech to the new super agency.

Date: September 19, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/economy/economic-insight/the-enduring-fallout-of-phoenix-and-shared-services/article31946755/

Discussion Points:

1) Did you or any of your classmates work for the federal government over the summer? Did any of you have any issues with getting paid the right amount on time?

2) Why do you think our efforts to increase efficiency by consolidation sometimes go astray?

3) If you were on the audit team responsible for auditing the Phoenix payroll system, what might be some of the planning considerations you would have?

Exxon and the SEC

Posted by & filed under Advanced Accounting, Auditing.

Description: The US Securities and Exchange Commission (SEC) is conducting an investigation into the way Exxon has been accounting for its oil reserves. The SEC – plus a number of  state authorities –  have been posing questions as to why Exxon has not joined other oil and gas producers in writing down the value of assets in the current prolonged slump in petroleum prices. Exxon has said future cash flow projections mean that no writedowns are necessary.

Date: September 20, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/sec-investigating-exxon-over-asset-valuation-report/article31967138/

Discussion Points:

1) What is your view of this story?

2) What are some of the key considerations in accounting for oil reserves?

3) If you were an auditor of an oil company like Exxon, what would be some of the risks you would have to consider in auditing the oil reserves? How would you address those risks?

#AuditorProud?

Posted by & filed under Accounting Careers, Auditing.

Description: In our world of hashtags galore, perhaps this one took you by surprise: #AuditorProud. It’s an effort to attract more people to the accounting profession and show the role of the auditor in capital markets. This is the second such #AuditorProud day, sponsored by  the Centre for Audit Quality – an organization associated with the American Institute of Certified Public Accountants and funded by US accounting firms.

Date: September 21, 2016

Source: thecaq.org

Link: 

http://www.thecaq.org/auditorproud-social-media-blitz-aims-encourage-youth-explore-careers-audit

Discussion Points:

1) Did you hear about the #AuditorProud day on September 22?

2) Are you interested in pursuing an auditing career? Does an effort like #AuditorProud help you with such a decision?

3)  In Chapter One of Wiley’s  Auditing: A Practical Approach  we read about various things that auditors do. When you read about the variety of types of work auditors do, what area do you think you would like to work in the best?

Emotional agility

Posted by & filed under Student life.

Description: Are the assignments beginning to pile up already? Have you missed a deadline or an important meeting this term? Feeling a bit overwhelmed by the pace and complexity of your university life? Perhaps it’s time for you to read about Emotional Agility: that’s a term developed by Harvard psychologist Susan David and she sees it as a key success factor in the world of work and in your personal life.

Date: September 14, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/careers/management/learn-how-to-tame-your-stress-response/article31851559/

Discussion Points:

1) How has student life been so far for you this term? Feeling any need to tame your stress response?

2) What was the most surprising thing you learned from this article?

3) Do you know what type of learner you are? This may help you in taming your student stress. See Kimmel (Wiley’s Financial Accounting: Tools for Business Decision-Making, Sixth Canadian Edition) page XXI for some guidance in answering this question.

Payday loans and poverty

Posted by & filed under Contemporary Business Issues, Student life.

Description: They are regulated in most Canadian provinces. But payday loans still have astronomically high rates ranging from 456 percent to 639 percent. Don’t be fooled by the simple phrase of $15 for a $100 loan. When you figure out the math on an annual basis, you can see why Professor Jerry Buckland is calling for government intervention to help consumers.

Date: September 14, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/rob-commentary/when-payday-lending-leads-to-poverty-its-time-for-intervention/article31857391/

Discussion Points:

1) As a student have you ever taken on a payday loan? If so, have you calculated the interest rate?

2) On page 79 of  Wiley’s Financial Accounting: Tools for Business Decision-Making we read about “Your Personal Statement of Financial Position.”If you had a payday loan, where would it show on your personal statement?

3) What might be some alternatives to payday loans if you are facing a temporary cash flow crisis in your personal financial situation?