Household debt rising in Canada

Posted by & filed under Accounting Careers, Canadian Economy.

Description: One downside of the long period of low interest rates is that consumers have been piling on the household debt. With income growth in trouble, debt is growing faster than household income. Canadians now owe almost $1.70 per every $1 coming in. The Bank of Canada is concerned about the impact of these debt levels on the financial stability of the country.

Date: September 15, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/economy/household-debt-surges-to-new-record-as-borrowing-continues/article31893150/

Discussion Points:

1) Do you see the personal household debt issue as a risk to Canadians and the Canadian economy?

2) In the opening vignette for Chapter 8 of Wiley’s Financial Accounting: Tools for Business Decision-Making we read about how Canadian Tire manages its credit card receivables. If you were a financial executive at Canadian Tire reading this story, how would you react?

3) How do you think the accounting profession could educate Canadians about the impact of debt on their financial flexibility? Do you see a future career in working with consumers and their personal finances?

Your tax dollars at work; competing against other tax dollars

Posted by & filed under Financial Accounting, Public Finance.

Description: For generations schools have competed against other schools in sports, drama, music and other activities. But would you believe Ontario’s four different publicly funded systems are competing each other in an effort to recruit systems from one of their three “competitiors.” Apparently in an area of declining enrollments attracting students to a school may be enough to keep your school from closing.

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

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/news/national/education/ontarios-competing-school-boards-spend-millions-to-attract-students/article31737795/

Discussion Points:

1) As a student –  and a taxpaying citizen – how do you feel about school boards spending public money to compete for students?

2) In the story, Peel Board spokesman Brian Woodland is quoted as saying “The research is basically what our customers are telling us they want.” Did you notice that word ‘customer’? How do you feel about using this word to describe parents and students?

3) How would a school board classify these expenditures for these various activities in its accounts?

Amaya CEO and insider trading

Posted by & filed under Ethics.

Description: Quebec securities market overseer AMF has uncovered an insider trading scheme at Amaya, the company which took over gambling hub Pokerstars in 2014. The insider trading dates back a number of years prior to the Pokerstars purchase. Allegedly, the insiders provided information on planned takeover deals with those making trades paying kickbacks on the profits.

Date: September 7, 2016; updated September 8, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/former-amaya-ceo-was-involved-in-complex-kickback-scheme-watchdog-says/article31761550/

Discussion Points:

1) What are the ethical issues around insider training?

2) If you were an accountant at AMF, can you think of any procedures you could put in place to prevent or detect this type of insider trading?

3) The first chapter of Wiley’s Financial Accounting: Tools for Business Decision-Making, discusses the importance of ethics for accounting. What lessons from this story on Amaya can you tie in with the discussion in Chapter One?

 

Trash that tech

Posted by & filed under Corporate Social Responsibility.

Description: No headphone jack on the new iPhone 7 and  wireless earbuds –  that seemed to be catching most of the attention with Apple’s latest release of its mega-product. It’s probably not exactly what Apple was hoping consumers would  focus on with its latest product launch. But some are saying the iPhone is showing signs of maturity, and there may not be the same ‘wow factor’ of prior versions. Jonathan Sterne of McGill University highlighted the vanishing plug-and-jack system as an example of  planned obsolescence.

Date: September 8, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/rob-commentary/a-tempest-in-a-headphone-jack/article31767127/

Discussion Points:

1) Are you an iPhone user? Do you think you will upgrade to the new phone?

2) Have you had any recent experience with disposing of a piece of consumer electronics that was still working? Have you calculated your own personal cost of planned obsolescence?

3) What can accountants do to help quantify the environmental costs of planned obsolescence?

Tax on Apple: What about Starbucks and Amazon?

Posted by & filed under Taxation & Planning.

Description: Many of us have heard of the European Commission’s decision that Apple should repay over $14 billion in taxes and interest. The Commission ruled the Irish government’s arrangement with Apple was illegal state aid. This put new attention on the issue of global companies chasing favourable tax rates. Perhaps Austria’s Chancellor captured the feelings of citizens best with his notion that a sausage stand would pay more tax than Starbucks or Amazon.

Date: September 2, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/feeds/thomson-reuters/canada-business/starbucks-amazon-pay-less-tax-than-a-sausage-stand-austria-says/article31695132/

Discussion Points:

1) Have you followed this Apple tax story?

2) What is your opinion about this case? Do you think that this tax strategy can hurt the Apple brand?

3) How can companies use transfer pricing to reduce their tax bills?

Betting on buses

Posted by & filed under Financial Accounting, Uncategorized.

Description: With schools opening all over Canada today, it might be time for investors to look at those bright yellow buses students are boarding this morning. Student Transportation Inc of Barrie, Ontario has been producing better than solid results for investors, particularly in terms of dividend yield, by providing student transportation across North America. Student Transportation Inc actually does about 90% of its business in the United States, with the remainder in Canada.

Date: August 31, 2016; revised September 2, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=STB-T

 

http://www.theglobeandmail.com/globe-investor/inside-the-market/this-high-yielding-stock-keeps-rolling-along/article31641636/

Discussion Points:

1) The article discusses dividend yield. Where can you find this ratio discussed in Wiley’s Financial Accounting: Tools for Business Decision-Making? How would you calculate this ratio?

2) What are some of the risks the company faces according to this article?

3) Based on what you see in the first chapter of Wiley’s Financial Accounting: Tools for Business Decision-Making, which financial statement do you think would be the most useful in helping you track those risks?

What did you work at this summer?

Posted by & filed under Accounting Careers.

Description: This past Saturday the Globe and Mail Report on Business featured a rather different sort of an article where ten highly successful Canadians talked about their summer jobs of years gone by. Finance Minster Bill Morneau talked about the value of hard work at his summer jobs. David McKay of the Royal Bank noted how a co-op job showed him what he did not want to do for the rest of his life. Christiane Germain, of the Groupe Germain Hotels chain spoke of how a job in a cheese store taught her things about providing top-notch service to clients.

 

Date: September 2, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/careers/ten-prominent-canadians-reflect-on-their-most-memorable-summerjobs/article31698191/

Discussion Points:

1) What did you do for a summer job this year? What’s the best summer job you ever had?

2) What have you learned from your summer employment that could help you in your career?

3) Have you ever had a co-op job or an intern experience? What lessons did you learn?

Sino-Forest failings

Posted by & filed under Auditing, Fraud.

Description: The case against Sino-Forest Corp, the forestry company with the missing forests, is winding down more than a year and a half after it started. The founder of the company was accused of “gross breach of trust” for misleading investors. A board committee looking into the company’s disclosures has been unable to find the trees or even whether the so-called missing trees existed.

Date: April 18, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/sino-forest-founder-committed-gross-breach-of-trust-osc-says/article29668597/

Discussion Points:

1) Have you followed the Sino-Forest story? What do you know about this case?

2) The story mentions that without being able to prove the existence of the standing timber, you also can’t prove valuation or ownership. What procedures would an auditor of a timber company do to gather evidence on these three audit assertions?

3) The article tells us that the Sino-Forest troubles began when news broke that it might be a Ponzi scheme. How would you define a Ponzi scheme?

Argentina back in bond market

Posted by & filed under Intermediate Accounting.

Description: After fifteen years in the debtors’ doghouse, Argentina has reentered the bond market. When the country defaulted on its debts in 2001, the bondholders resorted to various maneuvers to try and secure their funds, even going so far as to seize an Argentinian navy ship. But this new bond issue seems to be welcomed by investors, with demand far outstripping supply, possibly due to a healthy interest rate in a time of low or negative interest.

Date: April 19, 2016

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/argentina-returns-to-debt-markets-with-165-billion-bond-sale/article29682318/

Discussion Points:

1) What did you find surprising about Argentina’s return to the bondmarket?

2) The article discusses the high demand for the bonds and the high interest rates. Would you expect the bonds to sell at a premium or a discount?

3) Depending on your answer to question two, how will the investors account for the transactions? What about the bond issuer?

Duffy not guilty

Posted by & filed under Accounting Careers, Auditing.

Description: It would have been hard to miss it, the news of  Senator Mike Duffy’s acquittal on all 31 criminal charges he faced for his role in the Senate expense controversy of recent years. The trial judge said Senator Duffy may have made various administrative errors in his expense claims, but there was nothing of a criminal nature. Meanwhile, Canadians may be wondering what all this means for the future of the Senate.

Date: April 21, 2016

Source: thestar.com

Link: http://www.thestar.com/news/canada/2016/04/21/mike-duffy-trial-verdict.html

Discussion Points:

1) Were you following the Duffy trial? Were you surprised by the verdict?

2) The Senate Expenses Timeline included with the story shows this saga began in 2012 with the release of an audit report questioning the documentation (or lack thereof) in support of a number of Senate expense claims. What audit procedures do you think the auditors may have employed to arrive at this conclusion?

3) Imagine that you are now a qualified accountant and you have just been appointed as the chief financial officer of the Senate. What would be some of your first steps that you would employ to help deal with the fallout of this Senate expense scandal?