Wiley Accounting Updates

Posted October 12th, 2015 by Brent White & filed under Accounting Careers, Taxation.

Description: The BC government has stated it intends to crack down on a tax loophole that appears to be allowing foreign investors to escape paying property transfer taxes in a red-hot real estate market. An investigation by the Globe and Mail revealed the disturbing news that some foreign investors were using trusts or transferring property into relatives’ names to avoid tax. On the federal taxation side, the Canada Revenue Agency is investigating these real estate transactions as well. A BC immigration lawyer, Sam Hyman, told the Globe and Mail that “Canada has the reputation of being very soft on tax evasion, money laundering and vigorous enforcement of its tax code.”

Source: Globeandmail.com

Date: October 7, 2015; updated October 8, 2015

Link: http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/bc-pledges-to-close-loophole-that-allows-some-real-estate-investors-to-dodge-taxes/article26713509/

Discussion Points:

1) What do you think of Mr. Hyman’s comments about Canada being soft on tax evasion and enforcement of taxation law?

2) What techniques might CRA auditors be using to identify possible transactions where foreign investors are avoiding paying tax on property transfers?

3) What are the determinants of residency under Canadian taxation law?

Posted October 6th, 2015 by Brent White & filed under Canadian governments, Personal Tax.

Description: Canadians are anticipating some personal income tax changes following Justin Trudeau’s election victory on October 19. The Prime Minister designate campaigned on a platform of tax breaks for the middle class while stating his intention to raise the rates of the highest income earners. All this has prompted New Brunswick’s Finance Minister, Roger Melanson, to speculate that the province may have to cut its top marginal tax rate to avoide taxing the wealthiest at a combined rate exceeding 50%.

Source: CBC.ca

Date: October 22, 2015

Link: http://www.cbc.ca/news/canada/new-brunswick/melanson-tax-changes-1.3283334

Discussion Points:

1) Were you surprised by the recent Canadian federal election results?

2) What tax measures do you think should be implemented by the new government?

3) What is your opinion regarding setting tax rates? Is there a number – such as a 50% rate – that you think will negatively impact investment in a province?

Posted October 5th, 2015 by Brent White & filed under Accounting Careers, Auditing, Fraud Accounting.

Description: A former Quebec lieutenant governor will remain in jail until at least Tuesday after being sentenced to 18 months in jail for fraud and breach of trust. Lise Thibault’s problems started with a 2007 report by federal and provincial auditors general that pointed out questionable expense claims of over $700,000. Thibault’s lawyer is arguing that she should be released to serve her time in the community because of her poor health.

Source: Globeandmail.com

Date: October 1, 2015

Link: http://www.theglobeandmail.com/news/national/ex-quebec-lieutenant-governor-to-remain-in-jail-until-at-least-tuesday/article26615500/

Discussion Points:

1) If you were the accountant responsible for reviewing the expense claims of an important public official like this, what type of financial controls could you put in place to prevent or detect improper activity?

2) Are you familiar with the concept of the fraud triangle? How might the triangle be applied to this case?

3) Canada has seen a number of cases of expense scandal of high public officials. What do you think has lead to this series of failures?

Posted October 5th, 2015 by Brent White & filed under Advanced Accounting, Auditing, Financial Reporting and Analysis.

Description: This past week the Province of New Brunswick released its financial statements, claiming that its deficit was lower than projected. The big problem though was that the Auditor General, Kim MacPherson, gave the Province a qualified audit opinion for the way it accounted for its so-called shared risk pension funds. And. in somewhat of a surprise move, the government sought out the media to try to promote its viewpoint as the correct one. If those inside government knew a bit of audit history, they might do well to reflect on a previous conflict between a 1960s federal Liberal government and then Auditor General Maxwell Henderson. Suffice it to say, things did not end well for the government in that particular episode.

Source: cbc.ca

Date: October 2, 2015

Link: http://www.cbc.ca/news/canada/new-brunswick/auditor-general-nb-kim-macpherson-deficit-1.3254971

http://www2.gnb.ca/content/dam/gnb/Departments/fin/pdf/OC/PA15v1.pdf

Discussion Points:

1) Who do you tend to believe in this battle of accountants?

2) From your knowledge of pension accounting rules, what treatment should the government adopt?

3) A public company with a qualified audit opinion would be delisted by securities regulators, but this is not the case for a government like New Brunswick. Do you think securities markets should take stronger action when a government does not have a clean audit opinion?

Posted October 5th, 2015 by Brent White & filed under Personal Tax, Tax Planning.

Description: The details of the tax situation are scant. But it appears negotiations have broken down between the federal Department of Justice and giant accounting firm KPMG regarding a tax haven program KPMG marketed to at least 25 wealthy Canadians. The KPMG plan appears to have offered their clients tax haven protection in the Isle of Man.

Source: cbc.ca

Date: September 30, 2015

Link: http://www.cbc.ca/m/news/business/kpmg-tax-sham-used-by-at-least-25-wealthy-canadians-document-says-1.3249468

Discussion Points:

1) What are the normal residency rules for Canadian taxpayers?

2) Although the details are scant at this point, what might you speculate that these 25 wealthy individuals could do to move assets or income to the Isle of Man?

3) Dennis Howlett from the group Canadians for Tax Fairness made some strong comments about this particular case. To what extent do you agree with Mr. Howlett’s comments?

Posted September 28th, 2015 by Brent White & filed under Accounting Theory, Managerial Accounting, Student life.

Description: The digital world has had a deep impact on media such as movies, television, music and magazines. But for some reason, the much-maligned paper advertising flyer seems to be doing just fine. “Customers love their flyers,” said retail executive David Thorpe in a recent Globe and Mail. Apparently 98% of Canadians examine a flyer at least once per year, causing some to believe the flyer will still be around for years to come.

Source: Globeandmail.com

Date: September 24, 2015

Link: http://www.theglobeandmail.com/report-on-business/paper-flyers-remain-a-consumer-staple-as-stores-explore-digital-options/article26535313/

Discussion Points:

1) Do you still use the paper flyers from retail establishments or do you do your browsing all online?

2) Digital advertising talks about cost-per-click. What do you think the the key cost metric would be for those advertising through paper flyers?

3) How could you calculate the environmental cost of the free flyers that show up in our mailboxes and driveways?

Posted September 28th, 2015 by Brent White & filed under Financial Accounting, Student life.

Description: Teachers often repeat that just as the students learn from them, they often learn things from the students. This is often true, it seems, when it comes to technology, where our students often have the jump on their professors in knowing the latest and greatest of those tools. This week, I experienced this when a student recommended a hip-hop video to help cement that famous principle from intro accounting: debits on the left; credits on the right.

Source: Youtube.com

Date: n/a

Link: https://www.youtube.com/watch?v=j71Kmxv7smk&feature=youtu.be

Discussion Points:

1) What did you like about this video?

2) What are some of the innovative teaching techniques one can use to teach accounting?

3) Can you think of another area from introductory accounting that could be taught via a song?

Posted September 28th, 2015 by Brent White & filed under Auditing, Contemporary Business Issues.

Description: Much of the business news this week was dominated by the discovery of Volkswagen’s attempt to rig the test of emission standards. The story continued to spread throughout the week. VW’s stock price dropped. The VW president resigned. Some have even discussed the impact on Germany as a national brand repesenting engineering excellence.

Source: Globeandmail.com; Reuters

Date: September 25, 2015

Link: http://www.theglobeandmail.com/report-on-business/video/video-vw-scandal-why-it-costs-germany-too/article26539479/

Discussion Points:

1) How did you react when you heard this news?

2) If you were the auditor of VW, how would this news impact on your decisions around the engagement this year?

3) What role might an auto maker’s internal audit shop play in preventing these type of ethical failures?

Posted September 21st, 2015 by Brent White & filed under Advanced Accounting, Corporate Strategy, Data security.

Description: You could call it social media for physicians, or as the Globe and Mail called it, Instagram for doctors. But for a patient in rural Louisiana, Figure 1 Inc, a Canadian startup, could be called a leg saver. By sharing images on Figure 1, doctors were able to spot that the ulcer on the patient’s leg was a rare disease. Further, through Figure 1 caregivers obtained valuable treatment details and the patient’s problems were cured.

Source: Globeandmail.com

Date: September 16, 2015

Link: http://www.theglobeandmail.com/report-on-business/small-business/sb-growth/like-instagram-for-doctors-figure-1-app-now-has-500000-users/article26374609/

Discussion Points:

1) The article notes that Figure 1 has not figured out what it might do to produce revenue. What strategy would you recommend to generate sufficient revenue from this promising app?

2) What are some of the potential data security issues that emerge in this type of operation?

3) How should Figure 1 Inc account for its start-up and development costs while it seeks adequate revenue streams?

Posted September 21st, 2015 by Brent White & filed under Accounting Careers, Canadian Economy.

Description: With interest rates so low for so long, consumers in Canada have been loading up on debt. Debt to disposable income rates in Canada hit close to 165% this year, indicating consumers are adding to their debt loads faster than incomes are rising. At least part of the problem can be attributed to a failure of the economy to add well-paying jobs for the younger generation of workers.

Source: Globeandmail.com

Date: September 16, 2015; updated September 17, 2015

Link: http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/trying-to-understand-canadas-fiscal-state-debt-doesnt-lie/article26387699/

Discussion Points:

1) As a student, how do you relate to the observations on rising personal debt made in the article?

2) What do you see as some challenges for the Canadian economy based on these high debt levels?

3) What type of business opportunities might there be for accountants assisting Canadians in dealing with their personal debt levels?