Public Accounting At CMA BC

Public Accounting Course Registration Open for Fall 2009 Semester

2009-07-23T14:34:00.001-07:00

Please check the following link for course registration and outline information:

http://ce.uwaterloo.ca/Certified_Management_Accountants.htm#t

Audit Fees Rise, But Not by Much

2009-06-05T11:46:00.001-07:00

The good news is that the hikes trail the inflation rate. The bad: companies are taking on more audit burdens internally.

Scott Leibs - CFO.com US

June 4, 2009

A new survey on audit fees presents CFOs with a glass-half-full/empty test. On the plus side, fees in 2008 increased only 2.2% to 3.7%, a rate that falls below most measures of inflation and is a far cry from the substantial annual hikes of a few years ago.

But muddying that rosy view is the fact that the small increase is due in part to companies absorbing more auditing work internally. That's according to Marie Hollein, CEO of Financial Executives International, whose affiliate, the Financial Executives Research Foundation, performed the study.

The foundation surveyed more than 350 public and private companies and found that audit fees for publicly traded firms rose an average of 2.2% in 2008 from the previous year, while private companies paid 3.7% more.

Half of private companies predict their fees will rise again this year (by 2% to 10%), while a strong majority (81%) of public companies expect fees to hold steady or decrease. In 2008, public companies paid, on average, $216 an hour for audit services, while private companies paid $179.

Although they were more apt to cite service concerns than fee increases, private companies also differed from their public counterparts in another way: nearly one in four have put their contract out for competitive bid, and 6% say they plan to switch auditing firms. Fewer than 2% of public companies anticipate changing auditors.

Public companies, in fact, have been with their current auditors for an average of 16 years, compared to 8 years for private companies. Fully 86% of the public companies responding to the survey use a Big 4 firm, while only 38% of private companies responding do so.
In a statement, Hollein suggested that the modest uptick in auditing fees signals that public companies have gotten their arms around the requirements of the Sarbanes-Oxley Act and have made substantial progress in streamlining the auditing process, while private companies lag on this learning curve.

Internal Auditing: The 24/7 Approach

2009-06-05T11:37:00.000-07:00

Not satisfied with monitoring small data samples, more companies are seeking complete automation of the audit function.
David McCann - CFO.com US

June 1, 2009

For Harrah's Entertainment, an effort to fully automate the internal auditing process begun early last year could not have been timed more fortunately.

That's because the casino industry — already subject to stiff compliance demands from state authorities and the payment-card industry — saw its bar raised further at the beginning of this year by new reporting requirements, mostly involving system security, from the Nevada Gaming Commission.

At Harrah's, the heavier compliance crush is eased considerably by its ongoing project to achieve "continuous auditing." Definitions for that term vary widely; the Institute of Internal Auditors, for one, calls it "any method used by auditors to perform audit-related activities on a more continuous or continual basis." Increasingly, though, individual practitioners see the cutting edge as auditing 100% of data relating to transactions, processes, policies, or whatever else is to be audited, rather than reviewing small samplings at longer intervals, as many organizations still do.

Achieving that level of scrutiny generally is accomplished by writing data-analytic scripts for each area to be audited, then integrating them with any database and reporting systems used internally and with off-the-shelf auditing software programs like ACL, Idea, and Microsoft Access.

The integration work was a big undertaking for Harrah's, which has 40-plus properties, including 13 in Nevada. Each property has three key systems that run its slot machines, table games, and sports-book service, and there are also food-and-beverage, ATM, and in some cases hotel management systems. "We're talking about a lot of systems in a casino," says Cheryl Kondra, chief audit executive for Harrah's.

A lot of employees, too, which is a crucial factor. That's because monitoring workers' access to systems is one of the most important tasks for Kondra's department. Casinos are required to review the access listings each quarter to determine that, for instance, only active employees are listed and that everyone has the appropriate level of access. At Caesars Palace alone there are 5,200 employees, about 2,000 of whom have access to the key gaming systems.

"It was a massive, very manual process to print a report and compare it to an HR listing of employees," says Kondra. "Automating that, and monitoring it continuously instead of waiting until the end of the quarter, makes the audit a lot easier, and we don't find as many exceptions."

System access is so important because of the potential for employee fraud. "It's not just the access to cash," she notes. "You have to have adequate access to systems to get everything to balance so the fraud does not pop out."

For Harrah's, a big benefit of the move to automated monitoring is that it allows the 86 auditors who work at the casinos to spend more time on the gaming floor doing surveillance — another way to catch employee fraud. "I'd rather see them on the floor because that's where the action is, not at their desks buried in paperwork," Kondra says.

Provincial Prudence
For the Office of the Comptroller General of the British Columbia Ministry of Finance in Canada, the 2008 launch of a move to continuously audit 100% of transactions put it well ahead of most governments and other non-profit organizations, for which less-automated processes are still commonplace.

"We've had a lot of interest in what we're doing, from the Florida governor's office to some non-profits in the States, because we're using technology to move forward," says Shyrl Kennedy, executive director of the office since 2001.

That was the year a consultant analyzed the ministry's accounts-payable processes and determined that finance staff spent 77% of their time on processing transactions, 20% more than an efficient company might spend. Before a payment was made, it had to be determined whether the person issuing the payment had the proper spending authority, whether the account coding was right, and whether the goods had actually been received, among other requirements. "It was a very cumbersome process," says Kennedy.

The consultant recommended that instead of auditing 100% of transactions before payment, only a sampling of payments be reviewed post-transaction. The project started small, focused just on travel expenses. In 2004, it was expanded broadly across all government ministries, and savings of about $20 million per year in efficiencies and overpayments have been identified since then.

But with just statistical data samplings being audited, savings were still falling through the cracks. "We were really just hoping to find things, so we could know whether there was a business process or policy that needed to be cleaned up," Kennedy says.

Through extensive use of ACL software, her office last year began to continuously monitor payments made with purchasing cards. While using purchase cards can bring big administrative savings, she notes, there is also significant risk involved, because most purchases are small-dollar items that don't stand out, and many people in the government have access to cards that they could use for unauthorized purchases.

The continuous-auditing system has produced "incredible" efficiencies in identifying inappropriate purchases and people without authority to use cards, Kennedy notes. Now she is gearing up to tackle the rest of the government's spending, related to invoices, contracts, and grants.

The time it takes to roll out such a system is surprisingly short. With the purchase-card module, Kennedy says, developing business requirements and data analytics, having ACL integrate them into its program, and creating business processes for implementing the system took about three months.

Tracking What Counts Most
Last fall, Siemens Financial Services Inc., the U.S. arm of the global financial services firm, was just starting to institute continuous auditing, rather than performing tests every one to three years (depending on the risk level of the thing being audited).

But Jason Gross, who was running the internal audit department, found that he could not go as far as he liked in designing controls for the processes being audited. That was because of the expectation by the audit committee of parent company Siemens AG that auditors be arms-length from the activities they're reviewing as well independent from management. If he were to design audit controls, he would then be participating in the management of the company rather than simply using existing controls to perform an audit. That would go beyond the proper purview of internal audit, as viewed by the Siemens AG audit committee.

So in October the company formed a new department alongside internal audit, called controls management, with Gross in charge as vice president. He created a continuous-controls-monitoring system, which runs every night and uses many of the same elements he'd been working on for continuous auditing.

The difference between internal auditing and controls management, Gross notes, is in the level of granularity. "We're down at the data level, looking transaction by transaction, where typically an audit, depending on its objective, might just review a process and not get as deep into the data details," he says.

But it's the primary focus of the effort that draws interest. "I think we stand out a little bit, because a lot of the buzz you hear about continuous monitoring relates to generic processes such as travel and entertainment and purchase to pay," Gross tells CFO.com. "But we're monitoring our financial services business by developing the program from the ground up, because there was no package we could go out and buy to do that."

What's being monitored, essentially, is "everything that determines the value of a financial asset," says Gross's boss, Matthias Grossmann, CFO of the U.S. financial services unit, which provides financing for healthcare, energy, and industrial companies and manages $6 billion to $7 billion in assets. "Number one, of course, is information on your obligors. Is the entity migrating to different risk classes? Is there the normal underlying collateral? Do any inconsistencies show up?"

The decision to launch the controls-management department and put the focus on continuously monitoring the financial services operation was an easy one, Grossmann notes. "When we did audits using these techniques, we always found something," he says. "So we thought we could use them in our daily business, using technology we already had that was coming from a different angle. So far it looks good, and I hope we can expand it."

Gross says that, in fact, continuously monitoring controls not only can detect problems but can do so before they've happened. When the company is preparing a new lease financing contract, for example, all elements relating to the transaction and borrower are loaded into the system before the contract is finalized, which can turn up "data mismatches," he notes.

Setting Up A Personal Business Corporation?

2009-06-05T11:05:00.001-07:00

What you need to know from an income tax perspective
By Alladin Versi, CMA, FCMA

In the past few years, and even more so in the current economic environment, it has become common for individuals to set up their own corporations, which can then be used to contract out the services of the principal (or often the sole) shareholder of the corporation to one or more businesses. There are some benefits to this arrangement from an income tax perspective, such as lower corporate income taxes, deduction of business expenses and the ability to pay salaries or dividends to family members, to name a few.

A low corporate tax rate is generally available to a Canadian-controlled private corporation on its active business income earned in Canada, up to its federal and provincial small business limits. Effective January 1, 2009, the federal limit is $500,000 (previously $400,000). The provincial limit varies from province to province – in British Columbia, the limit is $400,000.

Consider the example of Jane Doe. Jane is a business consultant who recently lost her job, and is looking at setting up her own corporation, JaneCo, to provide consulting services. She has already lined up some work with a large firm, LargeCo, and is considering setting up a corporation to provide her services.

Is it a “personal services business?”

In setting up JaneCo to provide her services, Jane should be mindful of the “personal services business” provisions of the Income Tax Act (ITA). Income from a personal services business is excluded from active business income, pursuant to section 248 and subsection 125(7) of the ITA. As such, income from that business is not eligible for the lower corporate income tax rates. Instead, such income is taxed at the highest federal/B.C. corporate income tax rate of 30 per cent, rather than the lower rate of 13.5 per cent for 2009.

A personal services business provides the services of an “incorporated employee” to an entity, where the incorporated employee would otherwise reasonably be regarded as an officer or employee. Therefore, we have to determine whether JaneCo is providing the services of an incorporated employee or an independent contractor.

Contract of services or contract for services
Is Jane considered to be an incorporated employee or an independent contractor? The critical issue is A contract of service generally exists if the person for whom the services are performed has the right to control the amount, nature and management of the work to be done and the manner of doing it. A contract for services exists when a person is engaged to achieve a defined objective and is given all the freedom required
to attain the desired result.

The Canada Revenue Agency has an excellent guide, RC4110, Employee or Self-Employed, that assists in determining the nature of the contract. Some factors to consider are:
• Did Jane have a set number of working hours each day?
• Did Jane have to account for her time?
• Was Jane given specific job instructions?
• Was Jane a member of LargeCo’s benefit plan?
• Did Jane have use of LargeCo’s computer equipment and offi ce supplies?
• Did LargeCo provide an offi ce to Jane?
• Was Jane given a specific title and business card on LargeCo’s letterhead?

Whether Jane can be “reasonably regarded” as an employee or as an independent contractor is a question that requires an analysis of all factors surrounding the terms and conditions of her contract with LargeCo. In general, to be considered an independent contractor, JaneCo must have agreed to provide a service with no commitment regarding the number of hours worked. Jane should also be performing the service with little or no supervision. JaneCo must issue its own invoices and receive cheques for work completed. In addition, Jane should not receive any benefits from LargeCo, and should operate from JaneCo’s own office and use its own equipment.

Shareholder requirements
In addition, for JaneCo to be considered a personal services business, the incorporated employee (Jane), or a person related to Jane, must be a “specified shareholder” of the corporation providing the services. Specified shareholder generally means that Jane, or someone related to her, directly or indirectly owns 10 per cent or more of the issued shares of any class of JaneCo.

There are additional rules that include ownership in a related corporation, and similar rules apply for shares owned through a partnership or trust. However, a corporation will not be regarded as carrying on a personal services business in a taxation year if throughout the year it employs more than five full-time employees for that business, or if the amount was received for services rendered to an associated corporation.

Deduction limitations
In addition to a personal services business being excluded from the definition of an “active business,” paragraph 18(1)(p) of the ITA also limits deductions in computing the income from such a business. All deductions are disallowed, except: • salary, wages or other remuneration, and any benefits or allowance paid or provided to an incorporated employee;
• selling and similar expenses that would have been
deductible in computing employment income if
the individual had expended them; and
• legal expenses incurred in collecting amounts
owing for services rendered.

Income from a personal services business is also not eligible for a tax refund on the basis of taxable dividends paid. It will therefore be taxable at the highest corporate rate.

Tax planning considerations
Under new rules introduced in 2006, any dividends paid by a corporation from its personal services business would be considered eligible dividends, which are subject to a lower personal tax rate than noneligible dividends. The maximum tax on eligible dividends received by a B.C. resident is currently 19.9 per cent, compared to a rate of 32.7 per cent for non-eligible dividends. As such, it is no longer essential that all income earned in a personal services business be paid out to the incorporated employee as a salary.

Tax planning can be undertaken such that family members become shareholders of the personal services business corporation, so that dividends can be paid to them. However, it should be noted that the ITA contains various anti-avoidance provisions, such as subsections 56(2) and 56(4), or the General Anti-Avoidance Rules, that could result in such dividends being taxed in the hands of the principal shareholder. As such, care should be taken to ensure that any payments to someone other than the principal shareholder are appropriate.

In summary, while Jane may see some advantages from setting up JaneCo, she should be aware of the tax limitations if JaneCo is considered to be a personal services business. A careful review of her relationship with LargeCo, and any other contracts she obtains, is necessary to determine whether she is an incorporated employee or an independent contractor. Anyone considering incorporation should obtain professional advice before proceeding. ■

The 2009 Federal Budget: Answering the Call

2009-06-05T10:51:00.000-07:00

By Don Nilson, CMA, FCMA

As professional accountants, we must remember that we are an important part of the broader financial services industry. We have a public that we serve with our expertise, be that the general public (as public accountants)
or specific parties (as industry participants). Interestingly, the 2009 federal budget is now calling for general financial education for Canadians. We ought to be doing our part to answer the call. I believe there are two parts to this.

First, we ourselves must be financially educated. “What did he say? Is he kidding? Of course we are financially educated – we are accountants!” As a lecturer for 30 years in the continuing education field for professional accountants, I am not quite sure I am prepared to agree with you. Despite the mandatory CPLD model in our profession, I find that, on average, we are not on the front edge of pushing out our current depth and breadth of expertise, and instead tend to trade on old expertise. I believe the profession needs to raise the bar of our average professional, and achieving this requires every member to contribute to that process, not deflect the responsibility to our professional bodies. As I recently said to one of my junior staff , “It takes a lot of energy to really be someone.”

We must invest our learning time wisely. Unplug the boob tube, cancel the cable and start reading. We must be wary of the misinformation and disinformation we receive in the daily media as our knowledge source. William Bernstein, the physician turned money guru, describes the business press as “financial pornography.” His advice is to avoid it, with two exceptions: The Wall Street Journal and Th e Economist. My recommendation is to educate yourself – form a financial book club with friends and colleagues. In the financial field, start with Bernstein’s Intelligent Asset Allocator. On corporate strategy, read Dudik’s Strategic Renaissance. To raise your IQ a few points, read Beinhocker’s Th e Origin of Wealth.

Over the years, I have given away hundreds of copies of what is my seminal vehicle for helping friends and
clients embrace sound personal fi nancial management: Stanley and Danko’s The Millionaire Next Door. In short summary, personal fi nancial management draws from sports analogy – wealth accumulation is about offence and defence. The former is about the making of money, or more specifically “disposable income” (income after tax). As public practitioners, we are effectively members of the offence team, mostly by helping narrow the gap between before-tax and after-tax income.

As industry members, we may also contribute to the overall success of the money-making process itself.
Defence is about keeping the money generated on offence; i.e. it is about how money is spent. The authors
say that financially successful people run a balanced team. They don’t rely on a glittering offence that piles
up the score, while the defence meanwhile is allowing almost as many points to be scored by the opposition.
The authors also classify people as “prodigious accumulators of wealth” (PAWs) and “under-accumulators of
wealth” (UAWs). PAWs spend a lot of time on defence. Their attitude to what constitutes a baseline of life’s
entitlement is not what the low and middle class associate with wealthy people. Eighty per cent of them
spend less than $35,000 on a new car!

Once we have succeeded in “up-educating” ourselves, we can now turn to the second thing that we should be doing as accountants in order to answer the federal budget call to financially educate Canadians. We need to be an active part of that educating process. Those of us in the financial services industry need to take a deep breath and enter the half-time locker room of the defence, and talk with our clients about how they are spending their money, and how they are inculcating money values to the children they are raising. And we must lead by example ourselves. A financial services firm recently moved into offices across the hall from us. One of the chaps drives a Porsche. A client of mine walked into the office the other day and asked, “Is that your Porsche in the parking lot?” Ouch! Not!

Many of us in public accounting have been educating our clients for years. If you haven’t – if you treat the work you do for them as a “black box” – then it is time for a paradigm shift. Don’t let their financial ignorance, and need for you, stand in the way of advancing their financial education.
In the workplace, senior financial professionals need to think about the role model they advertently – or inadvertently – play to those around them.

For those in industry, it may also be time for a paradigm shift. Your HR strategies perhaps should include educating employees with in-house seminars on personal financial/debt management, access to related resources on the web or company newsletters, group savings plans (RRSPs or TFSAs) or employer sponsored
personal financial planning (not a taxable benefit, by the way).

Finally, as accountants, we need to actively ensure our kids are being educated in financial matters. Social scientists have proven wrong my long-held belief that attitudes towards money are formed by age 15 – they say it is age 10. The 10-year-olds in western society today have grown up in the most broadly distributed middle-class wealth in the entire history of this planet. The successive generations of financial comfort in the last hundred years have significantly raised the bar of baseline expectations. “Affluenza” is the modern neologism to encapsulate this phenomenon. The term gained notoriety in the high-profi le divorce case of Canadian fashion mogul Peter Nygard, whose defence lawyer cited the risk of affluenza in awarding child-care costs of $68,000 per month. That’s right… per month!

We also need to lobby our school districts to incorporate more, and better, financial education at the high school level. As professional organizations, we need to identify ways to fill all of these knowledge gaps. The Financial Planners Standards Council, for instance, has long been involved in the financial education of our youth.

To misquote, paraphrase and modernize a saying of the 16th century’s Sir Francis Bacon: family finances, to be commanded, must be obeyed. It takes a lot of energy to really be someone. ■

Balance Sheet Presentation under IFRS

2009-02-25T06:50:00.000-08:00

The link below points to an article prepared for the Financial Post by Karine Benzacar, CMA which is a quick primer outlining the Balance Sheet presentation suggested on the adoption of IFRS in Canada.

http://www.cmabc.com/index.cfm/ci_id/14089/la_id/1/document/1/re_id/0

You will note that it is substantially different than the presentation currently used and breaks up the balance sheet into the following components:

Net operating assets
Investing assets
Financing assets
Financing liabilities
Income taxes
Assets held for sale
Equity

Karine also wrote a more detailed article on IFRS financial statement presentation which is in the February edition of CMA Magazine.

2009 Federal Budget Report

2009-02-25T06:42:00.000-08:00

This is an abridged version of the budget report of BDO Dunwoody and has been prepared for our members with their permission. It addresses solely the taxation initiatives in the budget.

Please click on the link below to see the report.

http://www.cmabc.com/index.cfm/ci_id/14090/la_id/1/document/1/re_id/0

The Crisis and Fair Value Accounting

2008-09-24T12:29:00.000-07:00

For those members who are following the current debate with respect to fair value accounting (which is integral to IFRS) an article from this week's edition of The Economist may be of interest (click on link below)

http://www.cmabc.com/index.cfm/ci_id/13111/la_id/1/document/1/re_id/0

Course Registration Deadline Extended!

2008-08-15T08:28:00.000-07:00

The course registration deadline for the courses offered through the University of Waterloo has been extended to August 22, 2008.

More information about the courses and the registration process is available at the following link:

http://cmapublicaccounting.blogspot.com/2008/08/course-registration-available.html

Tax Information for Accomodation Providers

2008-08-08T14:39:00.000-07:00

Please see the following link for federal and provincial tax information for accomodation providers for the Vancouver 2010 Olympic and Paralympic games.

http://www.cmabc.com/index.cfm/ci_id/12687/la_id/1/document/1/re_id/0

Ethical Requirements for Public Practitioners

2008-08-07T09:43:00.000-07:00

Please view an exerpt from an article published in the CA Magazine regarding ethical requirements for public practitioners at the following link.

http://www.cmabc.com/index.cfm/ci_id/12673/la_id/1/document/1/re_id/0

Course Registration Available!

2008-08-01T09:36:00.000-07:00

CMA is pleased to be launching its CMA Program of Study for Public Accounting.

Objective

The objective of this document is to provide:

• An overview of the CMA Program of Study for Public Accounting;

• Confirm the key dates for the Fall 2008 (September 8 – December 1); Course outlines are available here:
http://www.cmabc.com/index.cfm/ci_id/12664/la_id/1/document/1/re_id/0

• Advise of some key administrative matters.

If you have any detailed questions or comments, or feedback on the pilot offerings, please contact your local CMA Office or Colin Shaw - Director, Public Accounting at CMA Ontario on cshaw@cma-ontario.org or 416-204-3112.

NOTE: For the purpose of Members seeking to practice public accounting in Ontario in the future, please be advised that these courses are subject to changes based on an assessment by the Public Accountants Council of Ontario.

Summary

The CMA Public Accounting Program is comprised of 2 topic areas:

• Auditing, and

• Taxation

Auditing

The Auditing material is divided into two courses – Audit I and Audit II. Each course is 12 weeks in length, plus two assessment components – a midterm and a final exam. Also, the grading for Audit II includes successful completion of the cases from Modules 10 through 12 on a pass / fail basis

For Audit I, sessions 1 - 12 and Audit II, sessions 1-9, detailed PowerPoint lessons support the readings and are narrated by the instructor of the class. The lessons are available on-line and on DVD.

Additionally on-line discussion boards will facilitate learning and provide candidate’s access to the instructor and other classmates. Each course builds on the competencies acquired through the prior course.

NOTE: Candidates seeking exemptions from Audit I will not be considered unless they have successfully completed a recognized university course that covers the equivalent material within the two years prior to their application.

Candidates will be required to support their application with a copy of the course outline for the claimed equivalent course, a copy of at least one exam question paper for the course and their transcript showing successful completion of the course with a mark of no less than 65%, submitted to CMA Ontario for assessment.

If these are approved, candidates will be required to challenge the Audit I examinations, both interim and final, on the dates scheduled for the next offering of Audit I. Exemptions are expected to be rare.

Taxation

The Taxation material is divided into 3 courses – Taxation I, Taxation II, and Taxation III. Each course is 9 weeks in length, plus two assessment components – a midterm and a final exam. Each course builds on the competencies acquired through the prior course.

For Taxation I, II, and III the website will facilitate candidate learning though directed readings and the completion of group assignments. These groups will be composed of 3-4 individuals and candidates will have access to a group forum hosted on the course web site in order to assist groups who are geographically dispersed. Candidates must be willing to devote an average of 10 hours per week to the learning process in each course.

NOTE: Candidates seeking exemptions from Tax I will not be considered unless they have successfully completed a recognized university course that covers the equivalent material within the two years prior to their application.

Candidates will be required to support their application with a copy of the course outline for the claimed equivalent course, a copy of at least one exam question paper for the course and their transcript showing successful completion of the course with a mark of no less than 65%, submitted to CMA Ontario for assessment.

If these are approved, candidates will be required to challenge the Tax I examinations, both interim and final, on the dates scheduled for the next offering of Tax I. Exemptions are expected to be rare

Administration

1. Eligibility: Prospective candidates must be a Certified Management Accountant in good standing in order to be eligible to enrol for these courses.

2. Fees: The cost of each of the 5 courses is $850 plus GST.

a. After the start of the course, refunds will not be available to candidates who voluntarily decide to withdraw.

b. Other materials such as textbooks are not included in this fee.

3. Textbooks:

a. Auditing

i. Auditing and Other Assurance Services, 10th Edition, Alvin A. Arens, Randal J. Elder, Mark S. Beasley and Ingrid Splettstoesser-Hogeterp, Pearson Education Canada, 2007, ISBN#9780131296152

This textbook can be purchased at the following link:
http://www.amazon.ca/Auditing-Other-Assurance-Services-Canadian/dp/0131296159/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1217606589&sr=8-1

ii. CICA Handbook: Canadian Institute of Chartered Accountants, 2007
The CICA Handbook must be purchased from the CICA Store at https://www.knotia.ca/

b. Taxation

i. Beam, Laiken and Barnett, Introduction to Federal Income Taxation in Canada (current ed.) + Companion CD, CCH Canadian Limited, North York, Ontario. [a.k.a. IFITC]

ii. Canadian Income Tax Act with Regulations (current ed.) CCH Canadian Limited, North York, Ontario.

Taxation textbooks can be purchased from CCH Canadian Limited at http://www.cch.ca/Products/

4. The Auditing and Taxation courses are offered in conjunction with the University of Waterloo Continuing Studies Department, and offered exclusively as distance learning through the University of Waterloo Continuing Studies web site.

5. Registration – Fall 2008 (September 8 – December 1):

a. In order to register, please use the following link – https://student.dce.uwaterloo.ca/dceforms/ce_registration/cma_reg_form.html

b. Registration Opens - July 25 / Registration Closes: August 15

c. SEE Course Schedules for detailed dates http://www.cmabc.com/index.cfm/ci_id/12664/la_id/1/document/1/re_id/0

6. Participation: During the Tax courses, participation in on-line discussion boards and group assignments will be monitored, and individuals will be advised if they are falling behind expectations.

7. Examinations:

a. Candidates will be required to sit for the midterm and final exams at a specified centre arranged by their respective provincial bodies.

b. Deferrals are only granted in unusual circumstances.

c. Late Cancellations and No-Shows may be asked by their respective provincial bodies to reimburse any costs incurred.

Please visit the following link for course outlines, schedules and registration information:

http://ce.uwaterloo.ca/Certified_Management_Accountants.htm

Please note: the registration deadline for fall courses is August 15th

For further information (until August 8, 2008), please contact Jon Jones, Director, Management Accounting, 416-204-3130, 1-800-387-2991 x 130, jjones@cma-ontario.org

For further information (after August 8, 2008), please contact Colin Shaw, Director, Public Accounting, 416-204-3112, 1-800-387-2991 x 112, cshaw@cma-ontario.org

Offshore Trusts Training Course

2008-07-23T10:30:00.000-07:00

Please visit the link below for information on an Offshore Trusts Training Course.

http://www.cmabc.com/index.cfm/ci_id/12574/la_id/1/document/1/re_id/0

Commissions for Sale of Tax Shelters

2008-07-16T14:43:00.000-07:00

(From Bob Parry, Director, Public Accounting, CMA Canada)

Please see the column by Jacquie McNish from today's Globe and Mail at the following link (http://www.cmabc.com/index.cfm/ci_id/12539/la_id/1/document/1/re_id/0). It reports a major lawsuit that has arisen in Ontario related to the indirect receipt by a practitioner of commissions from to the sale of tax shelters to his client. This evidences the pitfalls of receiving such fees and the conflict of interest, real or perceived, that exists when you are providing advisory services. For this reason, the receipt of such commissions is forbidden by the harmonized Rules of Professional Conduct of the Institutes of Chartered Accountants.

CMAs may have similar ethical rules in their respective provinces or, as is the case in Alberta, bound by the CA rules. In any case, practitioners are bound by the Code of Ethics of The International Federation of Accountants which states:
240.7 A professional accountant in public practice should not pay or receive a referral fee or commission, unless the professional accountant in public practice has established safeguards to eliminate the threats or reduce them to an acceptable level. Such safeguards may include:
• Disclosing to the client any arrangements to pay a referral fee to another professional accountant for the work referred.
• Disclosing to the client any arrangements to receive a referral fee for referring the client to another professional accountant in public practice.
• Obtaining advance agreement from the client for commission arrangements in connection with the sale by a third party of goods or services to the client.

The threats that are referred to are those to the Fundamental Principles set out in the Code of Ethics. In this case they would include threats to the fundamental principle of Objectivity, specifically self-interest and advocacy. It would be difficult to establish or demonstrate appropriate safeguards in circumstances such as this.

IFRS: Collateral Impacts

2008-05-20T10:49:00.000-07:00

Further anecdotal evidence that the devil is in the details, the non-accounting details is where CMAs may add great value. (See link to lead article from CFO's.com Accounting Newsletter, May 19, 2008)

http://email.cfo.com/cgi-bin2/DM/y/e5kZ0PBAtP0V7N0DbSD0EO

In addition to the lead article, a review of the article on spreadsheet accounting is suggested. This was painful for early SOX filers and looks set to rear it’s head again under IFRS. Rafik Greis (Partner, E&Y-Montreal) references a Canadian company who would require 15,000 top-side journal entries per month if IFRS is not pushdown to the transaction level!

http://email.cfo.com/cgi-bin2/DM/y/e5kZ0PBAtP0V7N0DbSE0EP

CFERF Report on IFRS Readiness in Canada

2008-05-06T11:40:00.000-07:00

The CFERF (Canadian Financial Executives Research Foundation) has recently released a report on IFRS readiness in Canada. The report can be accessed at the following link:

http://www.cmabc.com/pdf/PublicPractice/CFERF_IFRS_Report_2008(2).pdf

Transition to International Reporting Standards

2008-04-11T10:37:00.000-07:00

On April 7 the Accounting Standards Board issued its omnibus Exposure Draft (ED) “Adopting IFRS in Canada”. This can be downloaded in English and French from the following CICA IFRS Websites, respectively:
http://www.cica.ca/index.cfm/ci_id/44036/la_id/1.htm (English)
http://www.icca.ca/index.cfm/ci_id/44036/la_id/2.htm (French)

Readers are encouraged to look at the “Readers Guide to Adopting IRFS” before the ED itself. This is a good overview of what stays the same, what IFRS standards are already incorporated into Canadian GAAP, and what IFRS standards are expected to change before the 2011 implementation date. The ED also provides a link to download the full text of the IFRS standards as they existed on January 1, 2007 free of charge. (Yes - all 2,700 pages of them, don’t download to your Blackberry) You should also read the comments of Ron Salole, VP Standards CICA entitled “Don’t Stress over the Introduction of IFRS”.

Some good information and links are also available on the main CICA IFRS Websites at:
http://www.cica.ca/index.cfm/ci_id/39166/la_id/1.htm (English)
http://www.icca.ca/index.cfm/ci_id/39166/la_id/2.htm (French)

Deloittes, who developed the CMA series of IRFS seminars run last year, also have some very good IFRS material on their website. See their “Countdown to IFRS” newsletter at https://www.corpgov.deloitte.com/site/CanEng/menuitem.a1f3300cb77dea78311bc463027ea1a0/

This Blog Is For You

2008-03-27T13:10:00.001-07:00

Are there any topics you would like to have addressed on this blog? Please let us know and we will try to find resources on those topics to post here. We would like to make this blog as useful as we can for you and value your input.

Any questions regarding the operation of this blog can be directed to Christa Janke at christa@cmabc.com

CMA Professional Liability Insurance & Risk Management Seminar

2008-03-05T07:06:00.000-08:00

On behalf of LMS PROLINK, one of the insurance brokerages managing the CMA Professional Liability Insurance Program, CMA British Columbia wishes to invite you to a complimentary lunch and educational seminar on Wednesday March 26th.

The goals of this seminar will be to:

1. Further your understanding of the Professional Liability Insurance Program available to self-employed CMAs,
2. Identify Risk Management Practices to reduce your chance of experiencing a claim,
3. Outline what to do in the event of a claim,
4. Review past claims scenarios from the program and the identification of trends,
5. Receive your feedback on the existing program.

Please note that Christa Janke, from CMA British Columbia, and Bob Parry, Director of Public Practice with CMA Canada will also be in attendance at the seminar. Christa and Bob will be available to answer any questions or concerns CMAs may have.

All attendees will qualify for 2 CPLD learning credits for having attended this session.
This Seminar will be offered in Burnaby on Wed. March 26, 2008 from 12:30pm – 2:30pm at the Hilton Vancouver Metrotown, 6083 McKay Avenue, Burnaby, BC (close to the “Metrotown” Skytrain Station).

* Lunch will be served.

To register, please RSVP to Christa Janke at christa@cmabc.com or (604) 484-7061 as soon as possible.

As we would like this to be an informative and educational seminar, please feel free to e-mail Derrick Leue derrick@lms.ca with any requests or questions prior to the seminar date.

For over 20 years, LMS PROLINK has been a national leader in managing insurance programs for some of the foremost professional associations across Canada. This seminar will be provided by Derrick Leue, VP Insurance Programs at LMS PROLINK. Derrick is the national team leader for the CMA's Professional Liability Insurance Program and looks forward to having a chance to meet with you in-person.

We encourage you to take advantage of this seminar.

Rick Lightheart, FCIS, CAE, CMA, FCMAVice President, Operations
Christa Janke, CMAManager, Operations

Policy Point Rescinded

2008-03-05T06:58:00.000-08:00

At their February 25, 2008 Board meeting, the CMA British Columbia Board rescinded point I.A.3 of the New Public Accounting Policy

I.A.3
"The applicant must hold a Bachelor or graduate level degree as defined by the CMABC (refer the Appendix C). An applicant who has five years of continuous certified membership in good standing will be considered as having fulfilled the degree requirement. "

Registration Available for Taxation I and Audit II

2008-02-13T07:33:00.000-08:00

Registration for Taxation I (no prerequisites) and Audit II (prerequisite Audit I) is now available through distance education with the University of Waterloo at the following link: https://student.dce.uwaterloo.ca/dceforms/ce_registration/cma_reg_form.html.

Both courses will begin February 20th Please check previous post titled CMA Public Accounting Overview for course length, cost etc. Course outlines for Taxation I and Audit II are also posted on this blog and can be accessed using the links to the right

CMA Public Accounting Overview

2008-02-13T07:28:00.000-08:00

The CMA Public Accounting Program is comprised of 2 topic areas:

Auditing

Taxation

The Auditing material is divided into two courses – Audit I and Audit II. Each course is 12 weeks in length, and has two assessment components – a midterm and a final exam.

The Taxation material is divided into 3 courses – Taxation I, Taxation II, and Taxation III. Each course is 9 weeks in length and has two assessment components – a midterm and a final exam.

The Auditing and Taxation courses are offered in conjunction with the University of Waterloo Continuing Studies Department. The courses are offered exclusively as distance learning and the materials for the courses are accessed through the University of Waterloo Continuing Studies web site.

For Audit I and II detailed PowerPoint lessons support the readings and are narrated by the instructor of the class. Additionally on-line discussion boards will facilitate learning and provide candidates access to the instructor and other classmates. Candidates will be required to sit for the midterm and final exams at a specified centre arranged by their respective provincial bodies.

For Taxation I, II, and III the website will facilitate candidate learning though directed readings and the completion of group assignments. These groups will be composed of 3-4 individuals and candidates will have access to a group forum hosted on the course web site in order to assist groups who are geographically dispersed.

Prospective candidates must be a Certified Management Accountant in good standing in order to be eligible to enrol for these courses

The cost of each of the 5 courses is $750 plus GST. Materials such as textbooks or the CICA Handbook are not included in this fee.

Taxation I Course Outline

2008-02-13T07:07:00.000-08:00

Course Outline

This course is the first part of a three-part course series designed to prepare CMAs to take and pass the Ontario Public Accountants Council’s licensure exam.

Description
We hope you are prepared for an active and engaging learning experience. Taxation, all appearances to the contrary, is a lively and engaging area of study. Clashing interpretations of tax law can spark energetic debates - especially when your own money is involved! It is often unclear how tax laws should be applied to real life situations, with no pre-existing "answer" to a dispute. The study of taxation thus requires independent analysis, argumentation, and interpretation. Memorization of facts and formulas will not take us very far in the study of taxation.

Since discussion and debate are so vital for learning about taxation, this course will be highly participatory. You will not only be reading about taxation in this course. You will also be working with other students to assess and resolve tax situations. Everything you read will be applied to solve problems, and you will have to convince others of the correctness of your approach. Thus, in this course, you will be "learning by doing", not just learning by reading.

Objectives
The provisions of the Income Tax Act are not a series of rules and formulae to be memorized and applied. By understanding the reasons and concepts behind the legislation, how the various provisions interrelate and the tax consequences of various choices you will be able to apply the available tools and techniques to accomplish client objectives with predictable results.

This three-course introductory series in federal income tax law is designed to:

Explain the theoretical concepts behind the specific provisions of the law,
Apply the law in practical problems and case settings,
Interpret the law, taking into account the specific wording of the provisions, judicial decisions and the Canada Revenue Agency's position, and
Introduce basic tax planning concepts through problem application.

Course Sessions

Week	Session Title
Week 1	Module 1: Using the Income Tax Act (ITA)
Week 2	Module 2: Tax Liability and Intro to Employment Income
Week 3	Module 3: Employment Income and Income from Property
Week 4	Module 4: Income from Property and Intro to Capital Gains
Week 5	Mid Term Exam (45%)
Week 6	Module 5: Capital Gains (continued)
Week 7	Module 6: Other Sources of Income and Deductions
Week 8	Module 7: Computing Taxable Income for an Individual
Week 9	Module 8: Computing Tax Payable for an Individual
Week 10	Module 9: Tax Payer Rights and Obligations
Week 11	Final Exam (55%)

The Instructor for this course is Dr. Stanley Laiken

Educational Background
Ph.D., Business Administration, University of Western Ontario, 1972M.B.A., Wharton Graduate Division, University of Pennsylvania, 1969H.B.A., Business Administration, University of Western Ontario, 1966

Professional Designations
CBV (Chartered Business Valuator), Canadian Institute of Chartered Business Valuators
Academic and Professional Awards
Deloitte & Touche Professor, University of Waterloo, 1998-presentL.S. Rosen Award, in recognition of outstanding contribution to Canadianaccounting education, The Canadian Academic Accounting Association, 1997Distinguished Teacher Award, University of Waterloo, 1994

Audit II Course Outline

2008-02-12T14:25:00.000-08:00

Course Outline

This course is the second part of a two-part course series designed to prepare CMAs to take and pass the Ontario Public Accountants Council’s licensure exam. Students develop their understanding of current practical auditing, with awareness of current research and the current business environment.
Major parts of the course focus on elements of the context in which auditing is carried out, including such topics as:
• The reasons for auditing
• Auditing problems (e.g., liability and other current issues)
• Auditing practice, which includes:

o audit planning

o internal control

o audit evidence

o audit procedures

o information technology, and

o audit completion and reporting

Objectives

To complete this auditing course, you will need to be able to:

Explain the reasons for external audits and their nature and scope.
Discuss the auditing environment, including explaining the nature of the audit expectation gap and explaining the effects of an auditor's professional and legal responsibilities.
Demonstrate your ability to evaluate audit risk and plan an audit.
Use audit procedures to assess control risk and evaluate internal control.
Apply judgemental and statistical sampling.
Describe procedures for the audit of information technology.
Prepare audit programmes to obtain audit evidence for assertions concerned with transactions and balances.
Interpret and explain different types of audit reports.
Discuss current issues in auditing.

To help you understand the role of auditors with a focus on public accountants (external auditors) who audit financial statements. The materials provided will include discussion and consideration of:
• The economic and legal reasons why audits are requested.
• The environment under which audits are conducted.
• The concepts underlying the practice of external auditing.
• The decisions an auditor faces in conducting an external audit.
• The audit process from start to finish.
• The current external auditing environment and likely future changes that will take place in that environment.

Course Sessions

Week	Session Title
1	Fraud Auditing and the Nature of Fraud
2	Overall Audit Plan and Audit Program
3	Audit Sampling Concepts
4	Audit of the Sales and Collection Cycle - Tests of Controls
5	Completing the Tests in the Sales and Collection Cycle
6	Audit of Cash Balances, Payroll and Personnel Cycle, and the Acquisition and Payment Cycle
7	Completing the Tests in the Acquisition and Paymetn Cycle - Verification of the Selected Accounts; Audit of the Inventory and Warehousing Cycle; Audit of the Capital Acquisition and Repayment Cycle
8	Completing the Audit
9	Using Advanced Skills; Internal Auditing and Government Auditing
10	Enterprise Risk Management and Governance
11	International Regulation of Financial Reporting
12	Canadian Regulation of Financial Reporting

The Instructor for this course is Dr. Morley Lemon:

Educational Background
PhD (1975) University of Texas at Austin
MBA (1972) University of Toronto
BA (1961) University of Western Ontario

Professional Designations
Fellow - elected by Institute of Chartered Accountants of Ontario (1985)
Certified Chartered Accountant - Texas (1974)
Chartered Accountant - Ontario (1965)

Academic and Professional Awards
Canadian Academic Accounting Association: L.S. Rosen Outstanding Educator Award (2004)
Institute of Chartered Accountants of Ontario Award of Outstanding Merit (2003)
University of Waterloo Distinguished Teacher Award (1998)
PricewaterhouseCoopers Professorship in Auditing (1993-2004)

Practice Tiers

2008-01-21T09:38:00.000-08:00

As part of the new National Standards for Public Practitioners, approved by the Board in September 2007, all BC Society members currently registered as public practitioners (having an ownership interest in a CMA public accounting practice as defined under Bylaw 1.01) are being licensed into a Tier Level based on the practice mix information identified in their practice's most recent practice review.

The Tiers are as follows:

Tier 0 - Other (Forensic Accounting)
Tier 1 - Compilations
Tier 2 - Review of Non-public entities
Tier 3 - Audit of Non-public entities
Tier 4 - Review and Audit of Public entities

A letter to each registered practitioner, advising them of the Tier they have been licensed to was sent out by certified mail (Xpress Post) on Friday, January 18, 2008.

Each practitioner now has 120 days to submit a written appeal if they wish to challenge the Tier level which they were assigned in the letter.

As of the date of this letter, each practitioner also now has a 3 year transitional period to allow for any adjustment to the make-up of their practice to insure that the practice will meet the ongoing hours of verifiable public practice experience (Section IV Continuing Compliance 11-13 of the New Public Accounting Policy http://www.cmabc.com/pdf/PublicPractice/NEW_PUBLIC_ACCOUNTING_POLICY.pdf required to sustain their license at the assigned Tier level.

Interim CMA Public Accounting Education Requirement (alternative syllabus - seminars)

2008-01-21T08:56:00.000-08:00

CMA Alberta has taken the National Standards out of their public practitioners requirements due to long delays in establishing the CMA Ontario courses offered at the University of Waterloo. CMAAB is using a series of Institute of Chartered Accountant's seminars (11) as their education (seminar) component for licensing.

On January 11, 2008, the CMABC Practice Licensing Committee met and agreed that in the interim CMABC should move to the CMAA model in order to accommodate the growing list of CMA’s seeking Public Accounting Licenses since the May 2007 moratorium on public practice registrations.

Until the CMA Ontario courses become available online, CMABC Certified members seeking a Public Accounting License may take the following seminars offered by the Institute of Chartered Accountants of BC: (current offerings of these seminars are listed below. Information on future offerings of these seminars can be obtained on the ICABC website at http://www.icabc-pd.com/pd-seminars.php

Personal Tax Planning and Advice:

Income Tax Refresher (Personal)
http://www.icabc-pd.com/pd-seminars-seminar.php?id=743
2 Day Course
January 25, 2008 9:00am – January 26, 2008 5:00pm
Ocean Pointe Resort , Victoria, BC
February 8, 2008 9:00am – February 9, 2008 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $650.00

Compilation/Corporate Tax

Income Tax Refresher (Corporate)
http://www.icabc-pd.com/pd-seminars-seminar.php?id=661
2 Day Course
February 15, 2008 9:00am – February 16, 2008 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $650.00
Compilation Engagements
http://www.icabc-pd.com/pd-seminars-seminar.php?id=692
½ Day Course
February 7, 2008 9:00am – 12:30pm
Sutton Place Hotel – Vancouver, BC
Cost: $195.00
Financial Statement Presentation & Disclosure
http://www.icabc-pd.com/pd-seminars-seminar.php?id=442
1 Day Course
February 12, 2008 9:00am – 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $350.00

Review Engagements

Review Engagements
http://www.icabc-pd.com/pd-seminars-seminar.php?id=699
1 Day Course
February 13, 2007 9:00am – 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $350.00
CICA Handbook Accounting Refresher
http://www.icabc-pd.com/pd-seminars-seminar.php?id=439
2 Day Course
March 7, 2008 9:00am – March 8, 2008 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $650.00

Audit Engagements

Accounting, Auditing and Professional Practice Update
http://www.icabc-pd.com/pd-seminars-seminar.php?id=685
1 Day Course
February 8, 2008 9:00am – 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $350.00
Audit of Simple (Small & Medium) Entities
http://www.icabc-pd.com/pd-seminars-seminar.php?id=682
1 Day Course
February 5, 2008 9:00am – 5:00pm
Sutton Place Hotel, Vancouver, BC
Cost: $350.00

All seminars listed above must be completed within 2 years of application to become a licensed Public Practitioner

Once the Society (University of Waterloo) courses come on line, members registered under the alternative syllabus (above) will be allowed to complete the seminars in the group (eg. Personal Tax Planning & Advice, Compilation/Corporate Tax, Review Engagements or Audit Engagements) they have begun. Once the seminars in that group are completed, members will be required to finish the remainder of their studies under the Society (University of Waterloo) course syllabus.

5 Keys to Client Satisfaction

2008-01-10T10:10:00.000-08:00

Satisfied clients increase the bottom line. They not only bring repeat business but also generate new business through word-of-mouth advertising. Fully satisfied clients are more immune to competitive actions and generate a stable business environment. Given these facts, here are 5 keys to client satisfaction:

Reliabilty - the ability to perform the promised service dependably, accurately and on a timely basis
Assurance - the knowledge and courtesy of partners and staff and their ability to convey trust and confidence
Tangibles - appearance of physical facilities, equipment, personnel, and communication materials (eg. email, letterhead etc.)
Empathy - caring, individualized attention
Responsiveness - willingness to help clients and provide prompt service

From "CRM Key to Delivering Customer Satisfaction", Eric Rutten, Momentum Magazine

Is Your Staff Motivated?

2008-01-09T12:24:00.000-08:00

Staff motivation is an important driver of firm productivity, therefore, motivation is a highly relevant topic for an accounting practice. Understanding the dynamics of motivation at the staff level is critical. Motivation is defined as "those factors which cause an individual to behave in a manner that will assist them to achieve a particular desired goal". Motivation is "the tool by which we move individuals out of their comfort zones...it's the secret weapon for achieving firm goals". Here are some tips to increase staff motivation in your firm:

Always try to understand what you are asking your staff member to give up or change. For instance, if you are asking them to acquire a new skill in order for them to move up in the firm, you are asking them to give up time that would be spent on other activities. If the staff member feels that they are already at full capacity with their client load, the prospect of more responsibility will not be motivating, but rather demotivating. Be careful of competing motivations.

Be very clear about the goals that you want to achieve. It is wise to break longer-term or complex goals down into short-term or simple segments that are more easily understood and are more readily attainable. Goals that are too complex or too far in the future can be demotivating and discouraging. In order for you to manage the outcome (and this is what you want to do), the outcome must be very well defined and seen as attainable.

Make sure that you provide sufficient support for the change that you are trying to motivate. If staff believe that the partner supports the change and that there are sufficient resources available for them to make the change, they will be more motivated to change.

Collaboration with the affected staff members will generally increase motivation. Staff members who feel they have had some input in the planning of the desired change will be more motivated to carry it out.

Reinforce, on a timely basis, incremental movement towards the goal you wish the staff member to achieve. Recognition of incremental goals met will keep motivation at a high level.

From "Think Through Ways to Motivate Staff" by Mort Shapiro, FCA, CMC, The Bottom Line December 2007 issue

Public Practice Education Program Details

2007-10-15T09:58:00.000-07:00

The new Public Accounting curriculum for CMA's is being set up by the CMA Ontario Society. Here is the information on the Education Program details that we have to date:

There will be 5 courses in the program of studies -- Audit I & II and Tax I, II & III. All students are required to complete all 5 courses. The cost for each of these courses will be $750 + GST. All courses will be offered through online distance education with the University of Waterloo. Students will have email contact with professors for assistance. A lesson plan will be provided but students will be required to purchase textbooks and a copy of the CICA Handbook separately. Each course will include a mid-term and a final exam.

After students have completed all 5 courses successfully, they will be required to write a 2-part, 5 hour comprehensive public accounting exam. This exam will be marked centrally by CMA Canada and a passing grade will be 60% or higher for each part of the exam. Part A of the exam will be a 2 hour exam comprised of approximately 50-60 objective questions testing Financial Accounting and Taxation syllabus topics. Part B of the exam will be 3 hour exam comprised of approximately 25-30 objective questions and 3 mini-case questions testing Assurance syllabus topics. Students must pass both parts of the exam to successfully complete the program. Students who are not successful in their first attempt will be permitted a maximum of 4 attempts at the exam.

The full program will have defined start and end times. A pilot of the first course, Audit I, is currently running with 13 students across Canada. General registration for the program of studies is expected to be available in January 2008.

We will post further updates on this blog as we receive them. If you would like to be added to a list of people who will be notified by email when course registration begins, please email Christa Janke at christa@cmabc.com with your contact information.

Public Practice Update

2007-10-15T09:48:00.000-07:00

We are getting quite a few questions regarding the new National Public Practice standards and curriculum. The BC version of these standards was approved by the Board on September 27, 2007. Don Nilson, CMA, FCMA, Principal of Nilson & Company wrote an insightful article on this topic for the last CMA Update Magazine which I am reproducing here:

May you live in interesting times

This is a phrase well known in the English language and typically ascribed to an old Chinese proverb. In truth, there is no such documented connection. Some attribute the phrase to a mid-Fifties American science fiction writer and others ascribe it to a 19th Century British writer using a Chinese nom-de-plume. There, it was the first of three ‘curses’, the other lesser-known ones being “May you come to the attention of those in authority” and “May you find what you are looking for”.

Accountants in public practice indeed are living the well-known phrase. Aside from the ubiquitous burden of ever-changing government legislation in income and commodity taxation, CMA public practitioners must watch their right flank for huge changes at the professional level.

First, there is the Ontario-driven movement to CMA National Standards for public accounting. This has been in progress for a while and will soon come to fruition. The BC version of this is slated to go forward to the Provincial Board this Fall for review and possible ratification. CMA practitioners are well advised to be cognizant of what changes may lie ahead.

In the future, CMAs seeking to register as practitioners will have to meet these new standards in order to be licensed. New applicants must successfully complete five on-line post-designation courses in taxation and assurance, followed by a two part, five hour comprehensive national public accounting exam. They also must acquire relevant public practice experience, measured in billable hours or equivalent, gained in an approved training organization. Up to 75% of this experience may be gained prior to enrolment in the post-designation program.

A transitional measure will grandfather all CMAs currently registered, and exempt them from the educational and practical experience requirements explained above.

A new initiative will require all practitioners to register their practice at a tier level - one through four. Tier one is for a compilation-only practice, while the higher tiers include review engagements and audits. Grandfathered members will be initially tiered at the level reflected in their most recent practice inspections. They will be given a time-limited opportunity to appeal their initial tier level registration. The practitioner must have sufficient experience to function at a particular tier. All practitioners seeking to migrate to a higher tier may be required to acquire the necessary educational and practical experience commensurate with that tier. This may entail gaining the extra experience through a mentor, subcontracting or employee arrangement.

Another new initiative will require registration and approval to act as a training organization or individual if the practitioner wishes to hire staff who are trying to accumulate the practical experience requirements. The training organization or individual must have at least three or five years of public accounting experience, depending upon the tier level, and have had successful practice inspections.

Another significant change is a new “minimum level of activity” requirement, which may, for instance, affect practitioners winding down in semi-retirement. The minimum will be set at five hundred billable hours or equivalent per annum for the practice.

The new National Standards consolidate the existing requirements regarding insurance coverage, practice inspection, professional conduct and continuous learning. The practice of “public accounting” has a definition in BC that is broader than some other jurisdictions. Aside from providing audit, review or compilation services, it also includes providing forensic accounting or tax advice or tax preparation where it is related to any of the above services. Also, it may include accounting services insofar as it involves summarization, analysis, advice, counsel or interpretation.

The BC Society will be creating a new Licensing Committee which will oversee these new standards in BC. You can read more about these standards at www.cmabc.com under Members/Public Practice.

Secondly, the BC Society will bring forth to the 2007 AGM a new set of Professional Conduct amendments affecting public practitioners. These were mailed out in August with the AGM package. These were drawn directly from existing ICABC rules and they are principally directed to conduct in assurance engagements. Many of them are specifically directed to engagements for “reporting issuer audit clients” and likely can be ignored by most CMA practitioners.

Independence rules across a range of conditions restrict a practitioner from taking on an assurance engagement. First, there cannot be a direct financial interest or material indirect financial interest in the client entity by the practitioner or a defined list of related parties. Financial interest includes both an equity position and a lender or creditor position. Second, there cannot be a “close business (material) relationship”, which is not defined. Third, there cannot be an employee/officer/director relationship or a family or personal relationship to the client entity. This includes family members with significant influence. Fourth, there cannot be a “management function” provided to the client entity, defined variously in the draft. Fifth, the practitioner cannot prepare journal entries for the client entity which have not been approved by management. Sixth, neither the practitioner nor a “network firm” can provide corporate finance activities, defined variously in the draft. Seventh, the practitioner cannot receive gifts, hospitality or discounts from the client entity unless they are immaterial.

This is only a broad summary of the amendments, and practitioners would be well advised to read the details in the AGM package which will be available at www.cmabc.com under Members/AGM.

In closing, we return to the lesser known proverbs above: “May you come to the attention of those in authority” – indeed you have and, “May you find what you are looking for” in choosing a career in public practice in the face of ever-increasing restrictions and responsibilities.

Quality Requires Working Together

2007-07-11T14:59:00.000-07:00

“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives.”
- William A. Foster

The Public expects Canada's public accounting professionals to demonstrate clearly that quality is the core element of their engagements. The implementation of the Quality Assurance Manual (QAM) is an important response to this expectation. The Quality Assurance Manual (now a requirement for all practices completing assurance engagements) is an effort to document policies and procedures that have long been followed by professional accountants but were not prescibed as professional standards. However, implemenation of some of these new standards, such as the new independence rules and the need to have a file review monitor, does present some difficulties for sole-practitioners and small firms.1

Practitioners, competing to attract new clients, have put up many walls between themselves within the profession. Many are not comfortable with sharing files. Now practitioners must begin to collaborate with others, not only to comply with the new rules but also to enhance the service that they have provided to their clients in the past. It is critical for practitioners to forge relationships with other public accountants who provide complimentary services to their own in order to fulfill the new requirements.

Public Accounting "began with the mission to serve clients, to be independent and to provide knowledgeable opinions."2 In order to continue to pursue this mission, practitioners now need to work together more.

CMA BC Public Accountants meet together monthly at the Bonsor Recreation Centre conference room, 6550 Avenue, Burnaby, BC. If you wish to attend the next meeting, please contact Robert Holmes at robert@blackfishcma.com.

Should you need to purchase a Quality Assurance Manual, one can be obtained by visiting the following website: www.knotia.ca/store

1. www.cica.ca, "Message to Practitioners in Small Practices on Quality Control"
2. www.camagazine.com, Grant C. Robinson, "New rules, new opportunities"