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Articles from NeilMcIntyre.ca

Are accounting standards public enough? 2007-07-31 04:43:45 CA Magazine might be freely giving away their content for the benefit of all stakeholders in the CA profession and public accounting in general, but the goodwill doesn’t extend to the CICA when it comes to Canadian accounting and auditing standards. The CICA, through the Accounting Standards Board (AcSB), develops public accounting standards through a remarkably public process of consultation and comment, but once the standard makes it into the Handbook, it is rarely seen in public again. The Handbook is available online, if you’re a member of the Institute. That is, only if you’re a CA do you get access to the goods. Additionally, when one Googles “CICA Handbook”, the first result is a link to “Enhanced online access to CICA Handbook”! (This the access available only to CICA members.) A link to the protected Handbook is featured prominently on the CICA homepage. “Great,” a new visitor thinks, “the Handbook is only a mouse cli ...

Pay off debt, then start saving and investing 2007-07-30 11:04:43 I took the plunge this weekend and expunged my debts to the depths of the hell from whence they came. It was a tough move for some reason, even for a cold, calculating accountant. Subconsciously, I held on to the debt in order to keep my asset balances high. Artificially high. This is a bad move, and you don’t need to be a bean-counter to follow the logic. I had credit card debt at 18%, a personal line of credit at prime + 3%, savings earning me 3.5%, and a chequing account costing me the monthly plan fee less a paltry amount of interest. In summary, a net cost to me. I had enough cash in the savings and chequing to pay off the debts, but for some reason I had held off on doing so for months, all the time allowing the interest costs to pile on. I felt more secure maintaining the artificially high cash/savings balances. Why is that? It wasn’t until I started tracking my expenses using the so very Web 2.0 tool expensr.com about two weeks ago that I realized the time had come ...

How to pick an accountant for your online business 2007-07-25 06:02:19 Choosing an accountant for your business is always a delicate endeavour. It’s incredibly important for your accountant to understand your business thoroughly, inside and out, backwards and forward. So, for some non-traditional businesses (i.e. professional blogger), this can be tricky to say the least. A post titled How to pick an accountant for your online business appeared recently in a blog called Fortuitous, which is written by one of the co-founders of MetaFilter, Matt Haughey. I thought the post had some great advice for web workers and bloggers in particular, but some additional insight could be provided from an accountant’s point of view. I feel finances are important enough to warrant bringing in outside professional help. If you’re a geek, the temptation is to think “this is math — I know numbers!” but what you might be ignoring is the additional tax of having to learn an extremely complicated system. Leave it to the pros so you can focus on th ...

The value of blog postings and comments 2007-07-21 16:33:11 It was a long time ago in internet years that I started reading Dave Winer’s blog, Scripting News, and even longer since I started reading Jakob Nielsen’s writings on his site, useit.com. These two are truly pioneers of the digital age, with Winer instrumental in the development and promotion of RSS and Nielsen writing the book(s) on web usability. Winer recently discussed why he doesn’t allow comments on his blog, which morphed into a full-blown examination of whether the ability to comment on posts is what defines a blog. Do comments make it a blog? Do the lack of comments make it not a blog? Well actually, my opinion is different from many, but it still is my opinion that it does not follow that a blog must have comments, in fact, to the extent that comments interfere with the natural expression of the unedited voice of an individual, comments may act to make something not a blog. He makes a compelling argument, as previously I was in the camp that believed a blog ...

Mid-tier firms offer better experience 2007-07-19 07:52:13 So says this recent story on Accountancy Age, quoting a Cantos interview with the ACCA’s head of development, Tony Osude: “If you went to one of the mid-tier firms, one of the beauties about being there is you might not be paid as much necessarily, but you have much more hands on experience. You can expect to actually meet your clients in the flesh and have much more dealings with your clients and also, importantly, if you want to stay in practice and recognition is important to you, there’s a greater chance of being recognised and career tracked.” I have worked only at my current mid-size firm, so I can’t give a first hand comparison of the difference between it and a Big Four firm. I know that at my firm, I was given greater responsibility on files fairly quickly after starting, and when I started there I was as green as you can get. I thought a discontinued operation was an error message in Windows. In a non Big Four firm, you’ll generally have more oppo ...

Inching towards international accounting standards in the US 2007-07-18 07:24:10 In Canada, the Accounting Standards Board (AcSB) has already taken the first steps of convergence with international standards by outlining the plan under which publicly accountable enterprises will transition completely to IFRS. The change will occur over the next 5 years, and the Board expects the changeover process to be complete by fiscal years beginning in 2011, although it could still be pushed back if circumstances require it. In the US, the SEC has recently proposed that foreign companies will not have to reconcile their IFRS financial statements to US GAAP: If the current SEC proposal is approved, foreign companies registered with the SEC that use IFRS, which is published by the International Accounting Standards Board, wouldn’t have to provide a separate reconciliation report starting in 2009. This is a great development and real progress towards convergence. Foreign companies will likely jump wholeheartedly on this proposal, as it will allow them to save significant ...

CA Magazine knows information wants to be free 2007-07-14 19:04:55 I need to commend the publication of my profession here in Canada, CA Magazine, for offering the full content of each issue online as soon as the physical copy of the issue arrives on my doorstep. There are many magazines that charge for access to their full content, but CA Magazine realizes that increased readership of its articles will only help the profession’s stature in this country and internationally. It also helps bloggers like me link to and discuss the articles. The source of the headline was Stewart Brand who, at the first Hackers’ Conference in 1984, said: On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. Read the June issue. (Yes I realize we’re into July now, but you’ll have to trust me that the contents have been available for ...

Big Four dominate professional services globally 2007-07-12 07:37:58 The Managing Partners’ Forum was established in 1995 and is “dedicated to enhancing leadership and the status of the management team in professional firms worldwide.” They recently released the inaugural Global 500, a ranking of the top 500 professional services firms in the world by fee volume. The Big Four are at the top of the list, with PricewaterhouseCoopers coming first, followed by Deloitte, Ernst & Young, and KPMG. Interestingly, Accenture, formerly Andersen Consulting, formerly a division of Arthur Andersen, formerly the auditor of Enron, formerly in existence, occupies the number five spot: PwC - $22.0B Deloitte - $20.0B Ernst & Young - $18.4B KPMG - $16.9B Accenture - $16.7B I threw the numbers into Excel to do a little analysis. First, I wanted to see how they stacked up in terms of revenue per employee, since the report provided the number of employees. The third ranked firm in total revenue, Ernst & Young, is #1 when it comes to revenue ...

Audit choice and competition in UK and G8 2007-07-10 04:51:40 Jeremy Newman of BDO Stoy Hayward, highlights a key finding of the British Oxera Report on Audit Choice and Competition: According to the report by Oxera on Competition and Choice published in April 2006 more than 70% of FTSE 100 companies had not held a competitive tender for the last 15 years. The incidence of companies switching auditors is even less frequent. According to the Oxera Report it is around 4% on average for listed companies and less than 3% for FTSE 350 companies. It’s not just a problem in the UK, however. Grant Thornton researched the global audit market: The levels of audit market concentration across the world’s eight largest economies are dangerously high, with the Big 4 firms responsible for up to 99% of large public company audits, according to research by leading accounting and business advisory firm Grant Thornton LLP in the UK. […] Analysis of auditor concentration among the G8 economies revealed a high of 99% in Italy, followed by the UK ( ...

Firm using Facebook to recruit in Toronto 2007-07-07 12:05:01 I’ve grown a bit tired of Facebook lately. I think it’s because what originally was a torrent of friend additions has gradually slowed to a trickle. (I meet lots of new people through my job but I doubt they want the auditor on their Facebook!) It seems I’m not the only one who is questioning the system, but for other reasons. The lack of openness is leading some to compare it to AOL. But despite our misgivings, the beast continues to grow. My city, Toronto, is apparently the “capital of Facebook”: As a city, we have more members than New York, Los Angeles and San Francisco combined. Thirteen per cent of Torontonians have signed up. We not only have more members than any other city – 670,038 as of this week – we have more groups within the site talking about the goings on of our town. What does this mean? The value of Facebook to its members increases exponentially as more people join, and for Torontonians, the value of a Facebook account is much hig ...

Lotteries are just regressive taxes 2007-07-04 19:46:28 I like The Tax Foundation. They advocate some really smart tax policy in the US. They also have a good blog that regularly keeps me up on US tax, which isn’t something I ever need to know in my job, but is interesting nonetheless. They blogged about one of their Background Papers titled Gambling with Tax Policy: States’ Growing Reliance on Lottery Tax Revenue recently: Lotteries are a source of implicit tax revenue and exemplify poor tax policy for a number of reasons. They are not economically neutral; they are regressive; they lack transparency; they unnecessarily complicate the tax system; earmarked funds are often not used as promised; and lotteries are a business for the private market, not a state government. I don’t think too many people view lotteries as taxes, but they should. Bad taxes. The part above about lacking transparency hits close to home, as Ontario has experienced scandal lately because a disproportionate share of winners are store clerks: Roughly ...

Forced ranking at accounting firms? 2007-06-29 14:50:11 Francine dishes on forced ranking at GE and the Big Four: That is, compared to their peers, they don’t have the right stuff right now and their performance, although fine, is not as fine as the other 90%. So, with a poor rating instead of a positive rating, your choices are slim. No raise, no bonus, no ability to transfer, and a less enviable position at the negotiating table as far as a severance package when you do finally realize you have to leave. Oh, and don’t forget, with a poor rating on your record, there’s no rehire… […] One thing for sure. The standards for achieving success in a Big 4 firm are pretty clear. Conformance, Competence, Collegiality, and Chargeability. The idea of forced ranking doesn’t sit well with me, as it sounds pretty harsh towards those unlucky few at the bottom. It makes sense that there are the best and worst performers at the top and bottom, and that most are average, but to fire or demote or otherwise retard the ...

BDO Seidman using SugarCRM to manage office network 2007-06-24 14:49:08 Kind of old news (it’s from January last year) but BDO Seidman has implemented commercial open source software to manage their nationwide network of member firms. Open source software is software whose underlying source code is openly available and is usually licensed under the GNU GPL. What I like about open source is that the software is generally more stable and lightweight than closed-source software. This is due to the open nature of the code, which allows anyone to submit bug fixes or more efficient code. Firefox, for example, is much more stable and reliable than Internet Explorer, and allows the user much greater control of the browsing experience. So it comes as no surprise that BDO Seidman chose SugarCRM for its adaptability to their specific needs. [BDO] had never dealt with SugarCRM before, but she said that the lead project manager for the migration project was familiar with open source software. Helping matters was the fact that BDO Seidman’s IT team was ve ...

Audit committees recognize IT risks should be a focus 2007-06-24 00:40:27 Dan Meyer at Tick Marks has brought my attention to a KPMG survey that reports audit committees are becoming more concerned about IT risks on financial reporting. 90% believed that IT oversight deserved more time at audit committee meetings. By constrast, 80% of committee members were satisfied with audit committee oversight of management judgments and estimates and 60% felt that committees were spending sufficient time on these issues. Good to see audit committees are looking into this area with greater scrutiny. IT is often an area where firms of all sizes could benefit from increased focus and constantly thinking of ways to improve their controls and processes. But what about the 20% that is satisfied with audit committee oversight of management judgments and estimates, but do not believe sufficient time is being spent on the issue? How can you feel an area needs more time and yet be satisfied with the oversight? This is why looking at surveys is fun. “The ACI survey findin ...

Reflections on the week just past 2007-06-23 22:27:43 This past week has been an interesting one. I’m at a client for the third year now. This is the first time that’s happened, which makes sense since I just began the third year of work after graduating. Some reflections on the milestone: The first year I was green. I had about a week of client-site audit experience to that point, so I did very low-level work. But it was interesting, because the client is a very large owner-managed firm and the engagement is complex. The second year was shortened, since I went to the SOA during the final three weeks of June and after that I was put on another engagement. That engagement is also coming up soon, and will be the second client with whom I’ve hit the third year. This year, thanks to a colleague’s promotion and another’s vacation, I’ve inherited the “In-Charge” mantle and taken the reins of this beast. I find that I really excel in situations where I have greater responsibility, so I&rsquo ...