Reducing Tax-Related Risk

Effective risk management depends on thorough risk assessment. And the experience of the past few years indicates that a disproportionately high percentage of risk is associated with tax. In fact, based on SEC public filings, over 30 percent of the material weaknesses identified in internal controls are tax-related. As tax laws and corporate structures become more complex, it’s easier now than ever to make a false step when estimating and reporting all the myriad taxes, levies and duties that an organization is responsible for.

In a recent article “Strategies for reducing tax-related risk in the context of CEO/CFO certification” published in the June 2007 issue of CEO CFO Certification News, Deloitte discusses the most common tax-related weaknesses in internal controls, and offers risk management strategies to address them.

For a link to this excellent article, click here.

For a model policy that deals with the inherent risks in this area, see FN 7.07 – Income Taxes in Volume I of Finance and Accounting PolicyPro (FAPP). For more information about FAPP, click here.

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Merging Canadian GAAP with International Accounting Standards

For a number of years, the Canadian Accounting Standards Board (AcSB) has been working on a plan to merge Canadian generally accepted accounting principles (GAAP) with International Financial Reporting Standards (IFRS). The Board’s decision to merge with the “principles-based” IFRS was a deliberate move away from the American “rules-based” GAAP developed by the FASB.

Starting with a draft strategic plan in April 2005, the AcSB announced that it would pursue separate strategies for public companies (PAEs – Publicly Accountable Enterprises), private businesses (NPAEs – Non-Publicly Accountable Enterprises) and not-for-profit organizations (NFPOs). For PAEs, the AcSB set an objective of converging GAAP with IFRSs by January 2011. For NPAEs, the Board announced that it would immediately begin a process of understanding their financial reporting needs. For NFPOs, they would continue to apply those elements of GAAP for profit-oriented enterprises applicable to their circumstances, and develop other standards dealing with the special circumstances.

For the latest developments in this complex process, visit the AcSB website at www.acsbcanada.org. You’ll see that May 2007 was a busy month for the Board, who posted a number of interesting documents, including:

1. Invitation to Comment and Discussion Paper on the future of financial reporting by Canadian private enterprises (NPAEs)
2. Implementation Plan for Incorporating International Financial Reporting Standards into Canadian GAAP, which includes a comparison of IFRSs and Canadian standards as of March 31, 2007, as well as the AcSB's expectations as to which IFRSs are likely to be adopted in Canada before the changeover to IFRSs for PAEs
3. Implications of Moving to IFRSs for Existing Canada/US GAAP Differences, an updated document providing information about the extent to which the move to IFRSs will reduce or increase conflicts with US GAAP

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If you accept all of Facebook’s default settings, you are really putting yourself “out there” for everyone to see. All the personal information you enter, and every photograph you upload, is available without limitation.

However, there is a way to configure privacy settings in Facebook, and the Office of the Information and Privacy Commissioner of Ontario has recently published a useful, one-page set of instructions on how to do it.

Click here for your copy.

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Over the years, there have been many discussions between the provincial and federal governments regarding responsibility for education, healthcare, natural resources and the environment.

However, as they look to the future, governments are realizing that they need improved collaboration in order to resolve many of the challenges that they are facing, including escalating healthcare costs, aging population, the impacts of global warming, as well as aging infrastructure.

As Provinces in Transition: Tackling Canada’s toughest policy and management challenges, a new report from Deloitte, makes clear, Canada’s provinces face significant demands from their citizens to deliver more services, more efficiently. As the Foreword to the report states: “The provinces are at the frontline for many of the services that we as Canadians have grown to expect…[citizen] expectations continue to grow, even in the fact of obvious resource constraints.”

But the Deloitte study treats this daunting challenge as an opportunity for provinces to develop new models of governance—new ways of conducting business, new organizational structures, operating systems and service delivery models.

The report looks at a broad range of policy challenges that provincial governments face. It offers reform ideas and shares examples of winning strategies that have been already been put in place across the country. It concludes with a strong call to action. “The status quo is not sustainable and therefore not an option.”

For a link to a Deloitte press release announcing the study and a link to the thought-provoking report itself, click here.

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In PolicyPro Bulletin Vol. 2, Issue 3, we told you the story of how electronic health records containing identifiable personal information went missing when the laptop of a health researcher was stolen.

At the time, Ann Cavoukian, the Ontario Privacy Commissioner, issued a strong order to the Hospital for Sick Children, ordering it to develop policies to prevent the removal of health records with identifiable personal information from the hospital, or if they must be removed, to encrypt the information. She also ordered the hospital to develop a policy covering all “endpoint” electronic devices (including desktop and portable computers, as well as PDAs) that mandated that all personal health records stored on these devices be “de-identified” (i.e., stripped of data that can connect it to an individual) or encrypted.

This order has now been followed up with a Fact Sheet that is an excellent primer on effective password protection and the various alternative approaches to encryption, including:

• Whole disk encryption
• Virtual disk encryption
• Folder or Directory encryption
• Device encryption, and
• Enterprise encryption.

It also includes a very useful encryption checklist that could be incorporated into your company’s policy.

Speaking of policies, Information Technology PolicyPro contains numerous model policies and expert analysis dealing with data protection, physical and systems security, and network security. For more information, click here.

For a link to the Privacy Commissioner’s Fact Sheet, click here.

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About the PolicyPro Bulletin

Editor: Colin Braithwaite, Managing Editor – PolicyPro.

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PolicyPro Bulletin is a complimentary service published by First Reference Inc. and is sent to you monthly. Each issue of the PolicyPro Bulletin provides headlines and summaries of news that affects internal controls and policies in Canada.

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PolicyPro Bulletin ISSN: 1718-5866 Copyright ©2007, First Reference Inc., All Rights Reserved.