Peter Norwood, FCA

Transcription

Peter Norwood, FCA

September 2010
Peter Norwood, FCA
Your 2010/2011 president
On the Cover
In this issue
Peter Norwood, FCA, brings a
passion for education to the
ICABC presidency + meet your
2010/2011 Council
Supporting good public policy
CPD deadline: Are you ready?
Update on CA training in industry
Residency status of foreign affiliates
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contents
On the Cover
4Notes from the CEO
Supporting good public policy
6
For the Profession
Furthering the profession’s
growth
20 Tax Traps & Tips
8
Residency – mind and
management
22 PD News
Meet Your New
President
Fall PD highlights
24 Plugged In
News for and about members
+ Council 2010/2011
& students
ember announcements
M
A
GM minutes
P
RL notice
I CABC Social Networking
Group event
P
hotos from the Member
Recognition dinner
N
ominate a peer for
Fellowship
12
CPD Deadline –
Are You Ready?
+ How Member Services
can help you meet the
requirements
34 Ethical Dilemmas
16
The perils of blind faith
Update on CA Training
Offices in Industry
Four EEO CATOs in industry
weigh in on the experience
so far + CASB launches new
portal for results release
10%
Cert no. SCS-COC-000648
September 2010 ica.bc.ca
3
September 2010, No.489
Published eight times annually by the
Institute of Chartered Accountants
of British Columbia.
Editor
Michelle McRae
Supporting good
public policy
Design
Blindfolio Design
604-761-9212
Advertising
Advertising In Print
Phone: 604-681-1811
Fax: 604-681-0456
Senior Director of External Affairs
Lesley MacGregor
Institute Council
Peter R. Norwood, FCA
President
Notes from the CEO
Lenard F. Boggio, FCA
1st Vice-President
Gordon Holloway, FCA
2nd Vice-President
Michael Macdonell, CA
Treasurer
Olin Anton, CA
John (Jack) Arnold, CA
Linda Lee Brougham, CA
Kyman Chan, CA
Karen Christiansen, CA
John Crawford, CA
Andrew (Sandy) Hilton, CA
David Hughes
Sheila Nelson, CA
John Sims, FCA
Kenneth Tung
Praveen Vohora, CA
Eric Watt, CA
Chief Executive Officer
Richard Rees, FCA
Beyond Numbers is printed in British Columbia and
mailed eight times annually to more than 8,300
chartered accountants and more than 1,500 CA students
in public practice, industry, education, and government
service throughout BC, Canada, and other countries.
Beyond Numbers’ editorial and business offices
are located at:
Suite 500, One Bentall Centre, 505 Burrard St., Box 22
Vancouver, BC V7X 1M4
Phone: 604-681-3264
Toll-free in BC: 1-800-663-2677
Fax: 604-681-1523
Internet: www.ica.bc.ca
Opinions expressed are not necessarily
endorsed by the Institute.
Beyond Numbers supports the CA profession in BC
by sharing news from the Institute and news about
members, by sharing viewpoints on issues of specific
interest to members, and by promoting member
involvement in Institute activities.
For the past eight years, the Institute and other leading business
and industry associations have called on the provincial government to
harmonize the provincial sales tax with the GST. Why? Because it’s smart tax
policy. In our annual budget submissions, we have detailed the benefits that a
harmonized sales tax (HST) would bring to our tax system and our economy.
So last summer, when the government announced its intention to dismantle the
antiquated provincial sales tax and replace it with the HST, the Institute
applauded.
Since that time, there has been considerable fallout. Over the past several
months, it has been impossible to avoid the controversy and public
dissatisfaction surrounding the implementation of the HST. In fact, this has
arguably become the most politicized public policy initiative in recent memory.
Fuelling the flames, the anti-HST initiative has allowed for a one-sided and often
misleading discussion that focused on the circumstances surrounding the
introduction of the new tax, rather than on the pros and cons of an HST tax
regime. As a result, there is a chance that the proverbial baby is about to get
thrown out with the bathwater.
For this reason, the Institute has joined the Smart Tax Alliance (STA), a group
comprised of more than 30 organizations, representing over 800,000 workers
in BC. Over the coming months, the STA will actively advocate for the HST to
better inform British Columbians about this crucial tax change, and explain why
it is vital to BC’s long-term economic well-being.
As I’ve stated previously, good public policy does not always equal good
politics, and the HST has gotten caught up in the politics. I’m sure many of you,
like me, have had some uncomfortable moments over the past few months, as
people have questioned not only the merit of the new tax, but also the
Institute’s support of this policy. But our support must not waiver if we want the
government to follow through on its commitment. Equally important is the need
to better inform the public about how the HST can spur capital investment and
create jobs. A strong economy will benefit everyone, in part by paying for the
public services on which we all rely.
I look forward to your comments on this and other issues during the upcoming
President’s Tour.
Publications Mail Agreement No: 40062742
—Richard Rees, FCA
4
ica.bc.ca September 2010
The perfect
CA for your
business is
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Learn how you can join these industry
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Visit www.catoadvantage.ca
The Chartered Accountant designation has always
attracted bright young business minds. Until
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firm. In today’s world – where over 60% of CAs
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Decisions matter.
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Enbridge Gas Distribution Inc.
George Weston Limited
Government of New Brunswick – Office of the Comptroller
Inmet Mining
Insurance Corporation of British Columbia (ICBC)
Investors Group Inc.
J.D. Irving, Limited
Loblaw Companies Limited
Manulife Financial
Matson, Driscoll & Damico Ltd.
Navigant Consulting
Nexen
Office of the Comptroller General Newfoundland and Labrador
Office of the Comptroller General of Canada
Onex
PRA Group
Protiviti
Research In Motion (RIM)
Royal Bank of Canada
Score Media
Sobeys Inc.
TELUS
The Brick
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S e pte mbe r 2 010 i ca.bc.ca
5
For the Profession
Matching scholarships program creates win/win scenario
Furthering the
Profession’s Growth
By Amy Lam, CA
Senior Director of Member
Services
T
his month’s magazine features interviews with four expanded experience
opportunity (EEO) CA training offices
(CATOs) in industry (see page 16). These EEO
CATOs are helping to further the growth of the
CA profession by providing a broader range of
training opportunities for prospective CAs. Furthering the profession’s growth in this manner
will help us maintain the CA profession’s prominence in the marketplace.
The call is out to recruit more organizations in
the corporate and public sector, and also to further expand the EEO program in public practice.
But there are other ways in which members and
firms can help the profession thrive, including
participating in the matching scholarship program of the CA Education Foundation (CAEF).
The CAEF is a registered charity established by the ICABC in 1990 to support the endeavours of
current and future CAs. One of the CAEF’s most important activities is to ensure that scholarships are
available to students at every university and college in BC. To that end, the CAEF launched a matching
scholarship program in 2002, through which it matches any new funds made available to a postsecondary institution by a CA firm or association.
The matching scholarship program is designed to benefit educational institutions and firms/associations
alike. Firms/associations benefit by getting the opportunity to:
•Name the scholarship they help create;
•Encourage talented candidates to join the CA profession;
•Participate in the educational institution’s annual presentation ceremonies;
•Experience increased visibility through scholarship announcements in local media and
Beyond Numbers;
•Have their name listed on the CAEF website; and,
•Receive the tax deduction resulting from the donation.
Over 30 scholarships are currently available each year, and they’re administered either directly by the
universities or by the CAEF itself. Some of these scholarships help students with financial need; others
recognize academic excellence and/or leadership; all go to students who’ve indicated their intentions to
become CAs.
Four of these scholarships were created through the matching scholarship program, thanks to the
involvement of the Kelowna CA Association, the Fraser Valley CA Association, Chan Foucher
Lefebvre LLP, and Bursey Buryn Quiring Chartered Accountants. We thank them for participating in
the program, and we encourage other firms and associations to become involved!
More info
Please visit the CA Education Foundation’s website at www.caef.bc.ca or contact Amy Lam, CA, the
ICABC’s senior director of Member Services and staff representative for the CAEF, at [email protected]
for more information about the matching scholarship program.
Furthering the profession through branding
Look for new CA ads on television and radio in late September
The national branding of CAs as critical decision-makers continues with a new ad campaign being launched at the end
of September. The new television, radio, print, and billboard ads have been developed to be both challenging and
entertaining, while reinforcing the notion that CAs help you make better decisions. The campaign will run from October
2010 through March 2011 in key markets across Canada.
While the general public will not start seeing the CA profession’s new ad campaign until the official launch, members will
be able to get a sneak peek. An “invitation” email from the CICA will be sent to you in the next couple of weeks, with
details on how to view the ads. More information about the launch will also be provided in the October 2010 issue of
CAmagazine.
6
Helping future CAs
Have you ever wondered how you could help students who are interested in becoming members of our proud
profession? Consider donating to the CA Education Foundation (CAEF).
The CAEF is a registered charity established by the BC Institute of CAs to support the endeavours of current and
future CAs. One of the Foundation’s important activities is to ensure that scholarships are available to students at
every university and college in BC. Currently there are more than 30 scholarships available each year, all of which go
to students who’ve indicated their intentions to become CAs.
There are different ways to donate:
• General donations – Mail, fax, or drop off a donation at the ICABC’s offices in downtown Vancouver.
• Planned giving – Include the CAEF in your will.
• Giving in memoriam – Make a gift in honour of a colleague or family member.
• Matching Scholarship Program for CA firms and associations – Participate in the CAEF’s matching program.
Please visit the CA Education Foundation’s website at www.caef.bc.ca for more information.
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7
On the Cover
M
eet Your New President:
Peter Norwood, FCA
By Michelle McRae, Editor
P
eter Norwood’s soft-spoken, laid-back
demeanour belies the fact that he’s very
driven—particularly in terms of his
commitment to education and the CA profession. Focused and ready to lead the Institute, the
full-time educator brings a unique perspective to
the role of ICABC president.
“I think it’s important to have diversity in the
leadership of the Institute,” Peter says. “Our
members don’t all work in the same sector or
come from the same backgrounds, so it’s good
to have different perspectives on Council.”
Peter’s own foray into the world of accounting
happened in two stages. Born and raised in
Edmonton, he attended the University of Alberta,
where he completed a commerce degree in
1974. That same year, he accepted an articling
position with a local CA firm.
“I knew I wanted a career in business, and the
father of a good friend was a CA, which gave me
some insight into the profession,” he says. “Plus,
I liked the fact that the designation seemed to
guarantee job security. But at that point, I wasn’t
sure that the CA profession was right for me.
And I knew I wanted to go back to university.”
So when word came of a lucrative job possibility
in BC, Peter had a big decision to make.
“A friend of mine was working for a contractor
on the Mica Dam project north of Revelstoke,
and he told me they needed someone to handle
their purchasing,” he recounts. “The job paid
substantially more than an articling position, so
it meant that I’d be able to save up for school.”
With that goal in mind, Peter quit his articles
in April of 1975 and moved to Mica Creek,
where he worked through the summer of 1976.
“It was the best decision I ever made,” he says.
“Not only was I able to save up for university,
but I also met my wife Helen while I was there.”
(Originally from Manitoba, Helen was working
for BC Hydro in administrative services at
the time. She retired from BC Hydro this
summer, after working on and off for the Crown
8
makes a difference in terms of my effectiveness
as an instructor.”
In 1996, Peter began taking on administrative
duties at Langara as well. From 1996 to 2001,
he served as the coordinator of its Accounting
Program, and from 1997 to 2003, he served as a
member of the College Foundation.
In 2001, Langara’s Accounting Program became
the “Financial Management Department,” and
Peter took the helm as chair. While chairing
the department for the next three years, he
successfully negotiated an agreement with the
CMABC to deliver the CMA FastTrack program
at the College. He also served as part of a team
proposing to expand the department’s diploma
program into a degree-granting program; this goal
was reached in 2006, with the BBA becoming a
reality at Langara.
That same year, the College’s various business
faculties were amalgamated into what is now the
Langara School of Management. Peter has
served as chair of the School since its inception.
In addition to his teaching duties, he is
responsible for overseeing the administration
of all business-related degrees and diplomas at
Langara; this includes curriculum review, scheduling, budgeting, and student counselling.
“We’ve seen a nice, steady growth in the
School over the past four years,” he says. “In the
last two years alone, the School has doubled in
size.”
In addition to his ongoing contributions to
Langara and the Sauder School at UBC, Peter
has long been contributing to CA education
through volunteerism in the profession at the
national and provincial levels. From 1997 to
2002, for example, he was a member of the
CICA’s board of evaluators. It was a time of
“I hadn’t really ever thought about teaching,”
corporation for approximately 35 years.)
he admits, “but it sounded like an interesting
In 1976, Peter moved to Ontario to pursue an
opportunity.”
MBA at the University of Western Ontario
Peter began teaching part-time for the SCA in
(now the Richard Ivey School of Business).
1981. It proved to be a natural fit, and he carried
“It was the best MBA program at the time, and
on teaching even after leaving public practice in
being a part of it was a great experience,” he says.
1985 to work in industry. His work in industry
“It was a general program, but I was focused
included a role as assistant to the director of
on finance and management. I wanted to better
finance for Molson Breweries.
understand the management side of things
“I loved it,” he says of the job. “It had a
because I was thinking about pursuing a career
marketing aspect that I found really interesting.
in consulting.”
But when Molson merged with Carling O’Keefe
Peter earned his masters degree in 1978 (he
in 1990, they announced that they planned
and Helen were married that same year), and
to consolidate the accounting departments to
soon received job offers from several consulting
Toronto. And Helen and I didn’t want to move
firms. But one question kept coming up.
back to Ontario.”
“People kept asking me why I hadn’t finished
So Peter stepped down from Molson, and
the CA program,” he remembers, chuckling. “I
joined the Vancouver law firm Ladner Downs as
figured I should clear the blemish off my resume
controller. He left Ladner Downs after just one
and earn my CA designation. Besides—I quite
year when the opportunity arose to serve as
liked accounting.”
director of Education Services for the Society of
After interviewing with several CA firms, Peter
Management Accountants of BC (CMABC). As
accepted an offer from Deloitte & Touche LLP
his first full-time position in education, it proved
(then Deloitte Haskins & Sells) in June 1978. It
to be a turning point in his career.
was the firm that most supported his desire to
He continued to teach part-time while
head west.
working at the CMABC—teaching CA students
“By then, Helen and I knew we wanted to move
in the SCA and CMA students in the CMA
back to Western Canada,” he explains, “and
program—and made the leap to a full-time
Deloitte supported the idea of me relocating
teaching position in 1994, after receiving an
before I’d even earned my designation.”
offer from Langara College. In 1995, Peter also
The couple subsequently moved to Vancouver,
became a sessional instructor in the Diploma
BC, where Peter completed his articles in 1981.
Accounting Program at the Sauder School of
Soon after earning his designation, Peter was
Business at the University of BC. He continues
asked if he’d consider teaching. In 1980, Dr.
to teach at both institutions.
Don Carter, FCA—then head of the School of
“I never really dreamed of moving up the
Chartered Accountancy (SCA), and later the VP
ladder in business to become a partner of a big
of the CA School of Business—asked CA firms
firm,” he says. “I really enjoy education. I like
to recommend teachers for the first year of the
10.OBRTurnbullAd1A 1/22/10 2:15 PM Page 1
teaching, and I like the students—I think that
program. Peter’s was one of the names put forward.
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9
great transition for the CA program.
“We were transitioning from the old ‘UFE’
exam to the new competency-based approach at
that time,” he explains. “The board played an
extensive and important role in developing this
evaluation process.”
From 2006 to 2009, Peter participated in
another pivotal transition for CA education—
this time as a key contributor in the strategic
planning of the CA School of Business (CASB),
where he once again worked alongside Don
Carter. Today, Peter continues to serve on
CASB’s board of directors. In addition, he
currently serves as chair of the board of governors of the Chartered Accountants’ Education
Foundation (CAEF), having previously served on
the CAEF’s Accounting Educators’ Symposium
Committee.
Peter is also a former member of the ICABC’s
PD and PD Management Program committees.
In addition, he is the co-author of a university
accounting textbook, which is currently in its
eighth edition.
He became involved with the ICABC Council
in 2005, on the urging—once again—of Don
Carter.
“Don wanted to ensure that there would
9/9/2009 1:56:57
continue todap_beyondnumbers_sep09.eps
be an academic on Council
after PM
10
Johan de Rooy [FCA] stepped down from his
term,” Peter says. “I’m really glad he encouraged
me to get involved.”
Not surprisingly, as he contemplates Council’s
goals for the coming year, Peter has education
on his mind.
“A lot of what Council focuses on depends on
the national agenda,” he says. “It just so happens
that education and training are currently on
everyone’s radar. There’s definitely a push to
create more CA training offices with expanded
experience opportunities. In recent years, we’ve
had substantially more qualified candidates than
training positions in BC, so it’s obvious that
more training opportunities are needed. And I
think we’re on the right track.
“It’s hard to imagine what you can accomplish
in a year, but I’m optimistic,” he adds. “We have
a progressive, engaged Council that wants to
keep the current momentum going.”
When not on campus or at the Institute’s
offices, Peter’s favourite pastimes are golfing
and ice hockey. An avid hockey player since
childhood, Peter has been a member of the
Greyhawks hockey team in Steveston for the
past 15 years. He also coached hockey with the
Richmond Minor Hockey Association when his
two sons were growing up, and served on the
Association’s board. He and Helen’s eldest
son Chris (28) has a commerce degree with a
marketing focus from the Sauder School at
UBC, and currently works in artist management
for Nettwerk Music Group in Vancouver;
their youngest son Ryan (25) has a philosophy
degree from Mount Allison University in New
Brunswick, and is heading back to Korea this
month to teach English, having taught there
last year.
Peter never tried to steer his sons into the CA
profession, but that’s only because he wanted
them to choose for themselves. He has no regrets
about his own career path.
“Finishing the CA program was the best career
decision I ever made—second only to taking
that job in Mica Creek,” he says. “I’m very aware
of what being a member of the CA profession
has given me. That’s why I think it’s so important give back.” Peter was elected to the ICABC Fellowship in
2009. He is also a Fellow Certified Management
Accountant.
Photography
Cover photo by Kent Kallberg of Kent Kallberg
Studios Ltd. in Vancouver.
2010/2011
ICABC Council
Peter Norwood, FCA
Lenard Boggio, FCA
Gordon Holloway, FCA
Michael Macdonell, CA
Olin Anton
Jack Arnold, CA
President
Langara College
Vancouver
1st Vice-President
PricewaterhouseCoopers LLP
Vancouver
2nd Vice-President
KPMG LLP
Abbotsford
Treasurer
Office of the Auditor General
Victoria
Deloitte & Touche LLP
Vancouver
MacKay LLP
Surrey
Linda Lee
Brougham, CA
Kyman Chan, CA
Karen Christiansen, CA
John Crawford, CA
Meyers Norris Penny LLP
Kelowna
Pacific Blue Cross
Burnaby
Andrew (Sandy)
Hilton, CA
David Hughes
Hayes Stewart Little & Co.
Victoria
Sheila Nelson, CA
John Sims, FCA
Kenneth Tung
Praveen Vohora, CA
Eric Watt, CA
Chan Foucher LeFebvre LLP
Prince George
Manning Elliott LLP
Vancouver
Public Representative
Richmond
Vohora & Company
Surrey/Prince Rupert
KPMG LLP
Vancouver
LL Brougham Inc., CA
Victoria
UBC Okanagan
Kelowna
Public Representative
Surrey
Al McNair’s term as a public representative expired on April 30, 2010, and the Institute is currently awaiting the government’s appointment of a new public
representative to fill the vacancy.
Photography
Photos of Peter Norwood and John Sims by Kent Kallberg of Kent Kallberg Studios Ltd.
Photo of Linda Lee Brougham by Quinton Gordon.
11
CPD Status Update:
First Triennial Cycle Drawing to a Close
By Stella Lam-Leung, CA, Associate Director of Professional Development
I
n my job, I love talking to members who are
just as proud to be chartered accountants as
I am. The CA profession is prestigious not
only because candidates must pass gruelling
qualification requirements, but also because of
the high standards we must uphold once we’ve
earned the designation. And one of the most
important things we can do to uphold these
high standards—and maintain the public’s trust
and the reputation of the CA designation—is
commit to continuing professional development
(CPD).
From my discussions with members, I’ve
learned that most of you consider CPD a
given. You’ve told me you see it as an investment
in your career and in your future, and that you
expect other CAs to keep up with CPD as well,
to ensure the continuing pre-eminence of the
CA designation. As one of you told me: “It’s
just part of the privilege of being able to call
ourselves CAs.”
So as the end of the first triennial cycle under
the international education standard nears,
where do we all stand when it comes to meeting
the more rigorous CPD requirements? And how
can the Institute help?
12
First, a recap:
In 2008, the CPD requirements for members of the BC Institute were revised to meet the guidelines
set by the International Federation of Accountants (IFAC). These guidelines require members to
complete at least 120 hours of CPD in each triennial cycle, and 20 hours annually. The IFAC standard
is the minimum level of CPD commitment expected of members, irrespective of whether they are
involved in traditional accounting roles or otherwise. The increased requirements are timely given the
rapid pace of change in today’s business environment.
So far, so good… but time to check in
The CPD activities reported by BC members for 2008 and 2009 indicate that almost all members are
actually undertaking much more than the minimum level required. Moreover, the vast majority of
members are ahead of schedule in meeting the minimum triennial requirements, with few leaving the
balance of the triennial requirements to the last year in the cycle.
This data is very encouraging. Still, given that 2010 marks the final year of our first triennial cycle
under the IFAC standard, and that the deadline to meet the more rigorous requirements of this cycle
is only a few months away (December 31, 2010), now is a good time for all members to review how
much CPD they’ve reported to date. Doing so is simple: You can check your CPD reporting history
by logging into our CPD Online Reporting System at www.ica.bc.ca/secure.
Recognizing that CPD needs vary
We know that CPD needs vary from CA to CA. Accordingly, the spirit of the CPD program is to
let members assess their own CPD needs, and determine how best to meet them. Members have the
freedom to choose the educational options best suited to their needs—whether these be formal
education programs, one-day or multi-day seminars, or exchanges of information in technical discussion
groups (including groups established by professional/industry organizations, created in-house at CAs’
workplaces, or comprised of peers with similar interests in the business community). In other words,
CPD does not have to be taken through the Institute; nor does it have to consist solely of accounting,
assurance, or tax courses.
More rigorous, but also more
flexible
Although BC’s CPD requirements became more
rigorous in 2008, the program itself actually
becamemoreflexible.Priorto2008,thenumber
of creditable hours was limited according to
certain categories; for example, a maximum of
25 CPD hours could be earned at technical
conferences, and a maximum of 10 hours could
come from unverifiable sources. In 2008, these
limits were eliminated, which means that
memberscannowtakefullcreditforanyCPD
hours they complete, as long as at least half of
the minimum requirements are from verifiable
sources. IFAC defines “verifiable CPD” as any
learningactivitythatcanbeverifiedobjectively
by a competent source.
Because of the latitude inherent in the CPD
program, the onus is on members to ensure that
their learning activities are relevant to their professional roles and of sufficiently high quality.
Furthermore, members are responsible to retain
appropriate evidence to demonstrate their
compliancewiththeCPDrequirements.
Recent changes to CPD
program signal exemptions
for some CAs
a declaration form to the Institute confirming their eligibility for the CPD exemption. Note: This
exemption applies in BC only—BC members who belong to other provincial CA institutes must check
withtheseotherinstitutestomakesuretheymeetalloftheirrespectiveCPDobligations.
To access full details on exemption criteria and the declaration form, visit our website at
www.ica.bc.ca/cpd.
The role of the Professional Development Review
Committee
The Professional Development Review Committee (PDRC) is comprised of volunteer CAs. The PDRC
advisesCouncilonpolicymattersrelatingtotheCPDprogram;monitorsandensuresthatmembers
comply with the CPD Bylaws and Bylaw Regulations; and reviews and makes decisions about
discretionarymatterspertainingtoCPDexemptionsinunusualorextenuatingcircumstances.
Any member who believes that they have a valid reason for a reduction in (or exemption from) the
minimumCPDrequirementmaysubmitawrittenrequesttothePDRCforconsideration.ThePDRC
reviews each request on a confidential basis, and bases its determination on the information submitted.
Note: Members who submit a request related to a medical condition must attach a letter from their
medicalpractitioner.MemberswhowillnotbeabletomeettheirCPDobligationsforwhateverreason
butdonotqualifyforareductionorexemptionshouldsubmitawrittenrequesttothePDRC,stating
their reasons and their plans to restore compliance.
Helping you meet your CPD requirements
The ICABC and the CICA have developed a number of tools to help you meet and report your
CPDrequirements,someofwhicharedetailedonpage14.Ifyouhaveanyquestionsaboutthesetools
orabouttheCPDprogramorcompliancewithrequirements,[email protected]
or contact Lisa Murray at [email protected]’reheretohelp!
Tools to help
When the IFAC CPD standard was first adopted
in2008,allmemberswererequiredtocomply
withthenew,morerigorousCPDrequirements.
Some members subsequently informed us that
they found it challenging to meet these new
requirements,sotheProfessionalDevelopment
ReviewCommittee,alongwithagroupofactive
and retired CAs and a public representative,
reviewed our requirements within the IFAC
guidelines to ensure that we create a better
balance between reasonableness and public expectations.
As a result of this review process, the CPD
requirements for BC members in retirement
and members out of the workforce caring for
dependents—who meet certain criteria—were
recently changed. Now, members in these
categories who neither engage in the practice of
public accounting nor serve on the board of a
public company or reporting issuer may be
eligible for exemption from the minimum
CPDrequirementsiftheirgross annual earnings
(a defined term) do not exceed $27,100 for
2010. Members in these categories must submit
S e pte mbe r 2010 i ca.bc.ca
13
Tools to help you earn, record, and report CPD credits
CPD offerings from the Institute and other providers
As part of the Institute’s member services program, we provide more than 500 seminar offerings each year. Topics
range from traditional accounting, assurance, and tax courses to broader, management-related courses, to conference
days for members in industry and public practitioners. To see what we’re offering this fall, visit www.icabc-pd.com,
where our fall program brochure is now available. (Highlights are provided on pages 22 and 23.)
Still, given the diversity of members’ CPD needs, we know that we can’t provide all of the courses that might be
relevant to each of you. We can, however, help you find what you’re looking for. To that end, we’ve compiled a list
of other CPD sources that might be of interest to you, and we’ve noted low-cost sources, verifiable online sources,
and sources accessible to members living outside the Vancouver area. This CPD source list is available at
www.icabc-pd.com/cpd.
Free PD
The Institute is committed to offering free PD sessions on topics of general interest whenever possible. Two free PD
executive breakfasts will be held this fall:
• October 5, 2010 - Eric Turner, CA, a principal in the CICA’s Auditing and Assurance Standards department, will
present “Breaking Open Your New CAs Handbook.”
• December 15, 2010 - Helmut Pastrick, the chief economist for Central 1 Credit Union, will present an early edition of
the “2011 Economic Forecast.”
Be sure to check monthly mailings and the website for updates about additional free PD sessions as they’re added
throughout the year.
PD on Audio – now eligible for verifiable CPD credits!
Recognizing that many of you are unable to attend PD seminars in person, we’re committed to helping you meet your
CPD needs in alternative ways. So we’re pleased to announce that “PD on Audio” (direct recordings of select live PD
seminars) will be available on our website as downloadable MP3 audio files effective September 30, 2010, along with
any corresponding handout materials (in PDF format). After listening to an entire audio presentation and successfully
completing a short quiz (also accessible via the website), you will receive a certificate of completion and be able to
claim verifiable CPD credit!
CICA webinars
Did you know that you can claim verifiable CPD credit for live and archived webinars? The CICA offers free one-hour
webinars on a variety of topics, and these webinars are archived after being broadcast live, giving you more flexibility.
All you have to do to claim verifiable CPD credit for either live or archived webinars is register for a given webinar prior
to viewing it in order to trigger the verification trail, watch the webinar, and successfully complete a quiz. You will then
receive confirmation that you’ve earned these credits.
Online CPD reporting
Online CPD reporting was designed to simplify the record-keeping and annual reporting processes for members, and
we’re pleased to say that more than half of you are now filing your annual CPD reports online.
This service enables you to log CPD activities online throughout the year, as you complete them, and retrieve your BC
Institute seminar registration information at any time. Keeping a running log of CPD activities means that at the end of
the year, all you have to do to indicate that you’ve entered all of your CPD activities is click “submit,” and the reporting
obligation will be met.
As an added bonus, if you file your 2010 CPD report by January 31, 2011, you will be entered in a draw to win a
2011/2012 Personal PD Passport, valid for six days of passport-valid seminars. Lori Wanamaker, CA, deputy minister of
the Ministry of Tourism, Culture, and the Arts in Victoria, BC, won the 2010/2011 Personal PD Passport.
“The new CPD online reporting system is simple to use and efficient,” Lori says. “My 2009 report took less than 10
minutes to complete and submit.”
Congrats on winning the 2010/2011 draw Lori!
14
Left to Right:
Chad Rutquist, Fari d a S u k h i a , C h r i s H a l s e y - B r a n d t , R o n Pa r ks , S p e n c e r C o tto n ,
Rosanne Terhart, R o b e r t D. M a c k a y, G a r y M . W. M y n e tt , H u g h G. L i v i n g s to n e,
Cheryl Shea r e r, J e ff P. M a tt h e w s , K i u G h a n a v i z c h i a n , Ve r n B l a i r.
Blair Mackay Mynett Valuations Inc.
is the leading independent business valuation and litigation support practice in British
Columbia. Our practice focus is on business valuations, mergers and acquisitions,
economic loss claims, forensic accounting and other litigation accounting matters.
We can be part of your team, providing you with the experience your clients require.
Suite 1100
1177 West Hastings Street
Vancouver, BC, V6E 4T5
Telephone: 604.687.4544
Facsimile: 604.687.4577
www.bmmvaluations.com
Vern Blair:
Rob Mackay:
Gary Mynett:
Ron Parks:
Hugh Livingstone:
604.697.5276
604.697.5201
604.697.5202
604.697.5242
604.697.5238
Spencer Cotton:
Jeff Matthews:
Cheryl Shearer:
Rosanne Terhart:
Farida Sukhia:
604.697.5212
604.697.5203
604.697.5293
604.697.5286
604.697.5271
Chris Halsey-Brandt: 604.697.5294
Kiu Ghanavizchian:
604.697.5297
Chad Rutquist:
604.697.5283
An Update on Industry CA Training Offices in BC
By Harp Bagri, CA, Manager, CA Training Office Liaison with the CA School of Business
Editor: In the September 2009 issue of Beyond
Numbers, Lara Greguric, CA, the director of
CA Training Offices for the CA School of
Business, provided an update on the status of the
CA profession’s expanded experience opportunity
(EEO) program. Since that time, the number of
CA training offices that are approved to train with
paths outside of assurance has continued to increase
across the country. This article focuses on four EEO
training offices in industry. An update on EEO
training offices in public practice will be provided
in a future issue of the magazine.
I
n my role as manager, CA Training Office
liaison with the CA School of Business
(CASB), I speak to many organizations
about the process of becoming an approved
CA training office (CATO). Many of these
organizations are in industry (whether in the
corporate or public sector), and they have a
variety of questions about becoming a CATO—
one of the more common being: “Why should
we become a CATO?” I tell them that there are
numerous benefits to becoming a training office
for future CAs, including: broadening university
graduate recruitment and developing existing staff;
meeting succession planning needs; developing
leadership and long-term fit; retaining key personnel; reducing high-cost senior-level recruitment;
and developing staff with an implicit corporate
and industry knowledge-base.
Touching base with TELUS
To further expand on these benefits, I thought it would be good to touch base with the first industry
CATO in BC: TELUS. An approved training office in BC, Alberta, and Ontario since 2007, TELUS
currently has six CA students on UFE study leave, each of whom will be writing the UFE this fall.
Three of these students are training here in BC.
I spoke with Kimberly Ziprick, CA, the manager of the CA Training Program for TELUS, to find
out how becoming a CATO has affected the organization. Here’s what she had to say:
Harp Bagri, CA: What impact has the CATO program had on TELUS so far?
Kimberly Ziprick, CA: Being part of the CATO program for the past three years has been a very
positive experience for TELUS. We’ve had the opportunity to review the rotation system that’s part of
our Financial Management Development Program [FMDP], and strengthen the learning experiences
we’re providing to our CA students and our accounting and finance professional students. We’ve
expanded the number of TELUS team members who are involved in the program by inviting more of
the CAs from across our organization to become CA counselling members and rotation managers.
Being a counselling member to a student gives our CAs a chance to give back to the CA profession.
HB: Why did TELUS choose to become a CATO in the first place?
KZ: TELUS was approached by the CICA to become a CATO in 2007. We felt it was a very valuable
and rewarding opportunity to expand our existing FMDP and attract more of the top university
graduates in the country to our organization, providing them with the practical experience to excel in
their future professional careers. Our FMDP has run at TELUS for more than 40 years, and many of
those who have been through that program are now in a broad range of management positions—from
junior to senior—within the company.
HB: Has TELUS met some of the goals it set in becoming a CATO?
KZ: Definitely. Our program has been very successful for candidates, especially because they can fill
rotations in any of the three provinces in which we have training offices. Also, when we became a
CATO, we found that CAs had unique skills that we desired, and we’re seeing some of those skills
being developed in our CA students now. These skills will benefit the organization in the long term.
HB: Do you have any advice for industry organizations that are considering
becoming CATOs?
KZ: Take a good look at your finance organization, and see where you would benefit in both the short
and long-term by employing CA students. Also, you need to give CA students a good sense of corporate
support from across the company, and enough diversity and growth so that they will stay with the
organization post-designation.
With its CA training program up and running—and successful—TELUS plans to continue training the
next generation of CAs. The organization’s ongoing support of CA students will help develop CAs in
diverse training environments and ensure that the CA designation continues to be the most highly
regarded financial designation in Canada.
16
A Q&A with three new CATOs in industry
I’m pleased to announce that there are three new industry CATOs in BC: the Insurance Corporation of British Columbia (ICBC), the British Columbia
Transit Service (BC Transit), and the Beedie Group, a private company that specializes in the design, construction, and management of industrial buildings
in Greater Vancouver.
To find out what motivated these organizations to get involved in the training of CA students, I spoke with Susan Lucas, CA, director of Risk Management
& Corporate Audit for ICBC; Michael Kohl, CA, director of Financial Reporting for BC Transit; and Randy Strandt, CA, director of Finance for the
Beedie Group.
HB: Why did your organization want to become a CA Training Office?
Susan Lucas, CA: The Insurance Corporation of BC is a complex financial organization with lots of interesting financial work. We already have a number
of CAs in the company—many in management and senior leadership roles. Everyone I’ve spoken to thought this would be a great opportunity to help grow
the CA brand and, at the same time, develop high-quality staff. We believe the program will develop CAs who bring the financial and business acumen we
need to run our business, and we have enough diversity in our company to provide a challenging learning environment for students.
Michael Kohl, CA: BC Transit has experienced significant growth in the last ten years, and along with that, an increasingly complex environment. Developing
a partnership with the ICABC and CASB will help us ensure that we continue to attract top-quality individuals to the organization while continuing to
maintain our leadership with our various provincial and municipal stakeholders. This program will help us develop our people internally, through the rigour
of the CA program, and give them opportunities to grow within the organization.
Randy Strandt, CA: Our senior accountant at the Beedie Group expressed interest in the CA program and talked to me about becoming a mentor. The
company supports career advancement and training, and we agreed to explore the option of becoming a CATO. The chief financial officer and I are proud
CAs with a knowledge of the skills, abilities, and development that come from completing the CA program. The ability to support our own staff in this
program and attract future candidates is a fantastic opportunity for us.
17
HB: What are the benefits of becoming
a CATO?
SL: This program is consistent with our objective
of providing our staff with an employment
experience where they can continually grow
and develop their careers at ICBC. CA students
joining ICBC will have the opportunity to
develop depth in assurance or reporting and
analysis, as well as experience rotations in up
to four different business areas. They will be
working with experienced managers who will
guide and challenge them. We’re committed to
putting the time and energy into making this a
rewarding experience for any student. After all,
we’ll be making an investment as an employer,
and we want our students to get the most out of
this investment.
MK: We believe that having an opportunity
to train CA students will attract outstanding
individuals interested in careers outside of
public practice. It allows us to invest in our
people and develop outstanding individuals
within the organization in what we view as a
win-win relationship for both us and the Institute.
RS: The Beedie Group has been in business for
over 50 years, and it has always been a priority
to hire and retain highly skilled and loyal staff.
Becoming a CATO will help us continue this
tradition in our finance department to develop
current staff, and also as we look forward to
attracting new talent. As our organization
continues to expand, the need for skilled people
in the areas of finance and accounting continues
to grow as well. By training CA students, we will
gain staff with increased knowledge, skills, and
ability, and at the same time build loyalty,
expertise, and skill sets in our finance department.
It means that we will be able to meet some of our
expanding needs for financial professionals
through internal development, as opposed to
constantly looking outside for CAs trained in
public practice.
HB: Can you please describe the
CATO application process?
SL: The application process was so easy, thanks
to your help! I pulled together a meeting of
colleagues who would be participating in the
program by way of having students doing
rotations in their business areas. You explained
the program (since it was new to all of us!), and
made it really easy to document our competencies and our areas of breadth and depth. It made
the application process painless.
MK: We definitely appreciated your feedback
and updates during the application process. The
attention to detail throughout was second to
none.
RS: The application process was well done,
with excellent materials in place to support the
background of CASB, the training program,
competencies, and requirements. Information
provided at each level was informative but
focused. The support and assistance from the
staff at the Institute made the process much
easier and quicker.
HB: What was the reaction of staff
members when they learned that
your organization had become an
approved CATO?
SL: Excitement! Not just from the staff, but
from management and our in-house counsel
as well (I think they might be envious of the
program). They think it’s exciting to qualify and
are already asking me about next steps.
MK: BC Transit is very excited at the opportunity.
Being designated as a training office will help
the company attract, train, and develop strong
candidates in what we view as a great opportunity for both the company and the candidates.
RS: We all felt very proud to be associated
with CASB and involved with the training of
leading finance professionals in Canada. It’s an
exciting opportunity for the company to enhance
the skills in our finance team. Innovation,
leadership, and knowledge have been keys to our
success, and our approval as a CATO is one
more step in supporting this vision.
HB: How many CA students do you
plan to have on staff by the end of
2010?
SL: Our plan is to hire two students in 2010 for
a 2011 start.
MK: We were approved for two training positions,
and we will have at least one CA student on
hand at the end of 2010.
RS: One student for 2010.
HB: Any final thoughts you’d like to
share on the CATO process?
SL: I participated in an Institute focus group a
few years ago when the idea was first floated, and
I must say, I wasn’t in favour. I worried about
what would happen to the CA brand—about
the quality of the training and consistency.
What about being limited to only one company?
But after going through the presentation and
understanding the program’s structure, those
fears dissipated. Public practice may not be for
Candidate portal improves CASB results release
In May 2010, CASB announced a new method for delivering results to students and their training offices. Beginning with the results released in July
2010, detailed student results are now available online through a “Candidate Portal” for students and “CATO Portal” for CA training offices
(CATOs).
Previously, students and their firms had to wait weeks for case feedback forms, transcripts, and academic histories to arrive in the mail. Through the
portal, students can now view their case feedback forms at the same time as they learn of their status in the module, and they can download their
transcripts and academic histories one week later.
This change marks a significant service delivery improvement from CASB, as students can use the case feedback forms to debrief the module
evaluation at an earlier date. It also considerably reduces CASB’s carbon footprint, as two copies of each multi-page result package for 4,000 students
(one copy for the student, and one for their firm) are no longer being printed and mailed from the Learning Centre in Vancouver.
18
everyone. I look at my peers at ICBC, and we all
made the choice to work in industry and love it.
We think there are others out there like us, and
we look forward to attracting those people to
our organization and to the CA program.
MK: I would encourage more private businesses
to pursue becoming a CATO in BC. The benefit
of being an approved training office will only aid
in recruiting talent who aren’t necessarily interested in public practice, but realize why the CA
designation has a long tradition of being the
foremost professional accounting designation in
Canada.
RS: Becoming a CATO certainly provides the
Beedie Group with enhanced training and
recruiting abilities for our expanding group but
it also forces us to maintain an appropriate level
of technical competence and skills in our
management team to ensure that we’re able to
train and support our staff internally.
Expanding the EEO and
CATO programs further
Establishing CA student positions in various
industry organizations gives students a choice
when it comes to the training environment for
their CA designation. This, in turn, expands the
relevance of the profession to a larger student
audience. With the help of our EEO CATOs in
industry, we will be able to provide an increased
number of training positions to help secure the
future supply of CAs. In addition, this initiative
will ensure international consistency, as our CA
peers in foreign countries have been training CA
students in industry organizations for quite
some time now.
To get more information about becoming an
approved training office, visit our website at
www.catoadvantage.ca. You can reach me at
604-488-2648 (direct) or [email protected].
Reaching a milestone
In July 2010, Kuldip Mann, CA, became the first candidate to qualify for the CA designation in BC
after training outside of public practice! He articled with PRA Group, an assurance and business advisory services provider that was approved as an industry CATO in 2008. Congratulations Kuldip!
Currently approved* CATOS in industry, across Canada:
Corporate Sector
Organization
Beedie Group
Bell Aliant
Cameco
Canadian Western Bank Enbridge Gas Distribution Inc.
George Weston Limited
Great West Life
Inmet Mining Corporation
Investors Group Inc.
JD Irving Limited
Loblaw Companies Limited
Manulife Financial
Matson, Driscoll and Damico
Morgan & Partners
Navigant Consulting
Nexen
ONEX Corporation
OZZ Electric Inc.
PRA Group
Protiviti
Research In Motion (RIM)
Royal Bank of Canada
Score Media Inc.
SMART Technologies
Sobeys
TELUS
The Brick
Union Gas
Viterra
Williams & Partners Forensic Accountants Inc.
Province(s)
BC
NS, NB
SK
AB
ON
ON
MB
ON
MB
NB
ON
ON
AB, ON
ON
ON
AB
ON
ON
BC
ON
ON
ON
ON
AB
NS
AB, BC, ON
AB
ON
SK
ON
Public Sector
Organization
Alberta Education BC Transit
Insurance Corporation of British Columbia (ICBC)
Office of the Comptroller General of Canada
Office of the Comptroller General of Newfoundland
Office of the Comptroller General of New Brunswick
Province
AB
BC
BC
ON
NL
NB
*The list of approved employers increases regularly. For the most current
listing, please visit www.CATOadvantage.ca.
19
Tax Traps & Tips
Residency –
Maintaining “Mind
and Management”
By Maggie Chan, CA
T
he concept of residency is fundamental
to the Canadian tax system. A complete
analysis is beyond the scope of this
article, so let’s focus instead on one of the key
tax-risk management considerations for many
Canadian multinationals: the residency of
foreign corporate group members.
A company’s residency status is often relevant
when determining its exposure to foreign and
domestic taxes. For example, a resident company
in Canada would be liable to corporate tax on its
worldwide income, whereas a non-resident
company’s liability would be restricted to the
income arising from Canadian activities. Therefore, Canadian companies should be monitoring
the residency of their foreign affiliates on an
ongoing basis.
Place of incorporation
For Canadian tax purposes, our current test is
a combination of place of incorporation and
central management and control.
A corporation is generally deemed to be
resident in Canada if it is incorporated in Canada.
At the same time, a company incorporated in
another jurisdiction may also be considered
resident in Canada, provided that its residency is
not resolved in favour of a country with which
Canada has entered into a tax convention, under
the terms of the relevant tax convention.
20
Central management and control
For corporate central management and control—sometimes referred to as “mind and management”—
the Canadian courts have generally followed the principles applied in De Beers Consolidated Mines
Limited v. Howe (Surveyor of Taxes), [1906] A.C. 455 (De Beers), a precedent-setting case in the United
Kingdom. The principles of the De Beers case are still applicable today with respect to corporate
residency under common law in Canada.
De Beers was incorporated in South Africa—the location of its head office and its main trading
operations. Nevertheless, the court held that the company was a resident of the UK, basing its decision
on the following factors:
•The majority of the directors and the life governors lived in England;
•The company held general meetings in South Africa, but the directors’ meetings in London were the
meetings where the real control was exercised in practically all of the important business aspects of
the company, except the mining operations.
The court concluded that the test of residency is not where the company is registered, but where it
actually keeps house and conducts its real business. The real business is carried on wherever the central
management and control actually abides, which in the De Beers case, was the UK.
This ruling was confirmed in the much later case of Unit Construction Co Ltd. v. Bullock [1959] 38
TC 712 (Unit Construction). In this case, three wholly owned subsidiary companies were incorporated
in Kenya. By their articles of association, powers of management were vested in the directors who were
located in Kenya and did not hold meetings in the UK. However, these management powers were not,
in fact, exercised by the local directors, but instead by the board of directors of the parent company in
the UK, which effectively made all the decisions. This resulted in the subsidiaries being held as residents
of the UK.
The decisions in both the De Beers and Unit Construction cases make it clear that the place of central
management and control is primarily a question of fact. Both cases also demonstrate that it is the
highest level of control of the business that counts. That control may be exercised by the board of
directors in accordance with the articles of the company, as in De Beers; or the control may be exercised
by some other person—for example, a parent company or individual shareholder who has, in fact,
assumed management and control of the business, as in the Unit Construction case.
On balance, more recent jurisprudence continues to support the notions set out in the original UK
decisions.
2008 Update to the OECD Model Tax Convention
Sometimes a corporation can be resident in two countries at the same time under the respective
domestic laws of each country. Where a corporation is resident in two countries, a tax convention
between those countries often resolves residency in favour of the country wherein the place of effective
management resides.
In July 2008, the council of the Organization for Economic Cooperation and Development (OECD)1
approved the recommendations of the 2008 Update to the OECD Model Tax Convention; these
recommendations included a technical change to the concept of “place of effective management.” The
text of paragraph 24 of the 2005 edition of the Model Tax Convention offered guidance to tax authorities
and taxpayers regarding the term “place of effective management,” providing that: “The place of
effective management will ordinarily be the place where the most senior person or group of persons (for
example a board of directors) makes its decisions, the place where the actions to be taken by the entity
as a whole are determined; however, no definitive rule can be given…” Pursuant to the approval of the
2008 Update recommendations, this sentence has been deleted. An alternative is now offered in
paragraph 24.1, under which countries may wish to resolve cases of dual residence through a competent
authority on a case-by-case basis.
Factors such as where the meetings of the board of directors are held and where the chief executive
officer and other senior executives usually carry on their activities would be taken into consideration by
the competent authorities to determine the residency of the corporation.
While the meeting location of the board of directors is still relevant, its hierarchy of importance as a
factor in determining residency may be different under this new approach. The removal of a hierarchical
test further complicates the process of determining where the real central management and control is
located.
2011
2011
Corporate residency tips
The residency of the shareholders and the fact that they elect the directors should not be relevant in
determining residency; nor should it impact corporate residency as long as the directors make the major
decisions. However, care must be exercised if there is to be a shareholders’ agreement under the terms
of which any of the powers will be taken away from the directors and given to the shareholders.
As residency is a question of fact, companies should pay attention and monitor the residency of the
foreign subsidiary’s directors. In addition, to ensure non-residency, it is advisable that certain of the
foreign subsidiary’s activities/administrative details are conducted/exist outside of Canada. These
include:
•Meetings of the board of directors;
•The signing of legal and business documents;
•Corporate banking;
•The address and telephone numbers of the head office;
•Accounting and bookkeeping; and
•The residency of the directors and people with signing, contracting, and decision-making authority.
604-688-5100
604-738-7134
Ensuring due diligence
Corporate residency is a key consideration in international tax planning. The residency of a Canadian
company’s foreign affiliate will be relevant in determining whether or not the affiliate is subject to tax
in Canada, and whether or not earnings of the affiliate will be eligible for exempt surplus treatment.
The exempt surplus treatment would allow the repatriation of dividends to Canada, free of Canadian
tax.2 As such, due diligence must be exercised to ensure that mind and management is maintained,
where intended.
Maggie Chan, CGA, is a tax manager with the Mergers and Acquisition team of Deloitte & Touche LLP
in Vancouver. Albert Baker, FCA, is a partner in Deloitte’s International Tax Services group.
www.oecd.org
To be eligible for the exempt surplus treatment, the foreign affiliate must be resident in the foreign
jurisdiction for the purposes of the relevant tax treaty and under common law principles.
1
2
1275 West 6th Avenue, Suite 300
Va n c o u v e r, B . C . V 6 H 1 A 6
w w w. m o x o n p e r s o n n e l . c o m
PD News
the new Canadian auditing standards (CAS) for
the first time.
Oct 5, 7:30-9:30am, Vancouver
Economic Outlook
This session will provide an overview of current
and quickly evolving financial and economic
developments.
Helmut Pastrick, the chief economist for
Central 1 Credit Union, will share his perspective
on the economic outlook for the year ahead.
Dec 15, 8-9:30am, Vancouver
Note: Pre-registration is required for these free
seminars, and seating is limited, so be sure to
register early!
Stay tuned
Fall 2010
FALL PD PROGRAM
We have another great selection of courses to
choose from this year. Our fall PD program
alone offers more than 190 titles, with 370 offerings around the province. Here are some of the
highlights:
Mark Your Calendar!
PD Weeks
Kelowna
Parksville
Prince George
Surrey
Victoria
Vancouver
Nov 1-5
Nov 1-5
Oct 18-22
Oct 25-29
Nov 15-20
Nov 22-27
PD passports
Don’t forget to purchase one of
our PD Passports to enjoy incredible
savings on either classroom seminars
or PD products.
For more information, visit our website at www.icabc-pd.com or contact
the PD Department at 604-681-3264.
Free PD seminars
Breaking Open Your New CAS Handbook
This session, presented by Eric Turner, CA, of
the CICA’s Auditing and Assurance Standards
Department, will highlight areas that might
come as a surprise to practitioners who are using
22
Audit & Accounting
ASPE: A Comparison to Canadian GAAP
This seminar will help participants understand
which aspects of current practice (in all areas)
will change under the new accounting standards
for private enterprises (ASPE), and how these
changes will affect the financial statements such
enterprises.
Oct 18, 9am-5pm, Kelowna
Oct 19, 9am-5pm, Prince George
Oct 20, 9am-5pm, Vancouver
Oct 27, 9am-5pm, Surrey
Nov 1, 9am-5pm, Vancouver
Nov 2, 9am-5pm, Parksville
Nov 5, 9am-5pm, Abbotsford
Nov 9, 9am-5pm, Kamloops
Nov 17, 9am-5pm, Victoria
ASPE: The Basics
This course will help participants gain a base
level of understanding about the new accounting
standards for private enterprises (ASPE), which
are now included in Part II of the CICA
Handbook - Accounting. The primary objective
will be to help participants understand the aspects
of current accounting practice that will change
under ASPE.
Oct 22, 9am-12:30pm, Kelowna
Oct 29, 9am-12:30pm, Prince George
Nov 5, 9am-12:30pm, Surrey
Nov 5, 9am-12:30pm, Victoria
Nov 10, 9am-12:30pm, Kamloops
Nov 22, 9am-12:30pm, Vancouver
Auditing in the New CAS Environment
The new Canadian auditing standards (CAS)
will become effective for periods ending on or
after December 14, 2010. Are you ready for
the transition? Is your firm? If not, what can
you and your firm start doing now to ensure a
successful transition?
This course will give participants a solid
foundation in the practical application of CAS
in the new auditing environment. Using case
studies, participants will get an opportunity to
enhance their understanding of the standards,
and to practice applying these standards to a set
of client-specific facts.
Sep 23-24, 9am-5pm, Vancouver
Oct 21-22, 9am-5pm, Vancouver
Oct 27-28, 9am-5pm, Prince George
Nov 22-23, 9am-5pm, Vancouver
Nov 29-30, 9am-5pm, Surrey
Dec 13-14, 9am-5pm, Victoria
Practitioner’s Potluck
We’re pleased to once again offer this highly
popular conference to our public practice members.
The conference provides a forum in which
public practitioners can address issues relevant
to managing a successful public practice in BC.
It is a great opportunity for practitioners to obtain
an overview of key changes and challenges, and
to interact with and learn from peers.
The conference will feature a line-up of plenary
presentations, and participants will get to choose
their breakout sessions during the day.
Oct 26, 8:30am-5pm, Vancouver
Finance/Controllership/
Management Accounting
Due Diligence for Acquisition
This seminar will help participants plan and
execute due diligence assignments, identify key
issues and risks, and know what to look for when
undertaking business and financial reviews. The
seminar will focus on helping participants
understand the objective of the due diligence
review as part of the overall acquisition or
divestiture process.
Nov 15, 9am-5pm, Kelowna
Financing Strategies
This seminar will provide an in-depth review of
the various forms of financing used to fund
capital projects, acquisitions, or restructurings
of existing capital structures. It will review the
various forms of financing, including operating
lines, term debt, subordinated debt, and private
and public equity. The course will examine
the practical details sought by capital providers,
the issues that can arise, and how companies
should prepare themselves to execute a financing
transaction.
Improving Financial Performance for
Controllers and CFOs
Finance professionals face increasing pressure to
do things better, smarter, and cheaper. This
course will help them: improve financial performance; deal with short-term issues, such as
reducing expenses and increasing cash flows;
change internal procedures and processes to help
their businesses prosper; and understand the
changing business environment to prepare
themselves for the future.
Project Management – Tips & Traps
Project management (PM) is the organization of
resources to meet specific outcomes.
This course will provide an overview of PM,
explaining why and by whom PM should be
used. The course will address the components
of a good plan, how to organize for success,
and potential barriers. In addition, some PM
best practices will be described, and the final
wrap-up will include some advice on practical
problems associated with PM.
Oct 28, 9am-5pm, Kelowna
Management
Success – From Assessment to Achievement
Nothing of great significance will ever happen if
we stay rooted in our comfort zones and only do
“ordinary” work. We succeed when we can connect
and collaborate with others. requires some
critical skill sets and a workable plan of action.
This workshop will give you the structure,
ingredients, and insights to help you get there.
CFO’s Role in Family Business
Being a CFO in a family business brings
significant challenge and enormous personal
opportunity. Dealing with entrepreneurs and
owner-managers creates a much different
operating environment for a CFO.
This seminar will show you how best to apply
your skills to drive success for your business. It
will provide insight into how family business
differs from other business, and will give you a
chance to share your experiences with peers.
Effective Marketing Techniques to Build
Your Practice
This course is designed to get practitioners
thinking about how they can improve on what
they do today to yield far better results tomorrow.
This seminar will benefit those who do little or
no real marketing, as well as those who already
do some marketing. It will give you a range of
ideas and tips to take back to the office and use
immediately.
Taxation
Catching Up: 5 Years of Income Tax
Developments
Income tax changes and evolves over time.
Keeping up with these changes is, by necessity,
an ongoing process. Unfortunately, many
people don’t have the time or resources to stay
current and end up having to catch up on a few
years’ worth of changes at one time.
This seminar will give those who haven’t regularly taken tax update seminars an opportunity
to get up to speed on the notable income tax
developments of the past five years.
Oct 25, 9am-5pm, Victoria
Nov 9, 9am-5pm, Abbotsford
Dec 3, 9am-5pm, Kelowna
GST/HST Refresher
The application of GST/HST is often far more
complex than practitioners or businesses realize,
and the harmonization of BC and Ontario in
July 2010 further complicated this area.
The course will review several important
concepts, including: HST place of supply rules;
taxable supplies and deemed supplies; input tax
credit entitlements; and some of the more
common and important exemptions and zerorating provisions. Overlooking these complexities
can result in lost opportunities, or worse: large
tax assessments.
Oct 18, 9am-5pm, Prince George
Nov 1, 9am-5pm, Parksville
Nov 10, 9am-5pm, Kelowna
Nov 15, 9am-5pm, Victoria
Owner-Manager Compensation
Bonusing down profits of the owner-managed
business has long been the most common method
adopted by tax practitioners. While bonusing
down can decrease the integrated tax liability
arising on the corporate profits, the ownermanager still has to pay a significant portion of
the bonus to CRA. There must be a better way!
This seminar will review what’s hot and what’s
not in the area of owner-manager compensation.
Settlement Strategies in Tax Disputes
This two-hour seminar will examine various issues
pertaining to settlement strategies in tax disputes.
The session will be valuable to those who deal
with tax disputes and wish to learn about the
possible settlement strategies available to them.
Taxation of Professionals
This seminar will provide a comprehensive review
of the taxation of professional corporations,
including: the importance of consent and
subsection 56(2) of the Income Tax Act; current
integration and the small business limit; income
splitting; tax deferral; the transfer of pre-existing
investments to a professional corporation;
characterization issues (partnership and personal
service business income); strategies to maximize
entitlement to the small business limit, including
advance income tax rulings; and other tax
advantages (including corporate loss utilization,
inter-provincial tax planning, housing loans,
and IPPs), disadvantages, and challenges made
by the Canada Revenue Agency.
Oct 21, 9am-12:30pm, Vancouver
To Be or Not To Be:
The Executor – Powers, Obligations, and
Liabilities
Acting as an executor can be financially rewarding
for a CA or a CA client. However, the job can
also be onerous and fraught with complexity,
acrimony, and personal risk.
By attending this seminar, you will learn
about and examine the various stages of estate
administration—from the date of death through
to distribution, final accounting, and release.
The seminar will also provide a thorough
examination of the steps and precautions that
should be taken by executors.
PD on Audio – Now web-based
and eligible for verifiable CPD hours!
For more information, see the flyer
enclosed in this month’s mailing
or visit the PD website at
www.icabc-pd.com.
For detailed course descriptions or a complete schedule of upcoming
PD seminars, consult your fall 2010 PD brochure or visit our website at
www.icabc-pd.com. To register, call the PD department at 604-681-3264.
23
Plugged In: News for and about members & students
Announcements
Congratulations!
Kristine Bienert, CA, of the BC Utilities Commission, has been elected president
of the United Way of the Fraser Valley’s board of directors. Bienert has served
on the local United Way board for three years. Her first role was in 1999 as a
campaign chair in Edmonton. Also joining the board is Jason VanGarderen, CA,
of Meyers Norris Penny.
PricewaterhouseCoopers recently welcomed three CAs to the partnership:
Nicole Clark, CA, is a partner in Tax Services, specializing in tax accounting
services. Clark also assists clients in the technology, information, and
communication industries with tax planning, structuring, and related services.
Tim Johnston, CA, is an associate partner in Tax Services, focusing on tax
planning and compliance for domestic and international mining companies.
Sarah Marsh, CA, is an associate partner in Audit and Assurance, providing
external and internal audit services, as well as working on business advisory
projects. Marsh worked for six years in the public sector group in the UK, and
continues to specialize in government and not-for-profit organizations in
Canada.
David Devana, CA, became the chief administrative officer (CAO) for the
Municipality of North Cowichan this summer. Devana has more than 20 years of
experience in senior management positions. Prior to taking on his latest role,
Devana served as director of finance and deputy CAO for the District of Sooke.
Kevin Hiebert, CA•IT, has joined ICBC in North Vancouver as a senior functional
analyst and SAP Finance team lead in the IS Finance Services department. “After
years of ‘extreme commuting’ to the USA for several weeks each month,” he
says, “I’m glad to now work in the same city as my wife and cat.” Hiebert
continues to serve on the boards of several Vancouver-based charities, including
the Pacific Centre for Discipleship Association and the Quiring Chamber Music
Camp. He also volunteers as webmaster of the Point Grey Inter-Mennonite
Fellowship.
Bill Huxham CA, has resumed public practice and will be concentrating on
serving other chartered accountants by providing monitoring, quality assurance,
and mediation services.
Peter Leitch, FCA, has received an honorary doctor of law degree from Capilano
University in North Vancouver. Leitch is the president of North Shore Studios
and Mammoth Studios, and chairs the Motion Picture Production Industry
Association of BC. Leitch has been an advocate of Capilano University, aiding in
the movement to re-designate the school as a university and helping the new
Film and Animation Centre acquire government funding.
Susan Mehinagic, FCA, managing partner of Grant Thornton LLP in Victoria, has
been elected chair of the University of Victoria’s board of governors for a
one-year term.
24
ica.bc.ca September ’09
FVCAA Event Notice
The Fraser Valley CA Association
(FVCAA) will be hosting a
presentation entitled “Ethical War
Stories” at their meeting on
September 9, 2010. The event,
postponed from June, will be held at
the Cascade Community Centre in
Abbotsford, and will feature the
ICABC’s Director of Ethics, Chris
Utley, CA. Register online at
www.fvcaa.ca.
PRL Notice –
Cancelled Licences
Pursuant to its meeting of July 16,
2010, the Practice Review & Licensing
Committee announces that the
following firms are no longer in public
practice under these names:
Firm Name
Scott Busfield, CA
City
New Westminster
Richard G. Calkins, CA
Penticton
Notice to all BC Members –
2010 ICABC AGM draft
minutes
The 105th annual general meeting
(AGM) of the Institute of Chartered
Accountants of BC was held on June
23, 2010, at the Fairmont Hotel
Vancouver. The draft minutes of the
meeting are now available online at
www.ica.bc.ca. If you would like to
review the minutes but do not have
access to the Internet, you can
request that a hard copy of the draft
be mailed to you by contacting the
Institute office at 604-681-3264 or
1-800-663-2677 (toll free in BC).
ICABC Social Networking Group
Event Recap
By Jennifer Tokarek, CA, and Angela Semeniuk, CA
O
n May 20, 2010, the ICABC Social Networking Group hosted an exclusive evening of
networking for CAs over martinis and appetizers at one of downtown Vancouver’s hotspots:
the O Lounge at Coast Restaurant on Alberni Street. The “Martini Mingler” event was held
in support of the BC Children’s Hospital Foundation, with members invited to donate to the charity.
The Social Networking Group has been fortunate to work with exciting local venues like the O Lounge
to provide unique and memorable networking events for CAs. Members who attended the martinithemed spring networking evening were greeted at the entrance by an impressive ice sculpture into
which the ICABC logo had been hand carved. Not only was the ice sculpture a conversation piece—it
also doubled as a martini luge! Guests could choose either a “French” or a “Passionista” martini, which
then flowed through the ice luge before landing in their glass. Guests also enjoyed a variety of delicious
appetizers while mingling and getting acquainted.
We’re pleased to say that this event attracted a big crowd, as have our past events, and that we saw a
lot of new faces. More and more members from industry are becoming aware of the Group’s activities,
and their increased participation enhances the networking environment for all BC members.
Events such as these provide excellent opportunities for each of us to stay in touch with an invaluable
network of CA peers. They also provide huge opportunities for industry and public practice colleagues
to reconnect and discuss potential new business opportunities.
Angela Semeniuk, CA, and George
Kondopulos, CA, check out the martini “luge.”
September “Speed Networking” event
We hope you can join us at our “Speed Networking” event, which is being held in downtown
Vancouver on Wednesday, September 15, 2010. The outdoor event will take place, rain or shine, on
the gorgeous covered patio of the Market Restaurant in the Shangri-la hotel.
For more details about this and future events, you can reach the Group’s co-chairs by emailing us at
[email protected] or [email protected] (Angeline Zioulas, CA).
Jennifer Tokarek, CA, is the regional tax manager for TD Waterhouse Private Client Services in Western
Canada, and co-chair of the Social Networking Group. Angela Semeniuk, CA, is the manager of tax
accounting and regulatory reporting at Great Canadian Gaming Corporation in Richmond, and a member
of the Social Networking Group.
From left to right: Richard Wong, CA;
Emma Whibley, CA; John MacKenzie, CA;
and David Spicer, CA.
From left to right: Monique Van Vliet, CA;
Ingrid Morse, CA; and Steve Lux, CA.
Robyn Campbell, CA, (centre) enjoys her
first Social Networking Group event.
Organizers were gratified to see a packed
house once again.
25
Member Recognition Dinner 2010
On June 23rd, the Institute held its 10th annual Member Recognition dinner, bringing together ICABC honourees and their
family members, friends, and peers, along with Council members and Institute staff, to celebrate CA achievement. The event
took place in the Pacific Ballroom of the Fairmont Hotel Vancouver, and as always, there was a great turnout.
Photos by Kent Kallberg of Kent Kallberg Studios Ltd.
The Institute’s 2009-2010 award winners (from left to right) – Standing: Elio Luongo, FCA; John Gunn, FCA; Peter Norwood, FCA; Erfan
Kazemi, CA (Community Service); Norm Mayr, FCA; Gord Cummings, CA (Ritchie W. McCloy Award); Peter Leitch, FCA; Bud Kanke, FCA;
Dale Barkman, FCA; Ian Petrie, FCA; Ted Robinson, CA·IFA/CBV (Community Service); Bob Wiens, FCA. Seated: Leonard Zirnhelt, FCA;
Arvinder Bubber, FCA; Steve Lake, CA (Community Service); Riz Gehlen, CA (Early Achievement); Ran Clerihue, FCA (Lifetime
Achievement); Joanne Hausch, CA (Community Service); David Sinclair, FCA (Lifetime Achievement); Allan Neale, FCA; and Larry Van
Hatten, FCA. Not photographed: Scott Jeffery, CA (Early Achievement); Maria Pinelli, FCA, and John Webster, FCA (Community Service).
Not in attendance: Bob Byford, FCA; Michael Calyniuk, FCA; Gary Chan, FCA; Nadir Mohamed, FCA; John Palmer, FCA (Lifetime
Achievement); Tony Swiderski, FCA; Allan Wiekenkamp, CA (Early Achievement); and Garry Zlotnik, FCA.
Past president Doug Murphy, FCA, with
Lifetime Achievement Award winner David
Sinclair, FCA.
26
Early Achievement Award winner Riz
Gehlen, CA, with the Institute’s new
president, Peter Norwood, FCA.
Newly elected FCA Arvinder Bubber with
client and friend Tony Singh.
Community Service Award winner Joanne
Hausch, CA, with Peter Norwood, FCA.
Ritchie W. McCloy Award winner Gord
Cummings, CA, with wife Yvette Franc, CA.
Doug Murphy, FCA, with newly elected
FCA Allan Neale.
Community Service Award winner Erfan Kazemi, CA,
with wife Virginia Wigmore.
Newly elected FCA Ian Petrie with wife Carolyn.
Newly elected FCA Larry Van Hatten with wife Bev.
Newly elected FCA Leonard Zirnhelt takes the podium.
27
Peter Norwood, FCA, with Community
Service Award winner Steve Lake, CA.
Early Achievement Award winner Scott
Jeffery, CA, with wife Laura Smith, CA.
Newly elected FCA Elio Luongo with wife Rosanna.
Newly elected FCA Maria Pinelli with son Christopher, husband Paul Fletcher,
CA, and daughter Vanessa.
Lifetime Achievement Award winner Ran Clerihue, FCA, with wife
Lorraine.
28
Community Service Award winner Ted
Robinson, CA·IFA/CBV, with wife Heather.
Newly elected FCA Peter Leitch shares the evening with his
proud mother.
The ICABC
Member Recognition Program
Do you know a CA who’s gone the extra mile in the community, made an exemplary
contribution to the profession, or achieved outstanding success early in his or her
career? Acknowledge their achievements by nominating them for an ICABC award!
You can nominate a colleague for:
Fellowship (FCA)
Lifetime Achievement
The Honorary CA Designation
Early Achievement
Community Service
The Ritchie W. McCloy Award for CA Volunteerism
Nomination deadlines:
• Fellowship, Lifetime Achievement, Honorary CA: October 15, 2010
• Early Achievement: November 1, 2010
• Community Service: January 31, 2011
• Ritchie McCloy Award: January 31, 2011
Nomination forms
Forms are available on the Institute website at www.ica.bc.ca under
Member Centre/Forms and Dues/Member Recognition/Nomination Forms.
29
Nominate a Peer for
ICABC Fellowship
Call for FCA Nominations
Each year, members are asked to identify peers who have provided outstanding service to the profession
and/or brought distinction to the profession, and to nominate these individuals for election to the
Institute’s Fellowship. The Fellow Chartered Accountant (FCA) designation recognizes a CA’s
leadership and outstanding performance in at least two of the areas detailed in number three of the
official procedures below.
The FCA nomination form is available in both PDF and Word format on the Institute’s website at
www.ica.bc.ca under Member Centre>Forms>Member Recognition>Nomination Forms>Fellowship
Designation. Alternatively, you can access the form directly at www.ica.bc.ca/pdf/fca_nomination.pdf
or by contacting Sandy Parcher, manager of the Institute’s Executive Office, at [email protected] or
604-488-2602.
Nomination forms must be received at the Institute office no later than October 15, 2010.
Procedures for the Election Of Fellows
1. N
ominations for the election of Fellows shall be sought from all members of the Institute and the
FCA Nominating Committee.
2. N
ominations shall be submitted via an approved nomination form signed by a proposer and two
seconders.
3. N
ominators must demonstrate that their nominee has shown leadership, given outstanding service to
the profession, or brought distinction to the profession in the following areas:*
a) In the work of the British Columbia or another Canadian Institute;
b)In the work of an Association having objectives relating to the candidate’s chosen business or
profession;
c) In the pursuit of his/her career as an owner, employee, or as a corporate director;
d)In service (civic, community, political, or not-for-profit organizations);
e) In research, teaching, writing, or speaking on professional matters.
*Except in extraordinary circumstances, the nominee must have provided leadership and service with
distinction in more than one of these areas.
4.The fullest possible information on the nominee is to be provided, together with reasons why he/she
should be considered for Fellowship, supplemented by additional comments where necessary. To be
recognized as having brought distinction to the profession, the member must have been clearly
identified as being a Chartered Accountant while performing the activity cited. In addition, service
must have been rendered while the nominee was already a member of the Institute of Chartered
Accountants of British Columbia or another Canadian Institute. Proposers or seconders may wish to
contact the assistant, spouse, or business associate(s) of the candidate, or the candidate directly, if
additional information is required for certain sections of the form.
5. S itting members of Council, exclusive of the Institute’s First Vice-President, are not eligible to be
elected Fellows.
6.An FCA designation may be awarded posthumously only if the candidate dies after the Member
Recognition Committee recommends the awarding of his/her fellowship. An exception might be
made if an outstanding candidate dies before the next Member Recognition Committee meeting, in
circumstances where the Executive Committee refers that individual to the current Member
Recognition Committee for its consideration.
30
7. N
omination forms shall be submitted to the
Member Recognition Committee, consisting
of a minimum of five members. The Chair of
the Member Recognition Committee shall be
an FCA appointed by Council at its July
meeting, and he/she shall select his/her
Committee at his/her discretion from the
Fellowship. The Member Recognition
Committee must always include a past
president of the Institute.
8.The Chief Executive Officer should attend all
meetings as staff liaison and resource person.
9.The procedures for the election of Fellows are
to be published in the September issue of
Beyond Numbers, with a view to educating the
members on the election process and eliciting
nominations.
10.Nominations shall be sought between August
1 to October 15 inclusive each year.
11.The Chief Executive Officer shall review each
nomination form, deleting information
known to be in error, and adding information
known to be omitted. If necessary, the Chief
Executive Officer shall contact the proposer
or seconders for additional information.
12.The Committee shall perform the following
duties:
a) Review the nominations received from the
members, accept or reject them, and correct
or add to data submitted;
b)Prepare its own nominations, as deemed
necessary;
c)Ensure that all nominations have been
vetted by the Chief Executive Officer for
disciplinary matters; and
d)Present a slate of award nominees to
Council for approval. Note: Council does
not conduct individual ballots on each
candidate.
13.The Chair of the Member Recognition
Committee shall report to Council during an
in-camera session on the process undertaken
by the Committee and on the results of its
deliberations. Reviews of FCA candidates are
to include information regarding any violations of the Rules of Professional Conduct
through the disciplinary process, regardless of
when the offences occurred, except in cases
where an anonymous Determination and
Recommendation was issued more than
two years prior to the FCA review and was
accepted by the member cited.
14.All Council members shall vote on the slate
of nominees presented by the Member
Recognition Committee. At least 70% of
Council members must vote in favour of the
slate of candidates for any candidate to be
elected. If the government-appointed public
representative(s) deem(s) it appropriate to
withdraw from the voting, the withdrawal
will not represent an abstention, and Council
will be regarded as complete without his/her/
their participation.
15.An announcement regarding the successful
candidates shall be made to Council as soon
as the result is known. Those elected shall be
informed immediately. The ICABC membership and the media shall be advised of the
results of the election as soon as conveniently
possible.
16.Proposers of unsuccessful candidates shall be
advised of the candidate’s lack of success at
either the nomination stage or the election
stage (without disclosing which) by the Chair
of the Member Recognition Committee and/
or a member of this committee as delegated
by its Chair.
17.Nomination forms for those members not
elected shall, on the recommendation of the
outgoing Member Recognition Committee,
be brought forward to the incoming Committee the following year for consideration.
The outgoing Committee will forward applicable forms to the incoming Committee,
with a transmittal letter, and the incoming
Committee will be responsible for contacting
the original proposers for the purpose of
updating the information.
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18.The Member Recognition Committee shall
meet again in late spring or early summer for
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nominees for submission to the incoming
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Last revised December 2009
31
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33
Ethical Dilemmas
The Perils of Blind
Faith
By Chris Utley, CA
Director of Ethics
I
n the last few years, we’ve heard tell of a
variety of schemes and promotions, all
designed to raise money for the public flotation of one corporation or another. Often these
schemes and promotions involve resource
companies, and lately we’ve seen investment
schemes branch into the area of environmental
or “green” technologies. High rates of return are
promised, and the benefits of “getting in on the
ground floor” are touted, and time and time
again, investors readily provide cash in the hopes
of gaining quick and generous returns.
As we’ve seen rather too often, some of these
companies don’t make it to market, leaving
investors out of pocket. Unfortunately, this
happened recently to a company led by a
CA. And although unaware of some inflated
promises made to investors, this CA subsequently
found himself facing the PCEC.
The situation
Since becoming a CA in 1984, Wilson* has
spent the bulk of his career working with public
companies. In September 2005, Wilson and his
pal Donald,* a CPA, started a company based in
Hong Kong called Fresh Water Technologies
(FWT). They became the company’s directors,
with Wilson also assuming the role of CEO and
Donald assuming the role of treasurer.
The company lay dormant for one year, after
which the two partners issued a management
insider block of 275 million shares at $0.0001 HK
per share. Wilson entrusted Donald with the
responsibility of providing the relevant corporate and financial data for the preparation of
the registration statements to be filed with the
SEC in the US. He also asked Donald to help
find investors for an upcoming acquisition: eight
million shares of a company called Hydro
34
Green, a publicly listed company on both the TSX Venture Exchange and the NASDAQ Over-theCounter Pink Sheet Exchange. Hydro Green held the rights to an interesting new water purification
technology that had far-reaching applications, especially in Asia, where the provision of sanitary sewer
infrastructure was (and remains) inconsistent.
Donald made a big pitch to some high-profile Hong Kong investors, and through the fall and winter
of 2006, FWT successfully raised $15 million HK—a good portion resulting from Donald’s efforts.
Unbeknownst to Wilson, however, Donald had promised his investors that FWT would go public
within 12 months, increasing their investments ten-fold.
In March 2007, FWT entered into an agreement with Hydro Green to obtain the exclusive distribution
licence for the water purification technology. As part of this agreement, FWT paid a cash amount of
$1.5 million Cdn for 3.5 million shares of Hydro Green, and also gave 50 million shares of FWT to
Hydro Green in exchange for the rights to the technology. By December 2007, FWT had purchased
enough shares to own 15% of Hydro Green.
What happened
In March 2008, Donald realized he’d been overly optimistic in his projections, so he arranged a meeting
with some of FWT’s investors to buy some time. Wilson remained unaware of Donald’s actions.
All would soon come to light, however. By April 2008, FWT’s corporate structure had begun to
unravel—no products had been produced or distributed, investors were becoming increasingly edgy,
and the SEC approval process was bogged down. Then the market crashed.
The net result? In March 2009, Hydro Green reported to shareholders that it was out of cash, with
$2.5 million in payables. Of course, this bad news reverberated to FWT, and the party was soon over
for Wilson, Donald, and FWT’s shareholders.
Madeline* was one of these shareholders. Through Donald, she’d invested a substantial sum in both
FWT and Hydro Green; in fact, her personal stake in the former was almost 5%. Early in 2010, she
contacted the Institute, claiming that Wilson—as the CEO of FWT—was responsible for a number of
breaches; these included misfiled forms and financial reports, an arbitrary exercise of authority, poor
judgment concerning corporate acquisitions, and non-existent corporate oversight mechanisms.
A PCEC investigation was launched.
In response to Madeline’s allegations, Wilson said the filings were late—not misfiled. He said the
time lag was caused by Donald’s resignation as director and treasurer of FWT in July 2009, and by
changes the SEC had made to its filing procedures. He also pointed out that there was no statutory
regulation requiring FWT to file quarterly statements. In addition, Wilson said that FWT had
requested filing extensions from the Securities Commission, and that this had resulted in cease trade
orders being imposed on both companies. He added that the severe drop in the stock market
had worsened the share valuation. Finally, he told the PCEC that he had provided shareholders with
information, in writing, about the struggles FWT experienced in going public.
Wilson acknowledged that the market decline had sent the stock price of Hydro Green below the
private placement price, which had made taking FWT public a tenuous proposition. He also acknowledged that he’d entrusted Donald with too much responsibility, and admitted he’d been unaware of
his former partner’s representations to some of their investors.
The outcome
The PCEC considered whether Wilson had contravened Rules of Professional Conduct 201.1 (Maintenance
of the Reputation of the Profession), 202 (Integrity and Due Care), and 205 (False or Misleading
Documents & Oral Representation). In the end, the PCEC concluded that there were no grounds to
support a complaint against Wilson.
Nonetheless, there is a lesson to be learned here. Wilson genuinely planned to take FWT public, but
by relying rather blindly on his partner and friend, he found himself in the uncomfortable position of
defending his actions before a committee of public representatives and his peers as part of the discipline
process.
Comments or questions? Contact me at [email protected].
*Please note: This fictionalized account is based loosely on an actual case before the PCEC (Professional
Conduct Enquiry Committee). Names and circumstances have been changed to preserve anonymity. The
contents of this article are only intended for the general guidance of readers. The PCEC deals with each case
individually, based on its specific facts and circumstances.
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Peter Norwood, FCA

Transcription

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