| UPCOMING |
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CGA Ontario/Ivey Strategic Leadership Program - August 17 Human Resources Certificate for Accounting Professionals - August 24 |
| FEATURED BENEFIT |
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In this Issue of Practice News
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CGA Ontario's Practitioners’ Convention 2010Registration is now available for this year’s Practitioners’ Convention. It is scheduled for September 23 to 25, 2010 at the White Oaks Conference Resort & Spa at beautiful Niagara-on-the-Lake. Opening the conference is a tour of the Jackson Triggs Niagara Estate Winery enjoying their gourmet cuisine and award-winning wines. There will be a luncheon keynote address by Andrea Horwath, Leader of the Ontario New Democratic Party. We have reserved Saturday for one of our most distinguished speakers, Mark Woltersdorf, who will be reviewing the income tax developments of the past year, and addressing the five income tax issues that you have found most challenging in recent months. Also on the program are:
Complete details of all sessions and accessing the event registration section can be found online at www.cga-ontario.org. (“Event Registration” is located on the navigation bar in the members section of the website) Register now for the one learning and networking event that you must not miss, and save! Early Bird Registration Deadline: Tuesday, September 7, 2010. We look forward to seeing you there! |
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Practitioner Reminders
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Earthquake: Richmond and Delta BC |
10% min. $250,000 |
Earthquake: Ottawa Valley and Quebec |
5% min. $100,000 |
Earthquake: All other areas in BC |
5% min. $100,000 |
Earthquake: All other zones and provinces |
3% min. $50,000 |
- Valuable papers warranty exception: It is a condition of the policy that all valuable papers are kept in a locked metal filing cabinet. This condition now has an exception if electronic back-up copies are maintained.
The premium for the Basic Office package is $372. Additional/increased limits of liability are also available to compliment the Basic Office Package at an additional premium. Please visit the website at www.cga.aon.ca for further details.
Professional Liability All terms and conditions remain unchanged.
Corporate Identity Protection All terms and conditions remain unchanged.
Practitioners Assistance Program The Family Services Employee Assistance Program was introduced as a new coverage in the 2008-2009 policy term and will be available for the 2010-2011 term. It provides products and services designed to improve member work/life experience, including various types of confidential counselling services for a broad range of personal and work related issues such as:
- Personal or job stress - Relationship issues - Depression/Anxiety
- Eldercare and childcare - Addictions - Separation and divorce
- Parenting - Balance work and family - Financial and legal difficulties
Available Services Included
Confidential Counseling services
Immediate access to professional councilors available by phone 24/7 through a toll free line or face to face counseling by appointment
--Family Connexions
Services designed to address a wide range of family care issues
Other services
Legal services, financial consultation services, 24/7 teen/parent helpline, nutrition consultation services, career counselling and life coaching.
Schedule of Liability Package Premiums
Full Time Practitioners
Coverage |
Option 1 - $1,000,000 |
Option 2 - $2,000,0000 |
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2009-2010 |
2010-2011 |
2009-2010 |
2010-2011 |
|
Professional Liability |
$909.00 |
$874.00 |
$1,108.00 |
$1053.00 |
Corporate Identity Protection* |
$95.00 |
$95.00 |
$95.00 |
$95.00 |
Practitioner Assistance Program |
$15.20 |
$15.20 |
$15.20 |
$15.20 |
Sub Total |
$1,019.20 |
$979.45 |
$1,218.20 |
$1158.45 |
Program Subsidy** |
$(15.20) |
$(15.20) |
$(15.20) |
$(15.20) |
Total*** |
$1.004.00 |
$964.25 |
$1,203.00 |
$1,143.25 |
Part Time Practitioners
Coverage |
Option 1 - $1,000,000 |
Option 2 - $2,000,0000 |
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2009-2010 |
2010-2011 |
2009-2010 |
2010-2011 |
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Professional Liability |
$476.00 |
$455.00 |
$578.00 |
$545.00 |
Corporate Identity Protection* |
$47.50 |
$45.25 |
$47.50 |
$45.25 |
Practitioner Assistance Program |
$15.20 |
$15.20 |
$15.20 |
$15.20 |
Sub Total |
$538.70 |
$515.45 |
$640.70 |
$605.45 |
Program Subsidy** |
$(15.20) |
$(15.20) |
$(15.20) |
$(15.20) |
Total*** |
$523.50 |
$500.25 |
$625.50 |
$590.25 |
* Please note the Corporate Identity Protection premium is only for those firms with total annual revenue in between $1-$3,000,000. For firms with revenue in excess of $3,000,000, please refer to AON’s office for further details
** Funded by Program Reserve Fund as Loss Prevention Activity
*** Total Premium does not include Brokerage Fee
Aon Brokerage Fee
Aon’s Certificate fees remain unchanged from the expiring term:
On-Line Fee per Certificate |
$95.00 |
Mail/Fax Application Fee per Certificate |
$170.00 |
CGA service team: Toll Free: 1.866.710.5887; Fax: 1.416.868.5580; Email: CGA@aon.ca
III. No-Fee Assurance Work: Provision Extended Indefinitely
The government of Ontario has extended the no-fee audit provisions indefinitely.
Practitioners can continue to perform assurance services on a no-fee basis (no fee in cash or kind).
Regulation (4) of the Public Accounting Act, 2004 permits no fee assurance services provided the services are performed:
- by a person who is a member of a professional accounting body that administers a process for addressing public complaints against its members and who is insured against professional liability; and
- on a basis that is independent of the person for whom the services are being provided.
If you are a non-practitioner CGA providing such assurance services without reward, please ensure that you register with CGA Ontario as a volunteer so that we can provide you with free professional liability insurance.
The above does not apply to any assurance work carried out under certain federal acts, like the Canada Elections Act; such assurance work can be done by a qualified CGA, even for a fee.
We suggest that the fact that the review or the audit has been done without reward be prominently disclosed in notes to the financial statements.
Suggested sample wording: This review/audit engagement has been done without reward, strictly as permitted by section 2 of the Ontario Public Accounting Act, read with regulation 4 of the Regulations thereto. I am independent of the company/organization for whom the review engagement/audit services are being provided.
And please note that unlicensed Ontario CGAs cannot provide review engagement and/or audit services for a fee, except, as mentioned earlier, under certain federal legislation.
Interest Rates for the Third Calendar Quarter
The Canada Revenue Agency (CRA) has announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to amounts the CRA owes to individuals and corporations. These rates are calculated quarterly according to applicable legislation. The rate indicated below will be in effect from July 1, 2010 to September 30, 2010.
Income tax
- The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
- The interest rate paid to corporate taxpayers on overpayments will be 1%.
- The interest rate paid to non corporate taxpayers will be 3%.
- The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.
Other taxes
The interest rate on overdue and overpaid remittances for the following taxes will be:
Tax and Duty |
Overdue remittances |
Overpaid remittances |
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Corporate taxpayers |
Non corporate taxpayers |
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Goods and Services Tax (GST) |
5 % |
1 % |
3 % |
Harmonized Sales Tax |
5 % |
1 % |
3 % |
Air Travellers Security Charge |
5 % |
1 % |
3 % |
Excise Tax (non GST) |
5 % |
1 % |
3 % |
Excise Duty (except Brewer Licensees) |
5 % |
1 % |
3 % |
Excise Duty (Brewer Licensees) |
3 % |
N/A |
N/A |
Softwood Lumber Products Export Charge |
5 % |
1 % |
3 % |
For information on the prescribed interest rates of other calendar quarters, go to the www.cra.gc.ca/interestrates web page.
CRA announces sample logbook policy for automobile expenses
CRA recently announced a new policy regarding the type of records that must be kept to substantiate a deduction for vehicle expenses, or GST/HST input tax credits, where a vehicle is used partly for business and partly for personal purposes. Previously, CRA required a detailed record to be kept for each vehicle of all kilometres driven throughout the year. The new method involves establishing business use of a vehicle in a base year, then keeping detailed records for only a three-month period in each subsequent year and extrapolating the results (provided subsequent years' business usage aligns broadly with usage in the base year).
The record retention period for the base year logbook is six years from the end of the tax year for which it is last used to establish business usage of a vehicle, rather than six years from the end of the tax year for which it was originally maintained.
New guide for accounting standards for private enterprises released
The CICA’s Guide to Accounting Standards for Private Enterprises in Canada is now available for free download: http://www.cica.ca/privateenterprises/site-utilities/item39844.pdf.
The guide provides a comparison of new accounting standards for private enterprises (Part II of the revised CICA Handbook — Accounting) to the XFI version (found in Part V of the CICA Handbook — Accounting).
Public Practice Manual Update
The May 2010 update of the Public Practice Manual (PPM) has been released.
It contains a set of new audit programs conforming to the new Canadian Auditing Standards (CAS) and the Accounting Standards for Private Enterprises (ASPE). This is to assist the CGA practitioner in preparing for the transition from the current auditing standards to CAS, which will be effective for audits of financial statements ending on or after December14, 2010, and the transition from the current accounting standards to ASPE, which will be effective for financial statements beginning on or after January1, 2011, with early adoption permitted.
While many features of the existing CGA audit programs have been carried forward, the CAS audit programs contain many new and changed audit procedures — some to respond to new standards and some to improve the efficiency of the workflow or the effectiveness of the existing ones. Notably, some important features of the new CAS programs are listed below:
- Disclosure checklists now integrated into the audit checklists for test of balances.
- Audit procedures redesigned to break into two parts:
- Procedures responding to common risks; and
- Potential procedures responding to particular risks or where the risk is assessed as moderate or high.
- The audit planning process now replaced by three processes:
- Audit acceptance;
- Establishing the overall audit strategy; and
- Assessing risks of material misstatement.
For more detailed information on the structure and features of the new CAS audit programs, please refer to the Practice Alert — CAS audit programs, published in May 2010.
For financial statements ending before December 14, 2010, auditors are still required to follow the current GAAS; early adoption is permitted only if it will not result in a failure to comply with the current GAAS. Consequently, most auditors will not adopt the new programs until required to. To facilitate the transition period, the old and new audit programs coexist for a period of time in the PPM, and the old audit programs will be withdrawn from the PPM after November 2011.
As always, CGA Canada is committed to supplying the most up-to-date information to help you stay current and proficient in the CGA profession.
CGA Canada welcomes your valuable feedback: Please send any inquiries or suggestions to Eve Zhou, CGA, at ezhou@cga-canada.org, or call her. Eve is Public Practice Associate, Research and Standards Department, at CGA-Canada. Tel: (604) 694-6718; Toll free: 1-800 663-1529 ext. 6718.
Accounting Handbook Updates
The Accounting Handbook (Part I) Release number I.3 (June 2010) deals with the following:
IFRS in effect on January 1, 2010
International Financial Reporting Standards (IFRS) that are in effect for annual periods beginning on January 1, 2010 have been incorporated into Part I of this Handbook. The 2010 edition includes the following:
- IFRS 1 First-time Adoption of International Financial Reporting Standards, amendment regarding Additional Exemptions for First-time Adopters;
- IFRS 2 Share-based Payment, amendment regarding Group Cash-settled Share-based Payment Transactions; and
- 2009 Improvements to IFRS, amendments regarding non-urgent but necessary changes to IFRS.
IFRIC 8 Scope of IFRS 2 and IFRIC 11 IFRS 2 — Group and Treasury Share Transactions have been incorporated into amended IFRS 2 and, accordingly, have been withdrawn.
To identify the changes made, refer to the effective date guidance in the 2010 edition or IFRS issued but not yet effective in the 2009 edition.
IFRS in effect at December 31, 2009
For reference purposes, the 2009 edition has been retained.
The Accounting Handbook (Part I) Release number I.4 (July 2010) deals with the following:
2010 Improvements to IFRS
The following standards are amended as a result of the IASB's 2008-2010 annual improvement process:
• IFRS 1 First-time Adoption of International Financial Reporting Standards – Paragraphs 27 and 32 have been amended and paragraph 27A added to clarify how changes in accounting policies should be addressed by a first-time adopter when those changes occur after the publication of the entity's first interim financial report. Paragraphs 31B and D8B have been added and paragraphs D1(c) and D8 have been amended to extend the scope of the deemed cost exemption to an event-driven fair value and to entities with operations subject to rate regulation. These amendments are effective for annual periods beginning on or after January 1, 2011.
• IFRS 3 Business Combinations – Paragraphs 19, 30 and B56 have been amended and paragraphs B62A and B62B added to limit the scope of the measurement choice for certain components of non-controlling interest and to clarify the accounting for unreplaced and voluntarily replaced share-based payment awards. As well, paragraphs 65A-65E have been added to this standard and conforming changes have been made to IFRS 7 Financial Instruments: Disclosures, IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement to provide transition guidance on how to account for contingent consideration from a business combination that occurred before the effective date of IFRS 3. These amendments are effective for annual periods beginning on or after July 1, 2010.
• IFRS 7 Financial Instruments: Disclosures – Paragraph 32A has been added to emphasize the interaction between qualitative and quantitative disclosures about the nature and extent of risks arising from financial instruments. Paragraph 34 has been amended to clarify that only material disclosures of quantitative financial information are required. Paragraphs 36-38 have been amended to revise the credit risk disclosures required for financial assets, including collateral held and renegotiated financial assets. These amendments are effective for annual periods beginning on or after January 1, 2011.
• IAS 1 Presentation of Financial Statements – Paragraphs 106 and 107 have been amended and paragraph 106A added to clarify how entities may present the required reconciliations for each component of other comprehensive income. These amendments are effective for annual periods beginning on or after January 1, 2011.
• IAS 27 Consolidated and Separate Financial Statements – As a result of amendments made to IAS 27 in 2008, consequential amendments have been made to the transition guidance in IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. These amendments are effective for annual periods beginning on or after July 1, 2010.
• IAS 34 Interim Financial Reporting – Paragraphs 15, 15B and 16A have been amended, paragraphs 15A and 15C added and paragraphs 16-18 deleted to emphasize the disclosure principles in IAS 34 and to add further guidance on how to apply these principles. These amendments are effective for annual periods beginning on or after January 1, 2011.
• IFRIC 13 Customer Loyalty Programmes – Paragraph AG2 has been amended to clarify the basis for measuring the fair value of the award credits. This amendment is effective for annual periods beginning on or after January 1, 2011.
The above amendments have been included in the 2010 Edition of "IFRSs issued but not yet effective" section as the amendments are effective after January 1, 2010. Earlier application is permitted.
Interesting Articles from the American Institute of CPAs
Industry Canada Announcement
On May 25, 2010, the Government of Canada introduced enhancements to private sector privacy legislation in a bill seeking to amend the Personal Information Protection and Electronic Documents Act (PIPEDA). The bill implements the Government Response to the Fourth Report of the Standing Committee on Access to Information, Privacy and Ethics: Statutory Review of PIPEDA. It responds to issues raised during the parliamentary review of the Act that resulted in a number of recommendations to fine-tune the legislation.
Amendments presented in the bill will ensure that PIPEDA continues to protect personal information in the private sector. Additionally this bill, which supports privacy in the digital age, is an important element of a modern, information-based economy, or "digital economy", together with the new anti-spam legislation, the Fighting Internet and Wireless Spam Act (FISA).
For further information, including the associated news release, bill summary and background information, visit Industry Canada’s website at http://www.ic.gc.ca/eic/site/ecic-ceac.nsf/eng/h_gv00045.html.
CRA issues policy on access to audit working papers
The Canada Revenue Agency (CRA) released its policy on requesting access to accountants’ and auditors’ working papers on June 3, 2010.
The CRA’s view is that it has an almost unfettered right to access. While the agency indicated that such access will not be “routinely required,” it indicated that it will apply the same policy that it applies with respect to any third-party information. That is, it will seek such information “when the taxpayer cannot or will not provide this information, when it is needed by officials to determine the CRA’s position on an issue and in accordance with the scope of the review.”
This essentially leaves it to the discretion of the relevant CRA official whether to request access to working papers in a particular situation. It falls well short of the recommendation that the CRA adopt a clear national policy of requesting working papers and information only in exceptional and well-defined circumstances in order to preserve open and frank communication between auditors, accountants and their clients.
CRA guidance: IFRS financial statements and corporate income tax returns
As part of their ongoing review of the adoption of IFRS financial reporting by publicly accountable enterprises, the CRA has provided preliminary guidance of their approach to IFRS in Income Tax Technical News 42 dated May 31, 2010. Additional information will be available on the CRA website.
IFRS financial statements acceptable for tax filings
The CRA concurs that financial statements based on IFRS would be an acceptable starting point for the determination of income for tax purposes. The CRA further states:
- Taxpayers are expected to file with their tax returns, the financial statements they issue for financial reporting purposes.
- Where an entity has adopted IFRS, the references to GAAP in the Act can be read as references to IFRS and all references to GAAP in any CRA publication can be read as references to IFRS.
- Taxpayers are expected to apply IFRS on a consistent basis to all calculations in order to determine income tax. Moreover, the accounting standards used for tax purposes should be applied consistently to all years after initial adoption.
- Early adoption of IFRS will be permitted for taxation years commencing on or January 1, 2009 (subject to certain limitations for regulated companies).
First time adoption of IFRS – schedule 1
The application of the principles in IFRS 1 to the conversion from Canadian GAAP to IFRS may result in amounts that are never recognized, or conversely recognized twice, in the determination of accounting income. Accordingly, the CRA notes that first time adopters of IFRS may need to make adjustments on Schedule 1 of the T2 return to ensure that all revenues and expenses are fully reported, and only reported once, for income tax purposes.
CGA Tax and Financial Strategies Program
This telecourse is a tax-focused business solutions case study program, with a concentration on real-life patterns that are most likely to be encountered by practitioners. This program will be of interest to new and established practitioners seeking to improve their practices in the area of taxation by providing value-added services to their clients, while minimizing the risk of professional liability.
The course brochure and registration form is available to provide further information. To obtain your copy of the course outline and answers to frequently asked questions, please contact Brigitte Ilk, CGA, manager, public practice research and development, CGA BC, at (604) 629-8363, or call toll-free at 1(800) 565-1211 ext 363.
The number of participants in the Tax and Financial Strategies program is limited; please register early to ensure your participation.