News and views

IFAC increases support of developing nations, quality practices

At its Council meeting in Auckland, New Zealand in November, the International Federation of Accountants (IFAC) introduced initiatives to help developing nations and to further support quality performance by accountants worldwide. In addition, it released a new information paper to clarify the roles and responsibilities of professional accountants in business, considered a revised constitution to continue to strengthen its governance, and appointed six new Board members.

Recognizing the critical role of the accountancy profession in contributing to the development of national economies, IFAC released a new guide entitled, Establishing and Developing a Professional Accountancy Body.

“The release of this guide demonstrates IFAC’s increasing commitment to developing nations. It is one part of a comprehensive program to help developing nations worldwide achieve economic growth and stability,” states IFAC president Graham Ward.

Developed with the input of established accountancy bodies from around the world, the guide includes best practice guidance and information on membership requirements, relations with government and regulators, standard setting, education and training and other issues. It is now available in a searchable CD-ROM and a downloadable electronic version from the IFAC Web site.

To facilitate understanding of the role of professional accountants in business among business leaders, management and investors, IFAC issued an information paper on the diverse roles, competencies and value of the professional accountant in business. The paper includes a definition of the professional accountant in business and highlights the many roles that professional accountants in business fulfill, including implementing and maintaining operational and fiduciary controls, providing analytical support for strategic planning and decision making, ensuring that effective risk management processes are in place, and assisting management in setting the tone for ethical practices.

For more information on these and other initiatives, visit www.ifac.org.

Change still necessary in SOX compliance: FEI

Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI), recently released two new reports on Sarbanes-Oxley Compliance and Management’s Reports on Internal Controls. These reports were released in conjunction with FEI’s Conference on Current Financial Reporting Issues (CFRI).

Sarbanes-Oxley Section 404 Compliance — From Project to Sustainability summarizes the compliance practices of leading companies and describes how they are improving their processes in the second year of compliance as they strive for long-term sustainability. FERF produced this report with Dr. Robert A. Howell, Distinguished Visiting Professor of Business Administration at Dartmouth’s Tuck School of Business.

The report is the result of implementation leaders from some of the nation’s largest companies gathering to share their experiences of Section 404. From this discussion, arranged by FEI, it was made clear that most participants agreed the time and expense of compliance wasn’t sustainable, and that they would have to look for and implement process improvements.

The report describes some of those process improvements, which include:

• using a top-down approach to risk and planning;
• taking a risk-based approach to testing;
• using software to automate documentation, controls, and testing; and
• working towards a greater reliance on management’s testing by the external auditor.

FERF also recently released Management’s Reports on Internal Controls, which analyzes these disclosures and related auditors’ findings filed in Securities and Exchange Commission Forms 10-K and 10-K/A. A collaborative effort by FERF and Mark P. Holtzman, assistant professor of accounting at Seton Hall University, the report found, among other things, that:

• all used the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
• all reports included the four basic requirements per the SEC Rule. Virtually all followed the sequence of statements suggested in the rule, which was to include statements regarding management’s responsibility, the framework used, management’s assessment, and the accounting firm attestation.
• considerable variation was found in management’s reports that noted their companies have effective internal controls over financial reporting. Many reports reviewed and emphasized companies’ strong control systems, highlighting elements such as ethics committees and anonymous hotlines.

The reports can be found at: http://www.fei.org/rfbookstore

Intelligent outsourcing: Canada’s challenge

Canada needs to become more productive and focused to protect and enhance 2.4 million knowledge services jobs potentially affected by global competition, while, at the same time, seize the opportunities offshoring sometimes presents. According to A Fine Balance: The Buying and Selling of Canada, a report released recently by PricewaterhouseCoopers (PwC) in association with independent analyst David Ticoll, Canada trails its competitors in the offshoring of knowledge work. The country needs to identify the occupations where we can compete and win — and support these jobs with technology investments and business innovations. At the same time, we need to be open to the movement of other knowledge jobs to lower cost geographies.

The vast majority (>70%) of respondents to the PwC survey behind the latest Fine Balance report are taking action to lower costs and improve productivity in response to the offshoring trend. However, Canadian companies are behind in making the investments they need to respond effectively. Canadian organizations lag the U.S. and other global competitors in the use of offshoring, and this is related to the low adoption of certain information technologies and innovative business practices in Canada.

“The steps that companies take to ensure effective return on information and communications technology (ICT) investments are activities that also enable companies to capture the productivity benefits of outsourcing and offshoring,” says Ticoll. “Modularization, networked collaboration, and focusing on what you do best — these are the preconditions to the outsourcing of global knowledge work. Canadian companies fall behind in the ability to capitalize on new low cost sources of ICT-related global knowledge work.”

For more information visit www.pwc.com.

High tech

The smartphone gets smarter

Nokia recently expanded its business device portfolio with an addition to its high-end smartphone range, the Nokia 9300i. Incorporating WLAN connectivity with a full keyboard, 65,536-color screen, support for a broad range of enterprise e-mail solutions and an attachment viewer, the Nokia 9300i is an excellent combination of design and function and seems ideally suited to meet the tough demands of mobile professionals.

With the addition of WLAN connectivity, the Nokia 9300i enhances productivity by providing a reliable and cost-effective data connection for downloading large files or e-mail with attachments. It includes 80 MB of memory capacity (expandable up to 2GB with an optional MMC card), ample space for file storage; and a wide color screen makes it easy to view different types of documents, spreadsheets, presentations and Web sites. Add good voice capabilities and the Nokia 9300i enterprise smartphone is a great all-in-one device.

The Nokia 9300i smartphone supports E-GPRS (EDGE) and WLAN 802.11g, five party conference calling via an integrated speakerphone and multiple e-mail clients (with attachments), including BlackBerry Connect, Nokia Business Center, IBM WebSphere, and Oracle Collaboration Suite. It also integrates infrared and Bluetooth capabilities, giving users two different ways to wirelessly synchronize their devices to a desktop PC or laptop, as well as exchange data with other mobile devices.

Planned availability for the Nokia 9300i smartphone is in the first quarter of 2006.

For further information on features and availability, visit www.nokia.com.

 Impending talent shortage not sparking action

The impending retirement of the baby boomer generation and falling birth rates continue to present a threat to Canadian companies, according to a new survey from Deloitte’s Human Capital practice, but Canadian organizations are less prepared to address these issues than their global   counterparts.

In a global survey, 74% of Canadian respondents cited both attraction of new talent and retention of key talents as the most critical people issues their organizations face, versus 69% and 66% of global respondents. Retirement of the baby boom generation was the next issue flagged by Canadian respondents (54%).

Canadian businesses are feeling pressure from the draining labour pool in many areas. An overwhelming majority (86%) of Canadian respondents say they are experiencing or anticipating talent shortages for salaried staff, compared to 74% of global respondents. And the talent shortage is not limited to white-collar workers, as 66% of Canadian respondents are experiencing or anticipating the same shortage among hourly staff, versus 54% of global respondents.

Despite this awareness of the issues, Canadian organizations haven’t acted upon the concerns. In fact, Canadian respondents are less advanced in developing talent management strategies than their global counterparts. While Canadian organizations have discussed the issues at their boards of directors, less than half of the respondents (47%) have defined a list of critical skills for future growth, compared to 63% of global respondents.

For more information visit www.deloitte.com.

Focused biotech strategy a must for Canada, says Conference Board

Canada can’t rest on past success in the field of biotechnology, according to a report released recently by The Conference Board of Canada.

Currently, Canada’s modest investments in biotechnology are spread across a range of industry sectors. The report suggests that this can’t be sustained.

“Other leading countries are making more strategic decisions about their investments to achieve international competitive advantages,” said Trefor Munn-Venn, author of the report, Biotechnology in Canada: A Technology Platform for Growth. “To achieve international success in biotechnology, we must develop critical mass in our research investments, in our talent pool and in our biotechnology companies.”

Through an evidence-based analysis of Canada’s current biotechnology industry, the Conference Board report raises policy questions for industry, the academic community and government.

The report is available for free download at www.conferenceboard.ca.

Canadian companies claim confidential and private data at risk

While 98% of Canadian business leaders and decision makers believe it is important for a company to ensure that any sensitive data is protected against improper activity, the facts tell a different story. 

A recent Fusepoint/Sun Microsystems/Leger Marketing survey reveals that 55% of Canadian companies say that their confidential and private data is at risk of an attack, despite the fact that most consumers (58%) would immediately terminate their relationship with a company that compromised their personal information.

Poll results also showed that more than one in 10 Canadian consumers (14%) believe they have already been a victim of identity theft, with 38% of respondents saying they know someone who has been a victim of identity theft. In addition, 74% of consumers believe that everybody — including those possessing advanced technological know-how — is at equal risk of identity theft.

“With the exponential growth in the volume and sophistication of online threats, executives must heed their customers’ calls to take the necessary steps to protect their data and infrastructure from being compromised,” said George Kerns, President and CEO, Fusepoint Managed Services. “This is not a simple business issue. It’s a fundamental matter of trust.”

Somewhat surprisingly, the findings showed that business leaders believed the greatest threat to their data security wouldn’t come from a malicious external attack, but rather from the hands of an uninformed employee. The research showed that 46% of respondents said that employees who accidentally download security-compromising viruses, spyware or adware pose a greater data security risk to a company than external agents like hackers, cited next at 40%.

IBM study sets out five emerging trends to reshape global banking

IBM recently released a study revealing the key trends and innovations that will define the global banking industry in 2015. 

The study, Banking 2015: Defining the Future of Banking, forecasts trends in banking to offer insight into the competitive forces that bankers will face in the next 10 years. The study also spotlights the emerging business and technology innovations and societal trends that will propel and shape the industry’s transformation.

The survey was conducted by IBM’s strategic research unit, The Institute for Business Value, and revealed five key trends that will determine market success in 2015:

• Customers take control. Customers will be smart, informed and savvy users of financial services. They will only be interested in service providers that can meet their very specific individual needs.
• Specialized niche competitors. Market consolidation will continue, making the mega banks even bigger. But they will face swarms of nimble competitors including community banks, industry specialists and non-bank banks that specialize in providing specific services. Partner-competitor relationships will arise.
• A new workforce. The need for productivity and efficiency will create new labour and work practices. But there will also be intense competition to attract and retain talent.
• Regulated transparency. The need to comply with globally enforced standards of transparency and accountability will force the adoption by banks of integrated, enterprise-wide systems and processes.
• Sharply focused technology. The enabler of all this change will be technology that supports rapid, accurate decision making and greater operational flexibility and efficiency. The successful specialists will be those who can track and analyze specific customer needs and speedily meet them with profitable, reliable products.

Rusty Wiley, lead partner for IBM’s Global Banking Practice, says the study shows what banks must do now to stay competitive over the next 10 years. “By 2015, we will live in an intensely customer-centric market that is dominated by global mega banks and densely populated by specialist financial services providers. Fierce competition, global regulation and technology will reshape bank and non-bank structures.”

According to Sunny Banerjea, global banking leader for the Institute for Business Value, each bank must decide on a strategy that fits its customers’ needs. “Banks will need special strategies to cater to a far more discerning — and controlling — customer. Innovative approaches to business design, customer service, workforce management and IT will be critical to banks’ future success.

“Banking customers will demand more advocacy, personal security and control in their banking relationships,” Banerjea says. “Banks will source products and services from many specialized and best-in-class service providers, including independents and other banks providing white-label products and services. Innovation in products, processes, relationships and business models will be the primary path to sustainable growth.”

For more information visit www.ibm.com.

New Software

• CyberMatrix Employee Scheduler v1
• CCH Canadian Limited’s CCH Accountants’ Suite

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