IIA calls for more representatives on the record

According to The Institute of Internal Auditors president David A. Richards, the CEO and CFO are not the only corporate executives accountable to stakeholders. “Individuals in critical positions charged with overseeing the organization’s control structure and accuracy of financial information should step up to the plate and go on record,” says Richards. “This is one of the best ways for organizations to regain the public trust.” Richards is encouraging management to be forthright regarding the infrastructure put in place to ensure the accuracy and completeness of the organization’s financial reporting.

Richards suggests that the chief audit executive (CAE), the audit committee chair, the chairman of the board, the chief risk officer, the chief information officer and the chief legal counsel should all be considered key players in ensuring the accuracy and completeness of an organization’s financial reporting. For instance, the CAE plays a vital assurance role when issuing an opinion on the internal controls of the organization.

The AC Chair, meanwhile, oversees the work of the chief risk officer, external auditors, and internal auditors, and is responsible for reviewing the financial statements prior to release.

The chairman of the board has significant responsibility regarding a level of comfort with financial and governance-related areas of the organization, and as such, is a key link between investors and operating management.

For more information on the IIA’s perspective on this issue, visit www.theiia.org.

CMA Management article garners Award of Merit

A two-part article originally published in CMA Management appears in the 2004 Articles of Merit publication released by the International Federation of Accountants (IFAC). “Budgeting — an unnecessary evil” by R. Murray Lindsay, CMA, and Theresa Libby, CA, which originally appeared in the March and April 2003 editions of CMA Management, was selected for publication.

The Professional Accountants in Business committee (PAIB) of IFAC conducts an annual competition that gives international exposure to articles that are judged to have made a distinct and valuable contribution to the advancement of the field of management accounting. Articles are nominated by IFAC member body journal editors and are assessed by an international panel of judges.

The booklet can be downloaded at www.ifac.org.

Managing International Financial Reporting Standards

To help auditors address reporting issues arising from the first-time adoption of International Financial Reporting Standards (IFRSs), the staff of the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) along with staff of professional accountancy bodies, national standard setters, and audit firms have prepared a series of key questions and answers in a document entitled First Time Adoption of IFRSs — Guidance for Auditors on Reporting Issues. The publication is available electronically from the Other category of the IFAC Web site’s online store at www.ifac.org/Store/.

The 2005 adoption in the European Union of IFRSs, and the adoption of IFRSs in other countries, has given rise to requests for auditors to audit, review, or otherwise report on various forms of financial and non-financial information prepared by entities during their transition from previously applied national accounting standards to IFRSs. Although not a pronouncement of the IAASB or IFAC, the document is being made widely available to help auditors in those countries where these common issues are faced.

“This guidance includes detailed answers to common questions regarding the auditors’ report on information related to an entity’s IFRS transition,” said IAASB technical director Jim Sylph. “It is hoped that the guidance will assist auditors in addressing some of the issues related to IFRSs transition and contribute to greater consistency in audit practice.”

For more information visit www.ifac.org.

Canadian manufacturers less bullish

Compared to their U.S. counterparts, more than double the number of Canadian mid-market manufacturers say they are pessimistic about the future, according to a survey released recently by accounting and business advisory firm Grant Thornton.

“The changes and unpredictability in the marketplace faced by Canadian manufacturers in recent years could explain their lower degree of optimism,” says Grant Thornton partner Bruce Byford. “Their ability to weather the storm has been tested to the limit, draining a sense of bullishness about the future.” Based in Toronto, Ontario, Byford is the leader of Grant Thornton’s national practice focused on the manufacturing and distribution sector group in Canada.

In many ways, Canadian manufacturers in the survey have similar goals as their U.S. counterparts. More than 40% of manufacturers surveyed in both countries expect to increase their investment in plants and machinery. However, manufacturers surveyed in the U.S. (56%) are more inclined to use mergers and acquisitions as a profit-building method than those surveyed in Canada (43%).

Moreover, more than a quarter of U.S. manufacturers in the Grant Thornton survey say they plan to transfer operations off shore, again as a way of boosting profitability. This is twice the proportion of the Canadian manufacturers surveyed considering such a move.

More than half of U.S. manufacturers surveyed also export to Western Europe, South/Central America and parts of Asia, vastly outpacing Canadian respondents.

“The greater reliance of Canadian manufacturers surveyed on exports to the U.S. versus countries outside of North America could represent an important missed opportunity,” says Byford. “Investments made to access emerging markets like China and India could pay significant dividends for companies willing to take the risk.”

Conducted in Canada by the Toronto firm Research Dimensions, the Grant Thornton Manufacturing Insights survey is part of Grant Thornton’s International Business Owner Survey (IBOS), which covered 6,900 companies in 26 countries during September/October 2003.

For more information visit www.GrantThornton.ca/manufacturing.

High tech

Road warrior takes on a whole new meaning

Busy road warriors are always looking for ways to save time and hassle. Personal digital assistants (PDAs), laptops and cell phones have all made working a little easier on the road. But some people are suggesting that the mobile trend is about to make another leap.

This September, Gizmodo.com weblog guest editor Lionel Felix suggested that putting a computer in your car may become a new trend. As he says, “a new generation of car specific fanless cases, power supplies, screens and input devices have made installing a fully functional computer as simple as adding a new stereo.”

As the article notes, a modern computer can do everything a car stereo can and much more, and with a few peripherals added to it, such a system could cover all of your technological and communications needs. Chances are, adding a computer to the dash isn’t for all road warriors, but for those who never want to be too far from their laptop, a basic set-up is touted here for as little as US$300. Car manufacturers may be seeing the value of offering this as a peripheral too. In late September, word was out that Toyota will be offering a centrally-linked integrated system that orients around a removable PDA in the near future (though nothing has yet appeared on their Canadian Web site). As appealing as this might be, please, remember to pull over to check your e-mail.

For more information visit www.gizmodo.com/archives/audiomotive-carbound-pcs-021016.php.

New Software

• Prophix version 5.0
• CCH Canadian’s launch of its enhanced Taxprep
• XL2Web Software, which transforms Excel models into Web applications

rants and raves

Open source additions

As a management professor, I find much to applaud in Jacob Stoller’s September article “Open source: assessing the TCO picture” (page 18). There are, however, a couple of issues where I feel he does not portray the true scope and value of the open-source option.

First, despite the subtitle “Linux and beyond”, the article seems to tie open source and Linux too tightly together. Readers may miss the fact that many open source offerings are multi-platform — that is to say, able to run on Windows, Macintosh, Solaris, and xBSD operating systems, among others.

For example, theTellTable project is a research and development effort in which I am involved to provide collaborative and auditable functionality for spreadsheets, word processors and other office suite tools. TellTable is set up deliberately to avoid operating system dependencies for users.

In our case, the server behind the scenes is currently based on Linux, but that is a choice, not a necessity. (See www.telltable.com for information, and the demo CD image.) Another example that may be of interest to the accounting profession is R, which is rapidly becoming the main research tool for statisticians worldwide ( www.r-project.org), and runs on all major operating systems.

Stoller’s description of the terms and conditions of open source is also too closely tied to the licensing model used by the GNU/Linux project. He describes the GNU General Public License (GPL), but there are several open source licence types certified by the “Open Source Initiative”, listed at www.opensource.org. Open source licensing is not an exclusive path against proprietary software licensing. Indeed, the TellTable team offers the server software under an open source licence (LesserGPL) at telltable-s.sf.net, while our special spreadsheet audit tool is proprietary.

Third, Stoller’s total cost of ownership ideas, while mentioning some other benefits of open source, understate the opportunities presented. I have probably spent more money on open source software than on proprietary offerings, so I am on the wrong side of “cost.” And I certainly don’t “own” what I paid for. Yet, I’ve received excellent value for money. My goals were to have the use of software that I controlled and that I could modify or combine or adapt as I needed — or even continue to use when most folk would think it outdated.

I am grateful Stoller and CMA Management have shed some light on the questions that management accountants may have concerning open source. I hope I have clarified a couple of important aspects.

John C. Nash Professor, School of Management University of Ottawa

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