Comparison of IFRS to Canadian GAAP

Now that we´re well into 2009, January 1 2011, the date that International Financial Reporting Standards (IFRS) replaces Canadian GAAP for publicly accountable enterprises, doesn´t look so far away. The changeover is increasingly in the news, and there are growing numbers of seminars, courses, and whitepapers promising to make the transition less painful.

No matter where you fit in the process of making the transition, a recent publication from KPMG will help. IFRS compared to Canadian GAAP: An overview (second edition) discusses those differences that KPMG has encountered most frequently in practice, and focuses on recognition, measurement and presentation, rather than disclosure.

Click here to order or download a PDF version of this useful publication.

Stay tuned to Inside Internal Control for more news as the new accounting standards take shape for non-publicly accountable enterprises and not-for-profit organizations. And you can be confident that the new accounting standards will be integrated in Finance & Accounting PolicyPro (FAPP) and Not-for-Profit PolicyPro (NPPP) in the months to come through those publications' regular update releases.

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Fraud and NPOs

A recent survey found that nearly one out of two companies was a victim of organizational fraud (i.e., fraud committed by an employee). And according to Fraud in Canadian Nonprofit Organizations As Seen Through the Eyes of the Canadian Newspapers 1998-2008, a technical report from the CA-Queen´s Centre for Governance, fraud is almost as common in not-for-profit organizations. Although the losses are typically smaller in NPOs, there´s also evidence that incidents of fraud may be significantly under-reported, because of fears of damage to the organization´s reputation and the effect it might have on fundraising.

The report also notes that smaller Canadian NFPs appear especially vulnerable. How can they fight back? The reports suggests:

• Developing stronger internal controls such as segregation of duties
• Instituting a whistle-blowing or tip hotline
• Building an ethical culture, starting with top management (i.e., tone at the top)

Click here for a link to the report.

To help build stronger internal controls in your NPO, Not-for-Profit PolicyPro (NPPP) features more than 25 ready-to-use policies and 50 helpful procedures focussing on corporate administration, governance, financial management and human resources. For more information on NPPP, click here.

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Ontario introduces the Green Energy Act

On February 23, the government of Ontario tabled the Green Energy Act (GEA). The government hopes to attract new investment, create new green economy jobs (as many as 50,000 in the first three years) and protect the environment. The GEA introduces consequential amendments to 21 other Acts, including the Electricity Act, the Ministry of Natural Resources Act; and the Ontario Energy Board Act, 1998.

The Act has two major thrusts:

• To streamline approval of renewable energy projects
• To help homeowners, governments, schools and industrial employers make the transition to lower energy use

For more information, click here. And for an analysis of the Bill from Danielle Waldman and Michael Morrison of Gowling Lafleur Henderson LLP, click here.

Operations & Marketing PolicyPro (OMPP) includes an environmental management chapter with hazardous material management, recycling, energy conservation, sustainability and emissions trading policies. For more information on OMPP, click here.

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More about XBRL

In Inside Internal Control and its predecessor e-newsletter the PolicyPro Bulletin, we´ve talked a couple of times about XBRL, the XML-based open standard for business reporting. XBRL allows the exchange of financial information by tagging financial statement items using a structured, standardized markup language that allows financial information to be processed automatically in various ways for different users.

As of January 30, 2009, the U.S. Securities and Exchange Commission requires public companies and foreign private issuers that prepare their financial statements in accordance with U.S. GAAP, as well as foreign private issuers that prepare their financial statements using IFRS, to provide their financial statements using XBRL.

Could XBRL have prevented investments in the collateralized debt obligations that triggered our current financial mess? There´s a growing number of people who think so. As Gerald Trites writes on the XBRL Canada blog "... if the data around these complex instruments had been tagged, investors could have quickly seen through the instruments". To quote Charlie Hoffman, the "father" of XBRL, in a recent article in Wired magazine: "With XBRL, anyone can be an analyst."

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reCAPTCHA

Are you looking for a way to prevent automated abuse of your website, such as comment spam or bogus registrations? Are you interested in a free solution that furthers a worthwhile project and puts the efforts of your users to good use? If so, you should check out reCAPTCHA.

I´m sure you´ve seen a CAPTCHA - a series of blurred, distorted characters (sometimes a real word, sometimes not) that you need to correctly spell to access a website or proceed with a transaction on your computer. CAPTCHA is an acronym for "Completely Automated Public Turing test to tell Computers and Humans Apart", and that´s its purpose; as an authentication tool to ensure that the responder is a person, not a bot.

Clever idea. By not nearly as brilliant as reCAPTCHA, a project of the School of Computer Science at Carnegie Mellon University that leverages the CAPTCHA idea to help digitize text from the Internet Archive and the archives of the New York Times.

Here´s how it works. reCAPTCHA supplies subscribing websites (including Facebook, TicketMaster and Twitter) with images of words that optical character recognition (OCR) software can´t read. When you decipher the text, the results are returned to the digitization process to solve these word puzzles - the equivalent of 160 books per day (12,000 man hours per day of free labour).

So if the words can´t be deciphered, how does reCAPTCHA determine if you´ve been successful solving the puzzle? They do this by providing 2 images: one a known (solved) word, the other an unsolved one. If you provide the correct answer for the known word, the chances are pretty good that you´ve also solved the unknown one (and at least you´ve proved that you´re a human). If many people come up with the same solution for the unknown word, the odds are very good that it´s the right answer.

For the official reCAPTCHA site, click here. And for a recent article in Walrus magazine, click here.

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Privacy protection in an ecosystem model

Web 2.0 is quickly evolving into World 2.0, a global "ecosystem model" where corporate and national boundaries are disappearing and inter-networking, data sharing, and relationships between organizations around the world are becoming the norm. As connections grow and more information is shared, Federated Identity Management (FIM) systems are emerging to ensure that identity credentials issued to a user by a particular service or institution are recognized by other related services.

In the recently released paper The New Federated Privacy Impact Assessment (F-PIA), Ontario´s Information and Privacy Commissioner, Dr. Ann Cavoukian, has presented a new assessment tool for companies that share their online identity management systems.

The F-PIA takes the place of Privacy Impact Assessment (PIA), one of the tools that helps ensure that privacy requirements are incorporated into the design of a system, typically by way of a directed set of questions. The F-PIA can be used within an enterprise (where a number of different systems may be federated together) or across enterprises that have different needs and uses of information.

For a link to the Commissioner´s news release, click here.

For a link to this thought-provoking paper itself, click here.

Volume II - Corporate Governance in Finance & Accounting PolicyPro (FAPP) includes a policy on Confidentiality and privacy. For more information on FAPP, click here.

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About Inside Internal Control

Editor: Colin Braithwaite, Managing Editor, PolicyPro.

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