I bet more than a few of our readers use spreadsheets in their accounting, payroll and HR processes. You might even be thinking of (or currently) using them in your efforts to convert from GAAP to IFRS. And why wouldn't you?

"Spreadsheets are dynamic tools that can provide a wide variety of functionality at minimal cost. Consequently, in an environment of stringent deadlines and temporary data processing needs, they are used to fill the gaps in functionality within the computing environment", says the CICA's Information Technology Advisory Committee (ITAC).

Nonetheless, the committee notes in IFRS and Spreadsheets: A High-Risk Combination that the use of spreadsheets can cause problems. They are prone to error, burdensome to maintain and generally subject to less control and security than dedicated applications, which have controls built in. Without controls, the slightest mistake can lead to incorrect results, which a system with controls would catch at the outset.

"Anything more than a simple spreadsheet has a high likelihood of error and can have a significant impact on the organization … An analysis of seven spreadsheet-error studies … found an average error rate of 88%."

Indeed, even the simplest errors can lead to excessive (and unnecessary) payments and exorbitant fines. (See the committee's guide for examples.)

Remarkably, given the risks, the technology committee doesn't simply recommend not using spreadsheets, but instead offers suggestions on managing the risk:

• Familiarize yourself with the risks
   
• Ask yourself if spreadsheets are the best tool for the job
   
• If you decide to use spreadsheets, determine whether they will be a temporary or permanent solution (hint: make them temporary)
   
• Make your spreadsheets as simple as possible; e.g., avoid using macros, pivot tables and linking documents
   
• Extend the control environment to your spreadsheets

See IFRS and Spreadsheets: A High-Risk Combination for the details.

We've just updated Chapter 7 — Accounting and Reporting in Volume I of Finance & Accounting PolicyPro. The chapter includes valuable information on the transition from GAAP to IFRS.

<< Top of Page

Contrary to popular wisdom, lawyer Ronald A. Pink says that planning is not always in an organization's best interest. Now let me give you some context.

The comment, in Benefits and Pension Monitor, refers to governance plans for pensions and benefits, and the strict limits such plans can place on operations:

"It's better to have no governance plan that to have a plan and not follow it … governance plans are trouble—if you have one you have to follow it and you can't get rid of it", says Pink.

The comments arise from the recent and ongoing debate about pension reforms in Canada. If I understand his sentiment correctly, Pink seems to be suggesting that pension managers and boards of directors are more likely to face liability if they have a pension and benefits governance plan, but fail to follow it in practice, whereas those lacking a defined plan can better defend their governance practices.

Regardless, Pink says that if employers do not manage their pension and benefits plans properly—with or without a governance plan—they "are going to be sued for failing to follow their governance practices."

The Canadian Institute of Chartered Accountants points out that, "Sponsors have increasingly become the target of lawsuits in matters such as the use of fund surplus, benefit administration, and the payment of expenses from the fund."

Read the Canadian Institute of Chartered Accountants' 20 Questions Directors Should Ask about their Role in Pension Governance (in PDF).

Now, the best option might be to have a plan and always follow it, but you might also have heard a poet say that "the best-laid plans of mice and men often go awry"; and where does that leave you?

<< Top of Page

If you work in the not-for-profit sector, chances are that your organization performs some sort of community service, quite possibly helping disadvantaged persons or designated groups, such as visible minorities, Aboriginals, persons with disabilities or addictions, or women. For this reason alone, not-for-profit organizations are essential to the well-being of our communities and cities. But you already knew that.

It's also likely that you rely on grants from private donors and public programs to keep the organization running. Ontario's government recognizes the limits of this model. A recent press release notes that:

"Non-profit organizations currently receive funding for operating expenditures from various sources including government, philanthropic and private sector donors. However, they have inadequate access to funding for capital projects."

To ameliorate the situation, the province is introducing a program to help certain non-profits fund infrastructure projects, namely those that serve "cultural communities".

"The new Community Capital Fund will support infrastructure projects that help Ontario's non-profit organizations deliver important public services to diverse cultural communities. … These include newcomer settlement services, multi-service community centres, performance venues, and cultural activity centres."

The fund, administered by the Ontario Trillium Foundation, will cover up to 50 percent of a project's costs, from $20,000 to $500,000. The program will start in September 2010 and run through 2012. Stay tuned for more information.

The Ontario government announced earlier this year that it would be working on closer partnerships with the province's not-for-profit organizations. Visit the Partnership Project's website to find out more and offer input on it.

Not-for-Profit PolicyPro from First Reference looks at financing your organization in Chapter 4 — Financial Management, with sections like a Financial management primer, Revenues, Assets, Budgets, forecasts and reporting and more. And regardless of your financial status, you'll want to know about the new harmonized taxes in Ontario and British Columbia. We've updated section 4.03 – Expenses to cover the changes.

<< Top of Page

A recent issue of the Canadian Payroll Association's magazine Dialogues looked at how payroll technology will be changing in the next few years, and what that will mean for the payroll industry—and the businesses it supports. Turns out, the next few years are looking pretty rosy for payroll professionals. Here are some insights:

• Recording employees' payroll, time, attendance and absence information will become increasingly complex as the workforce becomes more mobile—spending more time away from the workplace—and more temporary.
   
• Software will help businesses to keep up by integrating payroll, HR and time and attendance management functions. This will allow organizations to make better decisions on overtime, staffing and service levels and human resources in general.
   
• Software will also automate these functions, reducing errors and speeding up HR processes, all in a handsome user-friendly package.
   
• With better software, payroll professionals will spend less time pushing pencils and gathering information, and more time thinking strategy and making decisions. "The payroll department will be seen as an important strategic resource to help the CFO and department managers make better decisions", said one such professional on the software side.
   
• If that's not enough, software will save businesses money by improving payroll, time, attendance, absence and HR management, and reducing errors, and help improve their carbon footprint by limiting the use of paper and other resources.

It all just sounds so lovely. And why not? These are probably the sorts of tasks that computers should do—and generally they do them well—leaving workers to do the things that people do best.

Of course you'll have to involve IT in these changes, since they're the ones who are going to have to set it up. Information Technology PolicyPro from First Reference offers chapters of valuable material and policies on Planning, Software acquisition, maintenance and disposal, Systems management, Data management, Security, Storage and backup, Training and support, and much more. Note that we recently updated the entire contents of Chapter 2 — Systems acquisition, maintenance and disposal.

There are privacy implications, too (requires subscription to HRinfodesk).

We don't mind mentioning that First Reference produces its own compliance-focused human resources management system, HRTrack, and you can try it free for 60 days.

<< Top of Page

Editor: Adam Gorley

Please do not reply to this email.

Inside Internal Control is a complimentary service published by First Reference Inc. and is sent to you monthly. Each issue provides headlines and summaries of news that affects internal controls and policies in Canada.

Please forward Inside Internal Control to your colleagues.

Please send any comments or suggestions about Inside Internal Control to the editor. For information about the Internal Control Library, click here. For more information about First Reference, including our terms of use, disclaimer, privacy policy and other legal matters, visit www.firstreference.com.

This publication is written for informational purposes only and should NOT be relied upon as legal advice or opinions. The reader should always obtain legal advice from a qualified lawyer or other qualified professional, which will be responsive to the case or circumstance of the individual. Please note that the content provided in this Bulletin or any content contained in or made available through any third party website linked to from this newsletter, is provided "as is" without representations or warranties of any kind. All representations and warranties in respect of Content or Third Party Content, express or implied, including, without limitation any representations to warranties or conditions regarding accuracy, timeliness, completeness, non-infringement, merchantability or fitness for any particular purpose are hereby disclaimed.

Copyright ©2010, First Reference Inc. All Rights Reserved.