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Volume 5, Issue 1           

  1. ASPE and employee future benefits
  2. Relief for non-profit boards
  3. Non-profit resources
  4. For all the boards
  5. Modern quality management – it's back!
  6. Expense account fraud
  7. Managing fraud risk
  8. Policy updates


Accounting Standards for Private Enterprises: what to do about defined benefit plans?

Is your company making the transition to Accounting Standards for Private Enterprises (CICA Handbook, Part II)? Do you have employees in a defined benefit pension plan? You should know that the Accounting Standards Board has approved amendments to CICA 1500, "First-time adoption" and Section 3461, "Employee future benefits." According to PricewaterhouseCoopers, the amendments:

Permit an entity that accounts for its defined benefit plans using the deferral and amortization approach to carry forward at the date of transition to ASPE any unrecognized actuarial gains and losses and past service costs that were determined previously in accordance with Part V, CICA 3461, Employee Future Benefits, or an equivalent basis of accounting such as Part I, IAS, Employee Benefits.

Deloitte seems to think the amendments will also apply to non-profits under Part III of the Handbook, and that they won't apply before 2014.

Feel free to let us know how your transition is going!

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Relief for far-flung and busy non-profit boards

Under the recently enacted Canada Not-for-profit Corporations Act, directors and board members can pass resolutions without holding actual meetings. Many organizations will likely find this measure convenient, particularly where members are often unavailable for meetings due to time and distance.

Section 127 of the Act says that a federally incorporated not-for-profit organization can conduct any of the following business, with the signatures of all directors on a resolution. They may:

  • Make bylaws
  • Adopt forms of debt obligation certificates and corporate records
  • Authorize the issue of debt obligations
  • Appoint officers
  • Appoint a public accountant to hold office until the first annual meeting of members
  • Issue memberships
  • Make banking arrangements
  • Transact any other business

Further, Section 166 states that:

  • A resolution in writing signed by all the members entitled to vote on that resolution at a meeting of members is as valid as if it had been passed at a meeting of the members; and
  • A resolution in writing dealing with all matters required by this act to be dealt with at a meeting of members, and signed by all the members entitled to vote at that meeting, satisfies all the requirements of this act relating to meetings of members

Looks like the federal government is trying to treat non-profits like adults. (Ontario has similar not-for-profit legislation in the works.)

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Federal non-profit resources

With the passing of the Canada Not-for-profit Corporations Act, law firm Drache Aptowitzer has introduced a website dedicated to the Act. At www.notforprofitcorp.ca, "you will find information that will help you review your options and decide the appropriate course of action for your organization."

Look under "Firm Articles" for recent discussions such as "New Beginnings. The Canada Not-For-Profit Corporations Act" and "Top Ten Things You Should Know About the New Federal Law."

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Something for all the boards

What board of directors couldn't benefit from "A minute on minutes"—that's board meeting minutes, get it? David R. Street and Jane Southren outline pros, cons and warnings, from basic to advanced. For example:

  • While accuracy is important, you have to have flexibility in deciding what to include
  • Record that a decision was made, but do not forget to include the process and discussion surrounding how that decision was ultimately reached
  • Consider making it a policy that, upon formal approval, all personal notes of directors made during a meeting are destroyed

Worth a look for boards looking to take a stricter approach to recording meetings. (The article might require free registration.)

I've just come upon audio recording systems for board meetings, too, but I'll leave that to you.

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Modern quality management

Picking up where he left off, Ron Richard returns with more modern quality management insight. Well, just a brief note for now.

The American Society for Quality has released its 2011 Future of Quality Study (requires free registration).

We welcome any thoughts you have on the future of quality, including six sigma, etc. Send your thoughts to icl_editor@firstreference.com.

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Are your employees abusing their expense accounts?

Business consultants Insperity offer six signs of expense account fraud:

  1. A big spender in the group
  2. Claims for non-business related items
  3. Inflating acceptable expenses
  4. Overcharging the company card
  5. Double-billing
  6. Exceeding the limits for allowable expenses

These might look obvious, but look closer and you'll find some good policy for businesses looking to clamp down on expense account fraud.

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Managing fraud risk

I wrote a word or two about fraud a mere fortnight ago:

Reducing the risk of fraud from both external and internal sources is something that all businesses have to consider at some time, or continually, depending on the owner's approach and taste for living on the edge. But seriously, fraud is a serious problem that can damage or even destroy a business, particularly small and medium ones, which can't afford the potential losses.

Take it from there at First Reference Talks.

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Policy updates

The last 2011 release of Finance and Accounting PolicyPro updated Chapter 7 — Accounting and Reporting. The material reflects recent changes. For example, most businesses have converted to either International Financial Reporting Standards or Accounting Standards for Private Enterprises. They will soon be preparing their first annual financial statements under the new rules. FAPP's introduction, "About Finance and Accounting Policies and Procedures" has also been revised and updated.

The final 2011 update to Information Technology PolicyPro replaced Chapter 5 — Data Management. Material has been added to the considerations in IT 5.03 – Management of Third Party Services, including a list of due diligence items to consider when selecting a new supplier, and a summary of provisions that should be reflected in the contract with a service provider.

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About Inside Internal Control

Editor: Adam Gorley

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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.

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Inside Internal Control ISSN: 1916-4866

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