www.lexisnexis.ca Vol. 31, No. 11 September 2015
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New BDO boss Kramer says he’s ready to embrace change

The new CEO of BDO Canada isn’t easing his way into the job.

“I’m off and running,” said Pat Kramer, a 20-year veteran of the firm who replaced Keith Farlinger on July 1.

Kramer spent his first few weeks working with his leadership team on developing strategies for the next five years and now they’re putting together specific plans with the firm’s partners.

“We’re in a good position right now,” he said.

Report cautions companies ignore guidance at peril

The corporate reporting landscape has grown in complexity in recent years as more public companies provide stakeholders with wide-ranging information about environmental, social and governance issues, in addition to traditional financial reporting. While much of the guidance for reporting this extra information remains voluntary, corporations ignore it to their own competitive disadvantage.

“We all know that companies have to use and generate financial capital and financial value. But in doing whatever they do to create financial value if, at the same time, they’re either destroying human capital or social capital, in the long term they may actually be shooting themselves in the foot,” said Alan Willis, an independent adviser and consultant to CPA Canada.

Mandatory auditor rotation can inhibit rather than encourage professional skepticism and have the opposite effect of what is intended, according to a recent U.S. study.

“Professional skepticism requirements are intended to elevate auditors’ skepticism of their clients and, ultimately, audit quality,” said the study’s authors. “This benefit disappears and even reverses when auditors rotate. That is, rotation and a skeptical mindset interact to the detriment of audit effort and financial reporting quality.”

The results of the study by Kendall Bowlin of the University of Mississippi, Jessen Hobson of the University of Illinois at Urbana-Champaign and David Piercey of the University of Massachusetts-Amherst appear in the July 2015 issue of The Accounting Review, and are based on a complex experiment involving students who did not know they were playing the role of auditors and corporate managers.

The golden years might not be all they’re cracked up to be on the financial front, according to figures in two recently released reports.

The Office of the Superintendent of Bankruptcy Canada’s annual report indicates that seniors aged 65 and older accounted for 10 per cent of all consumer insolvencies filed in 2014. That’s up 1.7 per cent from the 8.3 per cent figure for seniors in 2010.

Meanwhile, a survey by the Angus Reid Institute indicates that financial worries loom large for senior citizens, as 48 per cent of retirees surveyed fretted about outliving their money.

Bankruptcy trustees and financial professionals say it’s a growing problem that can no longer be ignored.