www.lexisnexis.ca Vol. 30, No. 12 October 2014
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The double edged sword that is digital technology

Digital technology has revolutionized business — but it has also opened the door to nefarious intentions, making it easier than ever for people to steal and defraud your company, says forensic investigator Kevin J. Ripa.

In his keynote speech at the Associate of Certified Fraud Examiners 2014 Conference in Toronto, Ripa said that nevertheless following the digital trail of breadcrumbs is a lot easier because there are so many more sources. And despite the risks, he said strong policies and protocols can be put in place to prevent or at least deter fraudulent activity and inappropriate use of company equipment.

"You can monitor computer usage by employees, but what’s legal?" asked Ripa, owner and director of Computer Evidence Recovery in Calgary. "If you have enough money you can get someone to give you an opinion saying what you want."

Tax tension within the Tim Hortons takeover

Burger King’s purchase of Tim Hortons in a recent $12.6 billion US cash-stock deal represents more than a takeover of an iconic Canadian brand. The fast-food restaurant giant’s decision to create a new corporation headquartered in Canada through an increasingly popular transaction known as a corporate inversion will, say experts, carry significant tax implications.

Although this particular deal is not likely to be affected, some American lawmakers are looking for ways to curtail this type of transaction in the future. However, there are serious doubts that goal can be achieved and even disagreement about how to address the U.S. tax code in order to attempt doing so.

"The sudden impetus for doing more [of these transactions] this year is because [participants] are nervous that U.S. authorities are looking at this entire situation, and may well try and close [what some view as] a loophole. So it’s a stampede towards the gate. Somebody has shouted ‘fire’ and everybody is rushing for the exits," said Vern Krishna, counsel for TaxChambers LLP in Toronto.

White hints at more IFRS involvement

While a number of important economies including the United States have not made the leap to international financial reporting standards, global standards "are both desirable, achievable and, in my view, inevitable," says Ian Mackintosh, vice-chair of the International Accounting Standard Board.

However, Mackintosh’s view differs from IASB chair Hans Hoogervorst, who in the wake of several failed convergence projects with the Financial Accounting Standards Board said that full convergence with U.S. accounting standards has become impossible.

Despite Hoogervorst’s pessimism, though, Securities and Exchange Commission chair Mary Jo White seemed to put IFRS consideration back on the U.S. agenda in a recent speech, noting "I have made it a priority for the commission to position itself to make a further statement on this very important subject … and I hope to be able to say more in the relatively near future."

Board moves on long association standard

The International Ethics Standards Board for Accountants (IESBA) has proposed beefing up its standard dealing with potential threats to auditor independence.

The proposed changes, released Aug. 14 in an exposure draft, would strengthen general provisions applicable to all audit engagements dealing with the potential threats created by long association with clients. They also include an increase from two to five years in the mandatory "cooling-off" period for the engagement partner on public interest entity (PIE) audits, strengthened restrictions on the type of activities that former key audit partners can perform for audit clients during the cooling-off period, and a requirement to have those charged with governance — often the audit committee — agree to any proposed exceptions to the rotation requirements.

The IESBA is also proposing strengthened provisions in Section 291 of the code dealing with assurance engagements.

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