Toronto becoming more expensive to live

Not through any direct experience of my own, although my landlord did take the opportunity to raise my rent the maximum allowable by law a month ago, but the city has been moving up the ranks of the most expensive on the planet.

Toronto of course ranks first in Canada as the most expensive place to live in the country, but its our international ranking that is more telling. We now rank 47th out of the top 144 cities, moving up from 82nd last year! That’s a 43% change in just a year, and analysts are basing it primarily on the strength of the loonie.

In other Toronto news, today is our annual Pride Parade, the world’s largest, celebrating our gay and lesbian community. I won’t be attending this year though, because the Netherlands is playing Portugal this afternoon! Go oranje!

Tangled web they wove

Over at the AAO Weblog, there’s an interesting post concerning the Adelphia fraud and an “enabler”, Scientific-Atlanta, which is now a unit of Cisco.

Around August 2000, Adelphia asked Scientific-Atlanta to increase the price of digital cable television set-top boxes it was selling to Adelphia – then kick back the difference to Adelphia in as “marketing support” for moving the set-top boxes.

How did the scheme work to increase earnings? Adelphia capitalized the set-top boxes at the inflated purchase price (and amortized the cost over more than one period) and the marketing support kickback was recorded as a reduction of ordinary marketing expense!

Ingenius! Now if Adelphia had just channelled their creative energies to building a legitimate business… Anyway, this is news because the SEC accused Scientific-Atlanta of aiding and abetting the fraud.

Without admitting or denying guilt, Scientific-Atlanta is settling the charges for $20 million.

NAFTA super highway to accelerate North American trade

I stumbled across this story through digg and it seemed pretty well supported even though it hasn’t been covered in the mainstream media at all yet. The Bush administration appears to be planning for a Mexico-USA-Canada “super corridor” to bypass a couple unions.

The new road will allow containers from the Far East to enter the United States through the Mexican port of Lazaro Cardenas, bypassing the Longshoreman’s Union in the process. The Mexican trucks, without the involvement of the Teamsters Union, will drive on what will be the nation’s most modern highway straight into the heart of America. The Mexican trucks will cross border in FAST lanes, checked only electronically by the new “SENTRI” system. The first customs stop will be a Mexican customs office in Kansas City, their new Smart Port complex, a facility being built for Mexico at a cost of $3 million to the U.S. taxpayers in Kansas City.

The first segment through Texas is ready to be constructed next year! The implication is the creation of a North American Union like the European Union, although it’ll probably end up being more like a natural extension of NAFTA. Less politics, more economics.

School of Accountancy through July 4

Posting may be infrequent over the next few weeks as I focus on the School of Accountancy, which started yesterday and doesn’t end until July 4. It’s being held at York University‘s Keele Campus in North York (Toronto).

It consists of classes every day, two practice exams this Friday and the following Friday, and the final exam at the end. I’m not the only blogger who’s there either!

The School of Accountancy curriculum provides for the development and enhancement of required CA competencies through integration and application of technical knowledge. It is also fundamental to the development of pervasive CA qualities (ethical behavior, personal attributes, professional perspective and judgment) and specific CA competencies required for the UFE and the practice of public accounting.

Case studies addressing professional-level competencies and reflecting real business scenarios, likely to be encountered in practice, are used extensively. Students experience a significant amount of work in small groups, including presentations, throughout the three-week period – there are no lectures at the School of Accountancy.

So far there have been minimal presentations. They’ve been limited to just sharing the results of small group discussions, and haven’t required standing up in front of the class. My seminar leaders may be going easy on us though, it may be different in other seminars.

There are around 1,100 CA students here, and we’re broken up into groups of about 30 for seminars, and small groups of 5 within the seminars for group work on the cases.

FASB and AICPA seek small, private company input

The Financial Accounting Standards Board and the American Institute of CPAs have announced a joint project whose aim is to seek “constituent feedback on proposed enhancements to the FASB’s standard-setting procedures that would determine whether the Board should consider differences in accounting standards for private companies.”

This is the classic conundrum commonly known to those in the biz as “big GAAP little GAAP.” (Link via Jack Ciesielski’s AAO Weblog.)

What this refers to is GAAP for “big”, public companies and “little”, private companies. It’s about striking a balance between the cost of complying with accounting standards for small companies with its relative benefit to financial statement users.

In Canada, the profession has responded to the issue with something called “differential reporting”, which is a set of options that non-publicly accountable entities can choose to make their financial reporting cheaper, without sacrificing quality.

The most common options that I see in my work have to do with accounting for subsidiaries and other significantly-influenced investments, and income taxes. Ordinarily controlled entities are required to be consolidated in the financial statements with the parent company, but under differential reporting you can use easier methods such as the equity or cost method. They don’t provide the same level of disclosure or quality of information, but in smaller companies this isn’t the end of the world.

For income taxes, the taxes payable method is an option that can be used instead of the future income taxes method, allowing a company to forgo measuring their future income taxes, which are taxes that are likely to be assessed in future periods and arise from timing differences between financial accounting and tax laws.

In order to use differential reporting options, all the shareholders must agree to use it. As you can imagine, it is easiest and used most often in companies with owner-managers or only a handful of shareholders. It is useful because these types of shareholders are privy to information in the companies that ordinary shareholders in public companies simply aren’t, by virtue of their increased involvement in the daily operations.