Does the media understand public accounting?

The short answer is no. Here is a story from the Associated Press that claims the FASB is going to “tackle the thorny question of accounting for leased equipment and property.” Excuse me? Have we just been ignoring leases until this point? Does any journalist do research any more?

Lease accounting isn’t new, although it is constantly being revised due to the complicated financing arrangements implemented by business. There are very few differences between accounting for leases between the US and Canadian GAAP. As with every other area of accounting, we just follow business – if the arrangement is complicated, then the accounting for that arrangement is likely to be complicated.

Stock options are another area of complication, and one where ordinary journalists (and even those who are primarily business journalists – a contradiction in terms if I’ve ever seen one) often mix up the facts for the hysteria.

When you read something in the mainstream media about public accounting, please take it with a grain of salt because it is inevitably rife with misinformation, either deliberate or otherwise.

Auditor laptop stolen, confidential data included

The auditor for Hotels.com is Ernst & Young, and one of their staff working on the audit had their laptop stolen from their car, compromising the credit card data of approximately 243,000 customers.

These things will happen, but what I don’t understand is whether they’re just assuming whoever stole the laptop is going to be able to crack the password that is no doubt protecting it. I have to enter two different passwords just to get into my work laptop, one to boot up and one to log in.

Am I missing something here? Are passwords not enough to protect the data? Can you just rip the hard drive out of the laptop somehow and extract the data that way? Is any data truly safe, then?

EY has pledged to encrypt sensitive data such as this in the future, so maybe that holds the key to safeguarding the intangible assets of audit clients.

Broad base and low rates = recipe for tax fairness

The Tax Foundation‘s Tax Policy Blog has an interesting post concerning a report produced by something called the (US) Congressional Research Service.

The report investigates the possibility of a flat tax in simplifying the tax code and concludes that the existence of a progressive system isn’t what is making things complicated at all. I’ve already blogged the very same thing: Tax brackets don’t make taxes complex!

The post makes the good point that its the erosion of tax bases that complicate the system and that simplifying taxes means simplifying the bases, which will allow the lowering of rates across all brackets. Very succinct post, and the blog overall is top notch.

Delving into union contracts

I spent the better part of today and yesterday auditing a client’s payroll system. They have recently switched to a new system and the difference between old and new is dramatic.

The reports are easier to read and understand, the font is easier on the eyes and brain, and the electronic interface is prettier too. I don’t know how much it cost them but I hope they find it worth the investment.

What I learned today is that unions very much control the labour supply in this industry. It is a risk in their line of business that they must deal with: The constant threat that the union will strike and their business will come to a grinding halt.

Unions have the rules stacked in their favour: They dictate the terms under which their workers will work down to the most minute detail. The downside to the workers is the onerous dues they have deducted from each pay cheque, but unionized workers at this client make double what non-unionized workers make, so it probably works out better for them overall.

Mapping out my clients after a year in public practice

I have been playing around with Windows Live Local lately, Microsoft’s competition for Google Maps.

GTA map of audit clientsI decided to map all the clients where I’ve been in the last year with my firm. For the blue ones I just had to search for the business name, but the red ones represent clients that I had to manually search for their address and add them because they didn’t show up in a business name search for whatever reason.

I thought it was pretty interesting to see it all laid out there. One client in Waterloo, an inventory count at a location in Guelph, a client in Burlington, one in Brampton, Pickering and Vaughan, a few downtown Toronto, the rest in Mississauga, Etobicoke and North York.