The Pacific Alliance – Discussions with Australia

This month, Canada will be having discussions with Australia “to negotiate a free trade agreement with the Pacific Alliance members as a bloc.” Read more from the Canadian TCS.

Great Management comes from Great Business Planning  

leadership2It should go without saying but many business owners fail to see that great management is derived from great business planning.
Planning entails juggling resources and priorities in an orderly fashion, whereas management is a leadership role tied in with the overall productivity of the business. The two are intrinsically linked and cannot be easily separated. You can have some great people in a leadership role to manage your operation, but if you don’t have a road map, what exactly are they going to manage?
So, how does one go about ensuring that there is great management with an even better business plan?
First and foremost you need to have a vision and no, we’re not talking about vision boards and “down the next ten years I want” sort of thing. This strategy needs to be one where you think about what the objectives of your business are and who are the best people to help you reach these objectives. They are little nuances in the daily operation of your business, not vague futuristic ideas. Furthermore this vision needs to be communicated with your employees and other actors in your business (financial, administrative, contractors). Do not keep everything in your head, write it out, sort it out and plan in out: maps work best when you make the picture not envision them.
While you’re creating your map, start to define your long term goals. Remember, be specific, not vague. Set out milestones that you are determined to achieve, keep them realistic but also challenging. Do not just look at being in the black and out of the red, look at presence, memorability and engaging in your business. If you only look at the bottom line you might just lose the bigger picture and miss out on areas of improvement or even surprise areas of success.
Do you see character on your team? People who are shaping up to be real assets and have the potential to enhance your business with their ideas and innovations? If you do then you need to understand how to best utilize them. Let them lead, make sure your team is committed and willing to put in the effort, and if they are passionate about your vision and long term goals they will most definitely be the best option in your businesses long term success. Great management feeds off of a great business plan and in that sense a great business plan looks to have a great team of leaders making the plan into a reality.

 

Vancouver: A Gateway to Asia

vancouver-duskBrian Hutchinson’s article in the National Post goes in depth to discuss the recent phenomenon of affluent Asians congregating in Vancouver, BC- Canada; bringing with them various changes in the economy and local culture.

Along the Pacific Rim, British Colombia has grown integrated with Asia in terms of investment and immigration received from the continent. Chinese money brings with it support for local businesses and boosting local employment. Gone is the profile of a middle class Chinese immigrant striving to obtain the “North American Dream”, instead these newcomers arrive with ample money in their pocket, and ready to spend it.

From 2005 to 2012 according to Statistics Canada thirty-seven thousand Chinese millionaires have arrived in B.C as permanent residents under the Immigrant Investor Program – a Federal Initiative that acts as a gateway for wealthy immigrants to expedite their entry into Canada via low-interest loans given to the provincial government.

Vancouver, B.C has become an investment hub and a gateway to the Asian market, bridging communities, cultures and most importantly, ample capital.

How to avoid an audit

An audit is an official inspection of an individual or an organization’s accounts via an independent body, which is typically the revenue agency of the country the individual or organization belongs to. There are different avenues countries revenue agencies take when looking into a potential audit:

  • Random selection
  • Project
  • Computer program
  • Secondary files
  • Leads
  • Sector

The best way to avoid an audit is to file all the required information with your returns, file on time, and not claim deductions subject to abuse.

The most commonly audited type of income is business or professional income. Income from property such as rental income is also a target for audits. Employment income and pension income are seldom audited, although certain deductions such as moving expenses, childcare expenses, and employment expenses are often reviewed. Tax shelters such as limited partnerships are often audited as project files.

A simple way to ensure your return is done efficiently and effectively is to have a professional do the work. Stats show that up to 40% of returns done by hand contain arithmetic errors. An accountant significantly reduces the chances of errors and audit triggers such as:

  • Questionable appearing investments.
  • Large variation in income from year to year, or in financial statement ratios of interest to the tax man.
  • Financial statements that are unusual for your industry.
  • Unusual deductions or incorrect expense categories.

The best route is to be prepared and ensure when filing and submitting information to your revenue agency, that it is done correctly and on time. What better way to do that than with a professional?!

Fraud Prevention

It can happen to anyone, so it can happen to you: A trusted employee embezzling funds and committing fraud.  What can you do to make sure that you and your business are not victims of such a breach of trust? Of course, it always is a trusted employee – someone you did not trust would not have the opportunity to commit fraud. Being distrustful is not the solution either; the solution is to have controls and procedures to make sure that employees do not have the opportunity to commit fraud.
Like a governmental system of checks and balances the best way to prevent fraud is to segregate duties. Even a business with only one or two employees can have effective controls. For small businesses, internal controls are mostly common sense and paying attention, not elaborate procedures. There are many ways fraud can occur, but they can usually be combated by just a few procedures.
Minimize access to goods by giving keys and alarm codes to as few people as possible – ideally, just the owner has keys and codes. Change the codes often, and don’t use birthdays or other easily guessed combinations. Change your locks every year or two.

  • Take regular inventory counts, supervise the counts closely, and have any spoiled goods set aside for your inspection. Ideally, the counts should be done by someone other than the person who orders, ships or receives goods.
  • Any discounts or markdowns should be approved, preferably by you.
  • Make sure clerks actually ring everything into the till, and at the right price. Don’t allow clerks to void transactions without approval.
  • Have clerks count and total the cash in the till at the end of their shift, then have someone else like you or your bookkeeper re-count the cash and compare it to the till tape. If your bookkeeper makes up the bank deposit, check it to the till tape and take it to the bank yourself. Reconcile the bank yourself, and do it regularly.
  • If you have a receptionist or office clerk, have them open the mail and list all cheques with date, amount, and payer info. Occasionally check the date a cheque in the bank deposit actually came in – it should be listed as received after the last deposit.
  • Write all cheques yourself, and don’t give employees signing authority. Never sign cheques in blank, and verify the account and amount you are paying by looking at the invoice or statement.
  • Make sure employees take an annual vacation, and that their job is done by someone else while they are gone – many of the more sophisticated frauds can be uncovered by this simple step.
  • One of the most overlooked controls is to check references in detail when hiring new employees, and to run a credit report on applicants or when promoting. Statistically, employees with pressing debts or bad credit histories are more likely to commit fraud.

Research by Dr. Donald Cressey (Association of Certified Fraud Examiners) led him to develop a concept called the Fraud Triangle. Basically, he states that three elements are present in most frauds.

  1. An un-shareable financial problem – a pressing problem that can’t be solved by ordinary financial resources and that the employee can’t get help with.
  2. Access to funds – your funds.
  3. Rationalization – an excuse or reason for the fraud.

There are steps you can take to identify or stop all three legs of the fraud triangle.

  • Pay attention to your employees so you know when they have financial problems, and talk to them about their problems.
  • Use the controls we have been talking about to limit access to cash or goods. Encourage an atmosphere of honesty in the work place, to make it harder to rationalize theft, and to encourage other employees to report anything unusual.
  • Be fair and consistent in disciplining employees, and make sure employees know the consequences of committing fraud.

Finally, talk to your accountant. He or she can help you to design easy to follow controls for your business to reduce the chance of fraud, and help you to spot warning signs in the financial records.

 

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