outlook - CPA BC

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f e a t u r e sBlue SkiesCGAs Ralph Wegner and Rick Hembruch dis-cuss Kelowna Flightcraft's stratospheric success.

SessionsCGA-BC's now quarterly student report.Ana Silva, Carter Honda's accounting wheeler-dealer; pictures that Connect BCIT and CGA-BC; and coming changes to the program.

v i e w staxmattersWhile you were out. Developmentspractitioners may have missed during tax season.

techviewWatson, come here and delete my v-spam. How VoIP is changing the Net and the phone.

capitalreportIda Chong three-peats; CGAs encouraged to take part in federal politics.

finalwordRita Estock on making sense of the B.C. election, and making progress in the economy.

contentsoutlookJ u n e 2 0 0 5 • V o l . 3 2 N o . 2

s p o t l i g h tworkingpapersNew international standards.

practicereviewTax filings become part of review process.

snapshotsCGA-BC honoured by co-op educators.

CGAcalendar of events

n o t i c ecall for nominationsSix vacancies on 2006 Board of Governors need to be filled.

Editor ’sMessage

Economy and CGA-BC are Flying HighB.C.'s economy is going for some pre-Olympic gold. Job creation and housing starts are up, our eco-

nomic growth is the highest in Canada and new businesses are opening everywhere.

So, it's appropriate that this issue of Outlook goes skyward to bring you the story of two CGAs

who really epitomize B.C's high-flying boom. I'm talking about top guns Ralph Wegner and

Rick Hembruch and how they have helped take Kelowna Flightcraft from local to global com-

petitor. David Ferman describes how these two accomplished professionals have helped this lit-

tle-known company soar and go head to head and win against some of the world's biggest play-

ers in aviation.

On page 24 you'll see that Association has taken its branding efforts to new heights. Through a

joint effort with CGA associations across Canada, we are participating in a refreshing new ad

campaign on all Air Canada flights. Watch for it the next time you fly with Air Canada or go to

www.cga-online.org and fasten your seatbelts for a 15-second getaway.

You'll also notice we’ve integrated Sessions, the newsletter for CGA students, into the magazine.

We’ve done this so members and students can share each other’s accomplishments; one magazine

for one association.

Remember, if there's a subject you'd like to see covered or member or student who you think

should be profiled in future issues of Outlook, drop us a line with a brief summary of your story

idea or subject.

AdvertisingFor advertising rates contact Pardeep Sidhu at (604) 730-6228 or visit our Website at www.cga-online.org Outlook is the premier way to contact B.C.’s CGAs.

Outlook is published four times a year by the Certified General Accountants Association of British Columbia and is sent to 13,000 CGA members and CGA students. Opinions expressed are not necessarily endorsed by CGA-BC. Copyright CGA-BC 2005.

Articles, enquiries and lettersArticles, enquiries and letters should be sent to Outlook:

CGA-BC, 300-1867 West Broadway, Vancouver, B.C., V6J 5L4(604) 732-1211 or (800) 565-1211

ISSN 1488-2337 Outlook - Certified General Accountants Association of British Columbia.

CGA OnlineMembers, you can now find all of your most important CGA-BC services online at CGA Online atwww.cga-online.org.

Cover PhotoRalph Wegner, CGA, and Rick Hembruch, CGA, by Ron Sangha

E xe c u t i v e S t a f f

O u t l o o k S t a f f

outlook2005

By Edward Downing

PresidentRita M. Estock, DBusMgmt, FCGA

Past-President/TreasurerLen A. Pietrzykowski, FCGA

First Vice-PresidentMoe Jones, CGA

Second Vice-PresidentGordon Clissold, CGA

SecretaryR. W. (Bill) Caulfield,BA, FCIS, CGA (Hon.)

Executive DirectorR. W. (Bill) Caulfield,BA, FCIS, CGA (Hon.)

Director of AdministrationDan Cheetham, CGA

Director of Marketing & Communications

Edward Downing, MA (Journalism)

Director of Education & Student Services

W. D. (Bill) Johnson,FCIS, P.Adm., FCGA

Director of Corporate AffairsJuliana Laing

Director of Information Technology

A. Marc FoxDirector of Member Services

Kathy Hurst, CGADirector of Public Practice Services & Public Practice Advisor

Tina Peters, BA, CGA

Managing EditorEdward Downing (604) 730-6208

Communication OfficersSheila Keenan (604) 730-6238David Ferman(604) 730-6206

Graphic DesignerTrevor Hargreaves(604) 730-6226

ContributorsBrigitte Ilk, CGAEd Kroft, LLB, LLM, CGA (Hon.)Susan ThrelfallJohn Yu, MSc., CDP, FCGA

E xe c u t i v e C o m m i t t e e

or many practitioners, March andApril is the time in which continuingeducation takes a back seat to the

demands of tax compliance. Therefore, asyou stare at the stack of neglected readingthat sits on your desk and stares back,recriminating, you might be wonderingabout the legislative, judicial and adminis-trative developments you missed whileyour head was down. Here are a few.

Legislative DevelopmentsThe 2005 budget proposals in Bill C 43included income tax measures such as theelimination of the foreign propertylimit for deferred income plans,increases in personal tax credits,changes in corporate tax rates, andincreases in contribution limits forRRSPs and retirement savings plans.Certain items were not included inBill C 43 but will be included in alater bill. These include the incometax proposals relating to persons withdisabilities, medical expenses, adop-tion expenses and agricultural cooperativecorporations. A second bill, Bill C 33,passed into law. This bill contained manyof the tax proposals that were part of the2004 federal budget, including changes tothe administrative rules with respect tocharities and the extension of the carryfor-ward rules for non-capital losses and for-eign tax credits for ten years.There has still been no bill introduced intoParliament relating to the TechnicalAmendments to the Income Tax Act. Sim-ilarly there has been no draft legislationagain introduced in bill form pertaining toforeign investment entities, non-residenttrusts or interest expense. This draft legisla-tion has been outstanding for a long timeand is expected to be made retroactive insome cases.

The Federal Court of AppealSeveral cases have been decided in which ataxpayer was successful in reversing adversedecisions under the Fairness Package.Some of the cases relate to claims forSRED tax credits (Dorothea KnittingMills) or to claims for losses when taxationyears otherwise appeared to be statute-barred (Lanno). The new rules in section222 for collection of tax debts (10 years)were determined to be constitutional (Gib-son).

The Tax Court of CanadaThere were a number of interestingdecisions of the Tax Court of Cana-da. First, in Pamela Allchin, thetaxpayer was assessed in respect ofher world income as a resident ofCanada. This decision went to theFederal Court of Appeal and wasreferred back to the Tax Court for aredetermination of residence. Afterthree different courts reviewed thematter, the taxpayer was considered

not to be a resident of Canada by virtue ofthe tie breaker rules in the U.S.-CanadaTax Treaty. This decision is noteworthybecause it is the first to analyze, on a factu-al basis, the application of the various tie-breaker rules set out in the U.S.-CanadaTax Treaty. Another decision, Alcatel, hasdrawn lots of attention. Here the Tax

Ta x M a t t e r s

The Supreme Court of CanadaSince the retirement of Mr. JusticeIacobucci, several tax cases have been orare now before the Court for considera-tion. One decision, Tsiapraillis, resulted ina victory for the Crown and a split decisionwith strong minority dissent. On March8, 2005, the first cases on GAAR wereheard and decisions are pending, with dis-sents expected. On November 17, 2005,the Court will hear the case involving Plac-er Dome Canada Limited and the OntarioMinistry of Finance. This case, involvingmining taxes, was won by the taxpayer in

the appeal courts, but the Crown wasgranted leave to appeal. On May 19, 2005,the Crown obtained leave to appeal theFederal Court of Appeal decision favour-ing Imperial Oil Limited in its claims fordeductions of foreign exchange lossesunder paragraph 20(1)(f ) of the Act. Thiscase will likely be heard in 2006. Afterthese decisions havebeen rendered, thequestion is what willbe the trend regard-ing statutory inter-pretation of taxingstatutes and taxavoidance?

What Happened While You Were Doing T1 Returns?

Under the new code, taxpayers will have the

right to contact the B.C.Ombudsman to assist in

dispute resolution.

Ed Kroft, LLB, LLM, CGA (Hon.), is a Partner in the Vancouver officesof McCarthy Tetrault, Barristers and Solicitors, which has more than 40 tax lawyers across Canada. His practice is restricted to taxation.

Developments from across the country.

By Ed Kroft, LLB, LLM, CGA (Hon.)

continued on page 4

Court permitted the calculation of SREDinvestment tax credits using stock optionbenefits as a basis for calculation. The con-troversy was whether the benefits consti-tuted expenditures to the issuing company.

Prescribed Rates of InterestThe prescribed rates of interest for the sec-ond quarter of 2005 will be in effect untilJune 30, 2005. The rates range from threeper cent for calculating shareholder andemployee loan benefits to seven per centon payments of overdue taxes. The refundof income tax overpayments is calculatedat five per cent.

CRA Administrative DevelopmentsThe Canada Revenue Agency's CharitiesDirectorate released Registered CharitiesNewsletter No. 22 on March 11, 2005. Itsets out certain situations and questionsregarding draft legislation and require-ments set out in the Federal Budget of2004. Any officer or director of a charityshould review this bulletin as it containsquestions and answers on a variety ofissues of relevance. The CRA also releasednew information circulars pertaining tosection 116 (Certificates for Taxable Cana-dian Property - IC72 17R5); and to clear-ance certificates on March 17, 2005

Tax Matters continued from page 3

(Information Circular 82-6R3). The CRAalso announced an advanced pricingagreements program for small business-es.which is documented in InformationCircular 94-4R.

B.C. BudgetThe British Columbia budget was tabledon February 15, 2005. It introduced theB.C. tax reduction, which is a non-refund-able tax credit to assist low-income tax-payers. Changes were also made to themedical expense tax credit provisions tomirror the federal legislative amendments.The mining exploration tax credit wasextended to 2016 and changes weredescribed for tax credits for the film andtelevision industry. The mechanics of theforeign tax credit calculation were revisedfor corporate taxation years beginning onor after January 1, 2006.

B.C. Administrative Developments —

The Taxpayer Fairness and Service CodeThe B.C. Ministry of Provincial Revenuereleased in 2005 a Taxpayer Fairness andService Code. This Code was introducedto describe the fairness and service princi-ples that the government will follow whendealing with its "customers." Its purposeis to ensure that taxpayers are aware of

their rights in dealings with the ministryand its staff, and outlines the standards andbehaviour that can be expected from theministry staff. A taxpayer's rights include:the right to courtesy and respect; the rightto privacy and confidentiality; the right tofair treatment; the right to obtain help; theright to complete, accurate, clear and time-ly information; the right to understand thebusiness that is conducted by the ministry;the right to dispute resolution; and theright to a timely appeal.This document is a refreshing read. If B.C.government officials live up to the princi-ples set out within it, then taxpayers shouldbe pleased. Taxpayers will now have theright to contact the Ombudsman of BritishColumbia to assist in the course of disputeresolution. This function is clearly missingin dispute resolution of tax disputes at thefederal level.It is suggested that taxpayers and their rep-resentatives carefully read this documentand rely upon it in dealings with B.C. offi-cials, or as a template for dealing with offi-cials at the federal level. Unfortunately,there is no specific legislative remedy con-templated by the Taxpayer Fairness andService Code to compel performance ifministry officials do not fulfill the Code'sguidelines.

If you are looking for the right financial and accounting

position, CGA-BC's Employment Referral Service is your online

connection. It has been designed to help CGA members and

students connect to career opportunities, as well as to help

companies and organizations fill accounting and financial

management positions.

For more information on how to get a CGAmember or student on your team, contactSusan Slade at: (604) 730-6237, oremail jobs@cga-bc.org.

You'll find up-to-date listingsevery day at www.cga-online.org

CERTIFIED GENERAL ACCOUNTANTS ASSOCIATION OF BRITISH COLUMBIA

T H I N K E M P L O Y M E N T R E F E R R A LT H I N K E M P L O Y M E N T R E F E R R A L

I M P O R TA N T I N F O R M AT I O N R E G A R D I N G T H E B O A R D N O M I N AT I O N P R O C E S S

Call for NominationsCGA-BC Board of Governors

Vacancies for the 2006 Board of GovernorsThere will be six vacancies for the 2006 Board of Governors. A candidate must reside in the electoral district for which he or sheis nominated.Lower Mainland (District 1)

Candidates are requested for five Lower Mainland vacancies. Fourvacancies are for terms of three years each. One vacancy is for aterm of one year.

East/West Kootenay Region (District 5)

Candidates are requested for one East/West Kootenay Regionvacancy for a term of three years.

Form, Profile and StatementAccompanying the nomination form is the Board Member Profile—a document that summarizes the qualities, skill sets and areas of expertise that nominees should ideally possess. Members are encouraged to consider this information prior to submitting a nomination.

Nominees must provide a Personal Statement indicating the skills and experiences that would make them a valuable addition to the CGA-BC Board.

Nomination DeadlineIn accordance with the Bylaws, nomination forms must be submitted to the Secretary no later than 4:30 p.m. on

Wednesday, August 17, 2005.

Nomination ProcessNomination packages, including nominationforms, are available to members in the following ways:

1. On our Website at www.cga-online.org.Sign in with your ID number and passwordand click on the Nomination Package

2. The Association will email all members(whose email addresses are registered withthe Association) the nomination package inPDF format.

3. A hard copy will be mailed to you onrequest. Simply call us at (604) 732-1211 ortoll free at (800) 565-1211 and follow theprompts.

To get your nomination package, visit www.cga-online.org or call (604) 732-1211.

5Request a NominationPackage

The signatures of two members, whose names will be published,are required as endorsements of the nomination.

icon: under “What’s New.”

tel and Navigata Communications,Primus and YakWorldCity.

In general, there are three types of VoIPservice: fixed, nomadic and foreignexchange. Fixed VoIP service users canonly place a telephone call from the loca-tion where their service is being provided.Nomadic VoIP service users can makecalls from any location where users areconnected to the Internet. Foreignexchange VoIP service userscan receive telephone callsdialed as local calls in anoth-er exchange that they haveselected (for example, a userlocated in Vancouver with aCalgary local telephonenumber).

The Economics of VoIPVoIP can offer significantcost savings over traditional telephone ser-vice. For example, the city of Mississaugaspent $3.3 million dollars on a new VoIPnetwork to serve over 2,000 phones. Thecity was able to save $700,000 annuallyfor its telephone services.

With traditional telephoneservice, we pay a flat month-ly fee for local telephonecalls and a per-minutecharge for long-distancecalls. VoIP calls are placedacross the Internet and canbe used to call anywhere inthe world. Most of us pay aflat monthly fee for Internet

service, regardless of the amount of usage.If you make a large number of long dis-tance calls, VoIP can become very attrac-tive indeed as there is no per-minute feefor long distance calls.

oIP (Voice over Internet Protocol)is the transmission of voice trafficover the Internet. The Internet

Protocol (IP) was originally designed fordata traffic over the Internet. However, asbandwidth becomes faster and more gener-ally available, it became possible to trans-mit voice as well as data over the Internet.

VoIP enables you to make telephone callsusing a computer network, over a data net-work that uses Internet Protocols. VoIPconverts the voice signal from your tele-phone into a digital signal (data packets)that travels over the Internet. At the receiv-ing end, these data packets are convertedback to voice. You can also make VoIP callsdirectly from any computer on the Inter-net, using a headset with a microphone.

The growth in the VoIP market has beenphenomenal. According to the ProbeGroup, the market for enterprise VoIP willgrow to $7.1 billion in 2008. North Amer-ican cable operators and telephone carriersare aggressively marketing the VoIP ser-vice. The four major cable service providersin Canada-Rogers Cable, Shaw Communi-

cations, Videotron and Cogeco Cable-alloffer low prices and target non-broadbandand non-cable customers with VoIP ser-vice. Unlimited calls start for as little as$19.95 a month. Other communicationscompanies are also active in the VoIP mar-ketplace. These include Telus, VonageCanada, Voice & Data Systems Inc., Sask-

Te c h V i ew

VVooiiccee oovveerr IInntteerrnneett iiss CCaalllliinnggBy John W. Yu, MSc, CDP, FCGA

John W. Yu, MSc, CDP, FCGA, is an avid watcher and consumer of technology, and has been working in the IT industry since 1970. He is Vice-President of Information Technology at CGA-Canada. He is also the privacy officer for CGA-Canada and CGA Shared Services Facility Corp.

Key advantages of VoIP over traditionaltelephone service:

· There can be significant savings in longdistance telephone costs that can be quiteimportant to many organizations, particu-larly those with international markets. · An integrated voice/data network allowsmore standardization and can result inreduced total equipment costs.

However, VoIP is not free. Some VoIPproviders charge for a long distance call toa number outside your calling area, similarto existing, traditional wireline telephoneservice. Other providers permit you to callanywhere at a flat rate for a fixed numberof minutes.

For larger organizations, VoIP can alsoreduce the cost associated with anychanges to the telephone service arisingfrom the addition of new staff or staffmoves. Instead of getting the telephonecompany to send technicians over to makeany changes, the organization's own sys-tem administrators can manage thesechanges centrally, using a Web-based tool.

However, there are challenges associatedwith VoIP.

continued on page 7

If you make a lot of longdistance calls, VoIP canbecome very attractive

indeed, as there is no per-minute fee for long

distance calls.

VoIP, the use ofphone calls over theInternet, will be a $7

billion industry inCanada by 2008.

VoIP gives entirely new meaning to dial-up Internet service.

Security risks Security is a critical issue facing organiza-tions using VoIP. Most VoIP systems runon servers that are as susceptible to hackingor denial-of-service attacks as any otherserver-based application. Ifhackers were to break intoan organization's VoIP sys-tem, there is the risk thatsensitive data may fall intothe wrong hands. VoIP gate-ways stand the risk of beinghijacked by hackers forunlimited unauthorized callsaround the world. There isalso the potential risk of hav-ing the VoIP calls eaves-dropped by hackers who break into thenetwork. However, all these risks can bemanaged.

911 Emergency Services Over the pastyear, a number of horror stories surfacedsurrounding 911 calls in the United States.Several of the VoIP service providers had

made 911 an optional service and userswho did not subscribe to this optional ser-vice were unable to make 911 calls inemergencies. To avoid this pitfall, in Aprilthis year, the CRTC in Canada ruled that

all VoIP service providers must provide911 service and notify their users of anylimitations.

Network OutagesTraditional telephone systems are poweredby the telephone company's circuits. It isextremely rare for these phone systems to

suffer outages even if there is a power out-age affecting the building or an entire dis-trict. But for VoIP phones, when there is apower outage, the phones will also notwork. This risk can be mitigated to some

extent using UPS (Uninter-rupted Power Supply) sys-tems.

VoIP or NotThere is a clear trend forbusinesses to consider VoIPas a replacement for the tra-ditional circuit-based phoneservice. Recent surveysreport that over 60 per centof organizations are either

implementing or considering implement-ing VoIP in the near future. As the tech-nology improves, the case for VoIPbecomes more and more compelling. Itwould be a mistake to dismiss VoIP with-out careful consideration of whether, andhow well, this emerging telephone tech-nology could benefit your organization.

continued from page 6

The risks include being hijackedby hackers for unlimited unautho-rized, long distance calls and the

possibility of eavesdropping byhackers who break into the

network.

ber of the Women's Caucus Committeeand the Vancouver Island Coastal Caucus.She has also been a member of the SelectStanding Committee on Public Accounts,the Select Standing Committee on Finance

and Government Services, and the SpecialCommittee on the Citizens' Assembly onElectoral Reform.

Ida has received a number of accolades

da Chong, CGA, is heading back tothe legislature after scoring an impres-sive third term win in the May 17

provincial election. Ida, who was Ministerof Advanced Education and the LiberalMLA for Oak Bay-Gordon Headwhen the writ was dropped, received13,443 (47.52 per cent) of votes. Shedefeated New Democrat CharleyBeresford who polled 12,016 or 42.47per cent of the 28,292 total votes castin the riding. Prior to becoming an MLA, Ida hadbeen in public practice and served as aSaanich councillor before defeatingformer NDP finance minister Eliza-beth Cull in 1996. Since the 2001election, Ida has served on TreasuryBoard, the Select Standing Commit-tee on Crown Corporations, the SelectStanding Committee on ParliamentaryReform, and as chair of the GovernmentCaucus Committee on Economy and Gov-ernment Operations. She was also a mem-

C a p i t a l R e p o r t

Edward Downing is CGA-BC’s Director of Communications.

Ida Chong Returned for Third Term

from the Association including the J.M.Macbeth Award for service at the chapterlevel and the Harold Clarke Award for ser-vice on a provincial committee. In 1999she was awarded the CGA Community

Service Award.

Heading to the private sector:After serving a term as the MLA forVancouver-Fraserview, CGA KenJohnston chose not to run for re-elec-tion and is returning to the private sec-tor. Former Supreme Court JusticeWally Oppal received the nominationfor Ken's seat and was elected as a Lib-eral MLA. Oppal, who has had a dis-tinguished legal career, is tipped as acabinet minister.

Voter turnout down:Voter turnout figures released by ElectionsBC for the May 2005 general electionwere the second lowest in B.C. history.Only 57.5 per cent of eligible voters casttheir vote, down from a record 70.5 percent of eligible voters who voted in 1983.Note, these numbers were accurate to May26 and may change at the time of the finalcount on May 30. CGAs invited to provide input into newprovincial budgetThe Select Standing Committee onFinance and Government Services will besoliciting public and professional inputinto the 2006/2007 provincial budget aspart of its annual consultation process forthe fall. And to help it formulate its posi-tion, the Association will be seeking mem-ber input over the summer. Watch for anemail to all CGA members once the offi-cial announcement is made. In the mean-time, if you have specific recommenda-tions, please email me at edowning@cga-bc.org. Remember to register your emailaddress for important news from the Asso-ciation if you have not already done so.

continued on page 9

By Edward Downing

Ida Chong is back in the legislature after May 17 election.

This summer, CGA-BCwill be seeking member

input into its recommendations to the

2006/2007 provincialbudget.

Provincial election highlights and some federal matters.

Accounting standards under reviewAs part of its new strategic plan, theAccounting Standards Board of Canada(AcSB), the body that sets accountingstandards for Canada, is seeking inputfrom the accounting profession. The planmaps out a number of new directions thatcould potentially change the way account-ing standards in Canada are set. The AcSBis seeking input on the strategies them-selves, and welcomes all feedback. If youhave specific insights or opinions onaccounting standards, you can access theplan at www.acsbcanada.org and followthe links. The AcSB consists of nine votingmembers from a variety of industry back-grounds. Robert Morgan, CFA, CGA,Forbes Morgan Consulting, of Montreal isthe CGA representative on the board.

CGAs invited to get involved in federalpolitics

While the prospects of a federal electionmay have dimmed for now, it's clear giventhe fragile balance of power in the Houseof Commons that an election could becalled at a moment's notice. And once thewrit is dropped, there will be lots of oppor-tunities for CGAs to get involved in arange of activities from working as cam-paign Chief Financial Officers to auditingriding associations.

Naturally, the Association encouragesCGAs to get involved in the politicalprocess at all levels and take advantage ofthis chance to network. Candidates musthave their auditor appointed before theyfile their papers with Elections Canada, sotiming is crucial especially given the cur-rent uncertainty around this Parliament.

The Website for Elections Canada can befound at www.elections.ca. You will findinformation about the election process,frequently asked questions, links to yourelectoral district, links to political parties,and a large number of documents relatedto federal elections in Canada. You willalso find links to an Elections Canada doc-ument entitled “Election Handbook forCandidates, Their Official Agents andAuditors.”

If you are interested in performing thiswork, you should contact local candidates

and riding associations personally to offeryour assistance. In addition to the Elec-tions Canada Website, you can find infor-mation about the various political partiesat the following links (in alphabeticalorder):

Conservative Party of Canada: www.conservative.ca

Green Party of Canada: www.green.ca

Liberal Party of Canada: www.liberal.ca

New Democratic Party of Canada:www.ndp.ca

CGA-Canada is developing an electionpackage. If you have any questions, orrequire further assistance, please do nothesitate to contact me at edowning@cga-bc.org.

continued from page 8

From the air, it could easily be mistaken for part ofthe Kelowna airport. Tarmac, squat administrativeoffices draped in no-nonsense sheet metal, cavernoushangars, and the seemingly random placement ofassorted aircraft all shout airport. But once at groundlevel, a close-up view of the airplanes gives KelownaFlightcraft away.

Like chorus girls backstage at a Broad-way musical, the aircraft are busy primp-ing in various states of undress. Insteadof rouge and lipstick, here is a Boeing727-100 receiving a final paint job-cost$60,000. Another high-flyer, in theequivalent of a costume change into boaand sequins, takes on a whole new inte-rior including hydraulics and avionics.

And rather than stepping into a pair ofheels, how about a stretch job? Reminis-cent of the magician's staple, the ladysawn in half, we see before us the Conva-ir 580 sliced into unequal thirds. Onlyhere there is no sleight of hand-just team-work, proprietary technology and plentyof heavy machinery. Voila, an additional14 feet. And, finally, in a perverse reversalof standard human liposuction, we havethe Convair belly addition, in which abeluga-shaped tank designed to carry fireretardant is attached to the underbelly ofan already curvaceous Convair C580.

PROFILE

By David Ferman | Photographs By Ron Sangha

From the air, it could easily be mistaken for part of the Kelow-na airport. Tarmac, squat administrative offices draped in no-nonsense sheet metal, cavernous hangars, and the seeminglyrandom placement of assorted aircraft all shout airport. Butonce at ground level, a close-up view of the airplanes givesKelowna Flightcraft away.

From the vantage point outside of the gianthangars, it's easy for the uninitiated to lose theirsense of perspective and imagine that these planesare simply high-tech toys neatly placed around amodel maker's workshop.

But on closer inspection, they are life-size: olderplanes stripped down to their basic superstructurerevealing lightweight aluminum frames and milesof wiring and electronics.

It's hard to believe that they will ever be able totake flight again.

Incredibly, a Convair C580 turboprop which untilrecently had been cruising through the rarefied airat 20,000 plus feet, sits dismembered and helpless,sliced into unequal thirds awaiting a most unusualprocedure — an extension.

Then, like pieces of a model plane, the three sec-tions are effortlessly lifted and fused together usinga combination of teamwork, proprietary technolo-

gy and plenty of heavy machinery. Voila, an addi-tional 14 feet, and valuable cargo space, to helpfuel the voracious appetite of the just-in-time com-ponents industry.

In another section of the hangar, a Boeing 727-100, likely built when many of the techniciansworking on it hadn't even been born, is receiving asimple makeover with a glimmering new paint jobworth $60,000.

Another plane, reduced to a metallic skeleton, istaking on a whole new interior as well as being pre-pared to be refitted with new hydraulics and avion-ics, a move that will extend its life by decades.

And finally in what appears to be the most incred-ible defiance of aeronautical engineering, perhapsthe basics of flight, there is the Convair C580 bellyaddition. Here, a beluga-shaped tank designed tocarry fire retardant is attached to its sweeping fuse-lage, making this plane a vital weapon in the battleagainst forest fires,

PROFILE

By David Ferman | Photographs By Ron Sangha

omething special is going on at Kelowna Flightcraft.Or rather, so much is going on that it is hard forRalph Wegner, CGA, Flightcraft's Director of

Finance, to know where to start explaining the company'smany operations.

"We modify airplanes, we give them new lives; we own, fly,operate and maintain the entire fleet of aircraft for Purola-tor Canada; we run Canada's third largest airline; we trainpilots; and, of course, we now have this big job," says Weg-ner.

The big job weighing on his mind is the CFTS or Con-tracted Flying Training and Support, a rather lacklustername for the company's most ambitious project: to buildand operate a new flight training school for the CanadianForces' fixed wing and helicopter pilots. Announced at theend of March, the 22-year contract between the federalgovernment and Allied Wings, a consortium led by Kelow-na Flightcraft, is sweeping in scope and, at $1.77 billion,jumbo-jet-sized in value.

The Western Canadian consortium beat out Bombardier,the giant aerospace manufacturer, in the bidding.

"This is a turn-key project," says Wegner, who originallyleft Vancouver for a job with Shaw Cable in Kelowna.

"It means Allied Wings is responsible for every singledetail, from plowing the runways, to maintaining aircraft,to operating simulators and computers, designing trainingmanuals, supplying fixed wing aircraft and helicopters, pri-mary flying training instructors, operating weather and airtraffic controls, to building and running the accommoda-tions for pilots in Southport, Manitoba. We're responsiblefor supporting the military to turn raw recruits into mili-tary pilots."

Those pilots will include not only trainees from the Cana-

dian Armed Forces, but also trainees from foreign militaryforces and commercial flight training organizations.

Federal Industry Minister David Emerson told CanadianPress the win sent out multiple messages.

"This is a testament to the fact we do in fact have a nation-al aerospace industry in Canada and a lot of it is right herein B.C. Kelowna Flightcraft and its partners have proventhat a relatively small company with a creative and ambi-tious approach and the right mix of partners with the rightmix of technology can compete for major contracts."

By "relatively small," Emerson means a company of rough-ly 900 employees and $130 million in annual revenues.

"It really is a hell of a job," says Rick Hembruch, CGA,Kelowna Flightcraft's controller. "And this was already acomplex company before we won CFTS. I mean Ralph hasalready worked on the bid for that job for three years, thepartnership agreement, arranging financing, and all therest."

With the billion-dollar baby taking up most of Wegner'stime, Hembruch keeps busy with the records keeping func-tion, preparing financial statements and several reportingassignments.

"From a flight operations point of view, we have the Cana-dian Air Travellers Security charges, as well as all the air-ports we fly out of to keep happy, and we operate in air-ports all across the country."

Hembruch, who worked in public practice for nine yearsbefore boarding Kelowna Flightcraft, also prepares dailyelectronic banking reports for the owner and oversees theinternal maintenance billing function that has to be cap-tured, costed and invoiced to customers outside and insidethe company.

"A huge volume of information is tracked in this office andreported on a monthly basis," Hembruch says of the account-ing department's staff of eight.

A tour of the facilities passes through an engine shop where jetand propeller engine specialists fix and maintain engines. It'sspecialized work and Kelowna Flightcraft's service and mainte-nance record is a testament to diligence and expertise. Overthe course of a two-year cycle, the entire Purolator CanadaBoeing 727 fleet receives comprehensive top-to-bottom main-tenance inspection and repair. Many of the Boeings are 30years or older and the last Convairs were built in the sixties,says Wegner.

The Convair 580 tankers are a Kelowna Flightcraft favourite.With Conair (the Abbotsford-based aerial firefighting server,not to be confused with Convair), Kelowna Flightcraft hasprovided a squadron of nine 580s for the B.C. and Albertaforest services. Earlier this year, the Kelowna Flightcraft /Conair joint venture received an order for four more of thetankers from the Saskatchewan Department of Environment'sFire Management and Forest Protection Branch.

Another Flightcraft specialty is "the Convair Stretch 580,"wherein Convair 580s are extended by seven feet fore and aftof the wings. Adding 14 feet to an old aircraft doesn't soundlike much but the results for the owner and operator are dra-matic.

"It actually adds about 50 per cent to the payload," says Weg-ner, "and it burns less fuel in gross."

That's because a stretch conversion includes changing to newengines with more horsepower that burn less fuel, adding abrand new cockpit, rewiring with lighter, safer Teflon-coatedwiring, beefing up the wings and landing gear and evenstraightening the fuselage.

"Over time, a fuselage will sag. We may only be talking abouthundredths or thousandths of an inch, but what we do is cutthe nose and tail off, sight the fuselage with lasers and correct

the sag. The result is a straighter plane that flies smootherthrough the air."

Total cost for a Stretch 5800: $8 million US. Cost of a com-parable, factory fresh plane: at least $25 million US.

"For all intents and purposes, this is a new plane," says Weg-ner with pride.

The stretch says a lot about the company. It's ingenious,bold, transformative and, at the same time, thrifty, in a do-it-yourself kind of way. This may be a reflection of the com-pany culture as a whole, and its owner, Barry Lapointe, whofounded Flightcraft in 1970.

"When he started," says Wegner, "Barry used to drive downto the Kelowna airport and do repair work out of his pickuptruck. We began our first stretch conversion in 1988, andevery one of those planes, whether in New Zealand or flyingcar parts all over the U.S., is still in service."

For an accountant, Wegner knows a lot about the opera-tions. "Aviation is just a really cool business to be in. It'sfun, it's always changing, and this is a really dynamic com-pany," he says as Hembruch nods in assent.

"And being private, we're able to effect change. If somethingneeds to be done, you do it. We don't get bogged down andwe don't wait for the budget—or anything else—to rollaround," says the director of finance. "That's a large part ofwhy this company is so successful. We're flexible and nim-ble."

Hembruch describes Flightcraft's culture as entrepreneurial.

"If an opportunity shows itself, we capitalize—and quick.For example, Jetsgo goes down one night and we're runninga recovery flight for stranded travellers that night or the nextout of Toronto. That tail stand holding up the Boeing there,one of our guys noticed it was available when Air Canadagot out of maintenance in Winnipeg, and made a deal."

14Pointing out another hangar, Wegner describes how it wasbuilt to house T-33 Silver Star jets Flightcraft was modifyingfor the Canadian Air Force. The company recently capital-ized on the expertise gained on that 35-aircraft job to dosimilar work for Bolivia's air force.

"We took 16 of their aircraft out of the jungle in variousstates of disassembly, checked them out, made them current,replaced the avionics and did a full structural inspection."

In another example of entrepreneurial and technical innova-tion, the company breathed new life into the Russian-madeMi-17 helicopter.

"We designed a new cockpit and fitted it with a Westernavionics suite. It was a real breakthrough for them because itnow makes their aircraft marketable worldwide," says Wegn-er.

Worldwide. That's how Flightcraft views its marketplace.

"We aren't operating in a B.C. industry so much as a globalone," says Wegner. "It's certainly not a B.C. client base;clients are in every corner of the world."

Clients have been plentiful, but what about the lack ofskilled employees said to be undermining so many sectors ofthe B.C. economy?

Hembruch says the company is always looking for skilledtechnicians and came up with its own solution.

"There was a real shortage of structural specialists [highlytrained metal workers] so we started up one school withBCIT and another of our own. Of course, most of the gradu-ates stayed with us."

That is one of Flightcraft's most remarkable features, its senseof self-reliance.

"We take control of everything we possibly can," explainsWegner. "It may be contrary to the outsourcing trends else-where in business, but for us, it's not just economics, it's tim-ing. We control the product and the schedule. If somethingneeds to be done, it gets done to our specs, with our systems,the way we like it."

Even the computer software resides in-house. All the sourcecode to Hembruch's accounting software and the people whocan modify it are internal. And adding to the company'sstand-alone status, Flightcraft has begun preparations for anew hangar that will accommodate Boeing 757s and a newengine shop that will allow its people to do complete engineoverhauls.

"This year coming we're taking a quantum leap," says Wegn-er. "But we've been profitable every year from the very begin-ning. Now we're looking forward to growth for the next 22years for sure."

“We take control of everything we can,” says Wegner of Flightcraft’s entrepreneurial nature.

sessionsT H E C G A - B C S T U D E N T N E W S L E T T E RV O L U M E 3 2 / N O . 2

J U N E 2 0 0 5

Ana Silva CFO-boundCarter Honda controller shifts career into overdrive.

f decisiveness and ambition are hallmarksof management prowess, Ana Silva's futureas a CFO is assured. Consider this bold

move from her recent past.

"Shortly after my firstperformance review, Iwent uninvited to theCarter Group CFO[Bill Mitchell] andtold him, 'I wantyour job.' He said, 'Idon't think my dad[Carter President JoeMitchell] is retiringany time soon, so Iwon't be leaving herefor a while.'"

That was 2004. Silva had been in Canada ascant five years and still had two years of CGAstudies ahead of her. Today Mitchell is still

CFO ("Yes, for now!" Silva says with a gleamin her eye) and Silva has just passed her finalexam.

Silva is controllerof Carter Honda,which sells and ser-vices Honda carsand motorcyclesfrom three loca-tions in the LowerMainland. It's aposition that shecalls "super," andcomes fully loadedwith a payroll of130 people, man-

agement duties for six accounting staff andeight administrators, oversight of $70 millionin annual revenues, and a host of options.

* * *Ana Silva was born and raised in Lisbon, Portugal.

W W W . C G A - O N L I N E . O R G

There she earned an accounting desig-nation and worked for eight years inpublic practice with a large multi-office public accounting firm and as apartner in a smaller public practice.

"By then I knew public practice was-n't for me and that I wanted some-thing in management."

After her Lisbon home was brokeninto and robbed three times in thecourse of a single year, Silva and herhusband decided to leave for the sakeof their young son. Silva researchedthe best countries in which to relocatebased on crime rates and safety andthe best opportunities for careeradvancement.

"It took two years of investigating,"she says. "We settled on Canada andthen I chose Vancouver because it wasthe warmest city. I visited Vancouverthree times and had a chat with CGAat an info session before I made upmy mind."

* * *From her temporary trailer office nearthe Burrard Street bridge, Silvaretraces her career path since arriving

in Vancouver just seven years ago. Sheworked for a public practice account-ing firm, a property managementcompany and set up the manufactur-ing plant and three retail outlets ofFine Pastries of Lisbon on behalf of aformer client in Portugal. After estab-lishing the bakery, she started a con-tract position at what was then theLoewen Group, now known as Alder-woods, the giant Burnaby-based funer-al home and cemetery operator.

"Four months into my maternity leave[for daughter Melanie] and I wasgoing crazy at home," Silva says, pre-tending to pull out her hair. "Alder-woods called and said they'd like tooffer me a full-time position andcould I please come in as soon as pos-sible. When I said yes, the woman onthe phone said, 'I haven't told youwhat the job is yet.'"

The position was trust accountant andthen, soon after, senior trust accoun-tant. It was a good place to work butshe says the position wouldn't get herto her long-term goal.

* * *Ana Silva isn't typical of automobiledealer management in the LowerMainland.

"Are you kidding?!" she laughs. "Ourmanager meetings were 14 men andanother female manager and me."

“I believe CGAoffered the bestpreparation for

management roles.I know I’m on the

right track.”

Ana Silva CFO-boundCarter Honda controller shifts career into overdrive.

PROFILE

By David Ferman | Photographs By David Ferman

sessionso

CGA students are interested in professional development,according to the Student Advisory Group (SAG). SAG mem-bers were surveyed at their May 25 meeting by Jaspal Rand-hawa, CGA, Manager, Professional Development, on thepotential market for PD courses among students and newgraduates. SAG members were very receptive to the idea, andsuggested a number of potential PD offerings.

It was the second of three meetings of the 2005 SAG. SAGmembers act on behalf of all students in bringing forwardissues and concerns about the CGA program of studies.

SAG members also discussed forthcoming changes to CGAcourses, and the delivery of the CGA program in general.(See page 18.)

The groups members are chosen from applications by currentstudents, and reflect the demographics of the CGA student

body. 2005 SAG members are: Elaine Lutley, Kevin Liang,Lourdes Elardo, Emmanuel Paul, Eric Poersch, Fareen Wal-lani, Geoff Devereux, Kerin MacLachlan, Sandra Morford,Shirley Whalen and Tracey Childerhose. The SAG is chairedby Jo-Ann Johnston, CGA.

Copies of the minutes of SAG meetings may be found in thestudent area of the CGA-BC Website at www.cga-online.orgunder Resources, Student Advisory Group, Advisory GroupMinutes.

In the same area, students may contact SAG members to dis-cuss issues, or raise new issues. For students interested inbeing considered for membership for the 2006 SAG, this areaalso contains an online application form.

The next SAG meeting will be held on November 24.

Students are pro PD

She won over her male peers for two reasons, she says. First,because she took on the position knowing she had the full sup-port of her general manager, who she describes as progressiveand who lived up to his word of backing her and her decisions.Second, and more importantly, she helped her co-workers makemore money.

"What really earned their respect was a cost reduction plan weimplemented," recalls Silva.

Carter Honda set out to reduce the prior year's expenses by 10per cent. By agreeing to set up new internal controls, the com-pany reduced advertising costs; inventory management costs;and the cost of supplies, security and cleaning services, whichwere put out to contractual bids. The resulting savings farexceeded expectations, says Silva.

Carter Honda's people weren't the only ones to experiencechange with the new controller; so were the banks, the manu-facturer, and other Honda dealers and traders. Because cashflow has improved, many benefits have flowed to CarterHonda, including the ability to borrow money at prime rate.

2004 was the first year Carter Honda received the DealerAccountants Club award from Honda Canada Inc. for high

standards of accounting policies, accuracy and meeting dead-lines.

Says Silva, "The bank is happy, Honda is happy, and, eventhough they were feisty at first, our colleagues at other Hondadealers are happy."

* * *She chose to earn a CGA because, "I believe it offered the bestpreparation for management roles…. I thought the manage-ment courses were super, super interesting. I know I'm on theright track."

The next stop on that track is the Honours BCom at Laurent-ian University, which she starts in September. That's right, Silvahasn't even received her certification yet, but is already itchingto get back to school.

"I know it sounds a bit crazy, but I miss it. I need to study andI need to learn," she says. From there she expects to earn herMBA (also from Laurentian) and has already been accepted intothe program.

And after that? Silva only smiles and shrugs. But if you're read-ing this, Bill Mitchell, don't hang any permanent art on youroffice walls.

S t u d e n t A d v i s o r y G r o u p U p d a t e

The PACE Capstone Professional

Applications 1 (PA1) course is being

modified and will be renamed PA1:

Issues in Professional Practice. In

the revised course (first available in

Session 3 of the 2006–2007

academic year), students will work

in facilitated online groups while

they complete real-world business

simulations from the perspective of

the professional accountant external

to the organization.

The Financial Accounting 4 (FA4)

course has been a mandatory PACE

Capstone course. As a PACE Cap-

stone course, transfer credits were

not accepted for equivalent post-sec-

ondary studies. As of the

2006–2007 academic year, FA4 will

be moved to Level 4 of the CGA

program. As such, equivalent post-

secondary courses may then be eligi-

ble for full FA4 transfer credit. This

only applies if you are on the revised

program.

In the 2006–2007 academic year,

starting in Session 1, a new PACE

Capstone course will be added to the

CGA program. The new course will

be called PA2: Strategic Financial

Management. This course will inte-

grate new and previously learned

concepts. Using business simula-

tions and online teams, students will

be required to take the role of a

financial manager providing direc-

tion and support to the development

of the organization’s strategic plan.

Changes coming to CGA program for 2006-2007

The CGA program will be undergoing a number of changes for the 2006-2007 academic

year. For current students, the only change will be to the content of PA1, as noted below.

New students starting the CGA program in the 2005-2006 academic year will have the

option of studying under the current CGA program structure or the revised CGA program

structure that will be in place for 2006-2007.

sessions

C.Y. Tay, CGA, Burnaby-Royal City Chapter Chair ,and Laura Friedrich, CGA, Vice-Chair, Surrey/ Langley/North Delta.

CGA-BC Board member Sarah Tobun,CGA, flanked by BCIT marketing students.

CGA-BC First Vice-President Moe Jones,CGA, mixes and mingles.

Powell receives an award from Kristin Hutniak, BCIT Marketing Association VP of Career Development.

John Pickersgill BCIT Marketing Association ExecutiveVice-President and guest of honour Wynne Powell, FCGA.

CGA-BC Board member Gordon Ruth, FCGA, chats with students.

Students and CGAs enjoy the night at the Hilton Vancouver Metrotown.

CGA-BC’s Second Vice-President Gordon Clissold, CGA, and student.

Keynote speaker Wynne Powell, FCGA, fires up thecrowd with his personal history and five-point recipefor success.

Connect, the inaugural CGA-BC/British ColumbiaInstitute of Technology President’s Evening, was heldon April 6. The special event was organized by theBCIT Marketing Association and CGA-BC.

The centrepiece of the evening was an address fromWynne Powell, FCGA, President and COO of LondonDrugs and a BCIT alumnus. Judging by the turnoutand the enthusiastic response of students and alum-ni, the event could become an annual affair.

workingpapers

s a founding member of the International Federationof Accountants (IFAC), CGA-Canada fully supportsIFAC's tradition of championing high quality global

standards for the profession. This international organizationworks with 163 member bodies in 119 countries to protectthe public interest by encouraging excellence in the world'saccountants.

IFAC serves the public interest through the development ofstandards in the areas of auditing, education, ethics, andpublic sector financial reporting. It advocates transparencyand convergence in financial reporting by providing bestpractice guidance for professional accountants.

As a full member, CGA-Canada was required to do a self-assessment for compliance with the obligations set out in theStatements of Membership Obligations (SMOs) and demon-strate this compliance. These SMOs provide benchmarks tocurrent IFAC member organizations to assist them in ensur-ing high qualify performance by professional accountants.The following seven SMOs were revised in April 2004 andratified by IFAC Council in November 2004.

SMO 1 - Quality AssuranceRequires member bodies to establish and publish qualitycontrol standards and guidance requiring firms to implementa system of qualify control in accordance with the Interna-tional Standard on Quality Control.

SMO 2 - International Education Standards for Profession-al Accountants and Other Education Committee GuidanceSets out the obligations of member bodies of IFAC in rela-tion to international education standards for professionalaccountants, including continuing professional education.

SMO 3 - International Standards, Related Practice State-ments and Other Papers Issued by the International Audit-ing and Assurance Standards BoardSets out the standards in relation to quality control, auditingand assurance for its members.

SMO 4 - IFAC Code of Ethics for Professional Accoun-tantsThis code serves as a model on which to base national ethi-cal guidance. No member body or firm is allowed to applyless stringent standards than those stated in this Code.

SMO 5 - International Public Sector Accounting Standards(IPSAS) and Other Public Sector Committee GuidanceSets out the obligations of member bodies in relation to IPSASs.

SMO 6 - Investigation and DisciplineSMO 6 is applied in the investigation and discipline of misconduct, including, but not limited to, breaches of pro-fessional standards and rules by individual members.

SMO 7 - International Financial Reporting Standards(IFRSs)Sets out the obligations of member bodies in relation toIFRSs issued by the International Accounting StandardsBoard.

The full text of these SMOs is available on the IFAC Website,www.ifac.org.

What this means to CGA-BC membersAs noted, CGA-Canada and the affiliates, including CGA-B.C., performed the required self-assessment process todetermine our compliance with these SMOs. It is importantto note that, as a full member and a founding member ofIFAC, compliance with these SMOs is not optional. It wasdetermined that we were in compliance with five of theseven SMOs. The two areas we needed to enhance wereSMO 2 and SMO 4. National work groups were struck byCGA-Canada to draft new policies, for the national board'sconsideration, which would bring us into compliance.CGA-BC has been an active participant in both these workgroups.

The new national policy regarding SMO 2 - InternationalEducation Standards for Professional Accountants and otherEducation Committee Guidance went to CGA-BC's boardin February for adoption. This new policy takes effect inJanuary 2007 and will change the way we assess our continu-ing professional development activities. Activities will besplit into two main areas, verifiable and non-verifiable. Veri-fiable activities are defined as learning activities that can beverified by an organization or source or entails an appropri-ate assessment process. The new policy also moves us awayfrom our current credit system to an hours-based process.All members will be required to earn 120 hours, on a three-year moving total, with a minimum of 60 hours being verifi-able.

The new national policy regarding SMO 4 - IFAC Code ofEthics for Professional Accountants will see us adding a newIndependence Standard to our Code. This Standard will begoing to our board in June for approval and to the October1, 2005, AGM for ratification by the membership.

CGA and IFAC - Partnering with the World

cga-bc educational foundation tax tip

CGA OnlineYour information gateway to CGA

at the touch of your fingers.

When you want it. When you need it.

G e t c o n n e c t e d . . .

v i s i t w w w . c g a - o n l i n e . o r g

Member

U p D a t e

Members Offered Savings ProgramCGA-BC is pleased to announce the addi-

tion of a new value-added savings program

for you and your business. CGA-BC has

partnered with Venngo to offer the Venngo

CGA Savings Program for members. This

program offers savings from brand name

companies such as Grand & Toy,Microsoft,

Workopolis,and New Balance—to name

just a few. The savings program is available

through the member Website.Sign in and

check out the savings at

www.cga-online.org.

Make Connections onNovember 3CGA-BC and its Educational Founda-

tion are partnering to present Con-

nections, an exciting new networking

opportunity an evening at Storyeum,

Vancouver's hottest attraction.

Included in the evening will be a fabu-

lous dinner and a private showing in

the underground theatres where you

will see the legends and stories of

British Columbia's past come to life.

This special evening will be available

to only 150 people.Watch your mail

for more details.

Laura ChokAdministrator, Professional

Development Events(604) 714-2352 (800) 565-1211 ext. 352lchok@cga-bc.org

Elize Combrinck Administrator, CPD &

Member Programs(604) 730-6229 (800) 565-1211 ext. 229ecombrinck@cga-bc.org

Penny HurstAdministrator, Membership &

Chapter Programs(604) 730-6207 (800) 565-1211 ext. 207phurst@cga-bc.org

C o n t a c t I n f o r m a t i o n

Charitable Giving through Life Insurancecharitable gift may be made througha life insurance contract. This oftenallows the donor to make a much

larger contribution than he or she otherwisemight have been able to afford. There arethree ways in which a donor can donate alife insurance policy: (1) leave the life insur-ance policy to the charity through a will; (2)donate the policy while alive; or (3) name acharity as a beneficiary in the policy. Eachof the alternatives will have different taxconsequences.

Under the first alternative, the individualwould make his or her estate the beneficiaryof the insurance policy, but provide in his orher will that the money is to go to a charity.Such a gift is deemed to have been made bythe individual immediately before death andcharitable donation tax credits will be avail-able to the individual in the year of death.

Under the second alternative, a donation isconsidered to have been made in an amountequal to the value of the policy. According-ly, the individual will have tax advantages inthe year of transfer. Finally, a policy namingthe charity as a direct beneficiary will passoutside of the individual's estate and willgenerally not be subject to probate fees,creditor claims or estate litigation. The wayin which gifts of insurance policies are struc-tured will thus depend on the objectives ofthe individual.

The CGA-BC Educational Foundation is aregistered charity that is dedicated to assist-ing CGA-BC students who are in need offinancial assistance. The Foundation wouldbe pleased to assist anyone considering a giftby way of an insurance policy, or otherinnovative ways to make a charitable gift.

practicereview

C o n t a c t I n f o r m a t i o n

Muriel Blessin Public Practice Administrator(604) 730-6230mblessin@cga-bc.org

Anita FortuneCoordinator, Advisory Services(604) 714-2350afortune@cga-bc.org

Brigitte Ilk, CGA Manager, Public PracticeResearch and Development(604) 629-8363bilk@cga-bc.org

Tina Peters, CGADirector, Public Practice Services & Public Practice Advisor(604) 730-6232tpeters@cga-bc.org

Jim Timmerman, CGAManager, Quality Assurance(604) 730-6231jtimmerman@cga-bc.org

Toll free: (800) 565-1211

Publ ic Pract ice

I n B r i e fFile Your GST ReturnElectronicallyThere is now an Internet filingoption for GST called GST/HSTNETFILE. It is available when areturn has a nil balance or refund of$10,000 or less. Using a pre-printedaccess code, the GST return can befiled by using the GST/HST NET-FILE Website atwww.cra.gc.ca/gsthst-netfile.Thisoption is available Monday to Friday8:30 a.m. to 8 p.m. and Saturdayfrom 8:30 a.m. to 5 p.m., local time.Visit www.cra arc.gc.ca/eservices/tax/business

Voluntary ServicesAlthough a member may be pro-viding volunteer (non-remunera-tive) services, they are consideredto be engaged in the practice ofpublic accounting when they solelyprovide public practice services toa not-for-profit organization. Priorto engaging in the practice of pub-lic accounting, members arerequired to register with the Asso-ciation.The exception to this registrationrequirement is a member who hasbeen appointed treasurer of a not-for-profit association. Fulfilling thisrole is not considered to be pro-viding public accounting services.Contact Muriel Blessin, Public Prac-tice Administrator, to register inpublic practice.

ublic practice registration fees aredue on or before July 1, 2005.Renewal of professional liability

insurance is due on or before August 1,2005. Invoices for the public practice reg-istration fee were mailed on May 1, 2005,and the Association's insurer (Marsh Cana-da Ltd.) will send you a renewal notice inearly June 2005. An administration fee of$150 for public practice fees unpaid byJuly 1 will be levied. A separate adminis-tration fee of $150 for failure to renew and

maintain professional liability insurance byAugust 1 will be levied. Failure to pay theoutstanding public practice fee by the spec-ified date, renew and maintain professionalliability insurance by the specified date,and/or pay the administration fee(s) leviedwill result in the matter(s) being referred tothe Ethics Committee.

Contact Muriel Blessin, Public PracticeAdministrator, for more information.

Practice Fees Due

n February 1, 2005, the Corpo-rate Registry began sendingnotices of dissolution to B.C.

companies, and notices of cancellation toextra-provincial companies that have failedto file an annual report for two or moreyears. Because notices were suspended for ayear, it will take quite some time until theCorporate Registry can deal with the sig-nificant backlog of companies that are indefault.All companies that had previously receiveda notice of dissolution but were never dis-solved (regardless of what stage they were atin the dissolution process), including those

companies where a delay in the dissolutionprocess was requested, will be reissued anotice. This also applies to extra-provincialcompanies.If your clients wish to delay the dissolutionor cancellation of a company, they mustreceive the new notice first before sendinga written request to the Corporate Registry.The staff at the Corporate Registry will notbe able to delay the dissolution or cancella-tion of any company until the companyhas been issued a new notice.Contact the Corporations Unit at (250) 356-8626 or in Vancouver at (604) 775-1047 formore information.

Corporate Registry Sends Out Notices of Disolution to B.C. Companies

o ensure the highest level of qualitycontrol and standards, effective July1, 2005, the practice review process

will include a review of the nature andextent of practice management and qualitycontrols used by a firm with respect tooptional/elective income tax filings.The nature and extent of quality controlprocedures will depend on several factors,such as firm size and the complexity of the

tax filings. Accordingly, the proceduresused and the extent of documenting themwill vary, with certain procedures notapplicable in all instances.Our professional liability insurance carrierhas indicated that, in the past, the area oftax filings has had the majority of claimsand/or disputes. Contact Jim Timmerman, CGA, Manager,Quality Assurance, for more information.

Practice Reviews to Include Tax Filings

Practice Review continued on page 23

Practice Review continued from page 22

f you incorporated your professionalpractice prior to March 29, 2004, underthe old Company Act, certain changes

are required to transition your corporationto comply with the new provisions of theBusiness Corporations Act (BCA). All exist-ing corporations have been given untilMarch 29, 2006, to make appropriatechanges to their articles.Transitioning entails the minor revision ofexisting articles or adoption of a new set ofarticles. The process is relatively simple butyou are advised to use the services of a legalrepresentative to ensure all matters areproperly handled. The Association willrequire notification that your corporation

has in fact completed the transition process.Your solicitor can forward notification (by afaxed notice or simple letter) that the tran-sition has been completed and that therehas been no change in the share ownershipof the professional corporation. If there arechanges, a new "Form C" must also be pro-vided.You may also wish to use this opportunityto revise any tax and/or estate planning inorder to fully realize the advantages of usinga corporate vehicle to operate your practice.Owners of the non-voting shares of yourprofessional corporation may now include aspouse, children, parents, grandparents,holding companies and family trusts.

If you wish to re-visit your tax planningopportunities, the details of these rules areavailable on CGA Online. Visit www.cga-online.org and sign in with yourmember ID and password. Click on thePractice Management tab and then on theCompliance tab. Click on Incorporationfrom the left-side menu. There you willfind an outline of the incorporationprocess.

Contact Jim Timmerman, CGA, Manager,Quality Assurance, for more information.

Transition Your Professional Corporatioonn iinn LLiinnee wwiitthh NNeeww AAcctt

HHeeaatthheerr BBaannhhaamm,, CCGGAA,,chair of the Okanagan UniversityCollege's business administrationdepartment, has been appointedto the board of the CanadianCouncil on Small Business andEntrepreneurship. The councilpromotes and advances smallbusiness and entrepreneurshipthrough research, education andtraining, networking and scholarlyand policy information. Banhamhas been a professor at OUC for10 years and department chair forfive years. She has a master'sdegree from the Asia Pacific Inter-national Graduate School of Man-agement.

BBiillll JJoohhnnssoonn,, FFCCGGAA,,CGA-BC's Director of Educationand Student Services, celebrated25 years with CGA-BC in April.Johnson joined CGA-BC in 1980after nine years with MacMillan-Bloedel.

With a recently published book toher credit, Vancouver CCGGAA SSyyllvviiaaLLiimm has been getting somenational media coverage. Limcommented on her book,Finances After 55, in the May 14issue of the National Post. Limtold the Post that she was an earlysaver, putting 80 per cent of her50 cent allowance into her piggybank.

K U D O S C G A N E W S

Canada's Certified General Accoun-tants have taken their advertising tonew heights as they embarked on anew awareness campaign on-board allAir Canada flights featuring in-flightentertainment. The 15-second CGAspot started running on April 19 andwill appear during the busy summerseason wherever Air Canada flies. Thebilingual spot appears on all rebroad-casts of the CBC National news.

Ads in the air

CGA graduates from 1980 gathered inNew Westminster to celebrate theirinduction into the Quarter CenturyClub. Four of the new 50-year membersalso attended—members emeriti GeorgeCaldwell, CGA, Brian Edwards, CGA,James Mason, CGA and Leo O'Neill,CGA.

C G A E V E N T S

CGAs running in the Sun

A joint CGA-Canada/CGA-BC team showed impressive results in theApril 24 Sun Run. Each member of the 60-person team finished the racein under two hours, placing the team 21st out of 155 organizations in itscategory. We take extra pride in noting that the team's fastest man(Grant Burnard, with a time of 42:28) and fastest woman (Noreen Jang,CGA, with a time of 62:16) are both CGA-BC staff members.

Get out your running shoes again

There's still time to join the CGA team for this year's 26th annual Easter Seals 24 Hour Relay onJune 25 and 26 at Swangard Stadium in Burnaby. Contact Gary Mah, CGA, to join the team.Work: (604) 990-2236 Home: (604) 254-2825 Email: mahg@dnv.org

25 years later, they're still smiling

M i l e S t o n e s

Heather J. Hannah, CIA, CGA,of Vancouver, has joined Grant Thornton as asenior consultant in the Business ConsultingGroup and will work on technology risk manage-ment, business continuity planning, internal con-trol certifications and Sarbanes-Oxley projects.Heather has over 24 years’ experience in thefinancial services sector managing business andIT projects.

Philip Yee, MBA, CMA, CGA, has beennamed CFO of Canarc Resource Corp., a Van-couver-based gold exploration and mining com-pany. He was previously finance manager andcontroller for Canarc.

CGA student Bill Lutz was recently promotedto food and beverage unit controller at BC PlaceStadium.

CGA student Ben Langstaff recently graduat-ed from the University College of the Fraser Val-ley with dean's list honours, focus in accounting. "I was awarded the CGA continuing educationscholarship for $2,000 and transferred my cours-es to CGA. I was searching for employment toget some great experience."Langstaff found a job as an associate accountantat Surrey Community Services using CGA-BC'sEmployment Referral Service. "It is refreshing to get into a career where thepossibilities open up immediately and the workis very diverse." Langstaff is also a former winner of a CGA-BCContinuing Education Scholarship.

In MemoriamWe were saddened to learn of the death of Henry Green,CGA, one of the founding members of CGA-BC andmember of our first Board of Governors in 1951. Greengraduated from Oxford in 1929 and worked for RoyalDutch Shell in China from 1930 to 1941. Green’sinvolvement with accounting in B.C. dates back to 1943when he became the 100th member of the Vancouverbranch of the General Accountants Association. Green,94, was a life member of CGA-BC.

C G A L AU G H S

C G A AWA R D S

CGA-BC Aces With Co-op Educators

CGA-BC was honoured for its long-standing commitment to post-secondary co-op education at a gala banquet in Kamloops on May26.

Citing CGA-BC's "outstanding leadership and commitment topost-secondary co-op education," the Association of Co-op Educa-tors of B.C. (ACE-BC) handed out a special trophy to CGA-BC'sManager of Student Recruitment, Dan Relihan, CGA, at Delta SunPeaks Resort.

That commitment has included funding more than 20 students inspecial accounting co-ops through SFU, and supporting UBC's co-op program since its inception.

Dan Relihan, CGA, accepts award from co-op educators on behalf ofCGA-BC.

C a l e n d a r o f E v e n t s JUNE 2005Monday

• PD Event: CICA Handbook

Tuesday• PD Event: CICA Handbook

PD Event: Breakfast Seminar

Wednesday• PD Event: Practice Management

(Pro I)

Thursday• PD Event: Practice Management

(Pro I)

Friday• PD Event: Review and

Compilation Engagements (Pro II)• PD Event: Trust Audits (Pro IV)

Saturday• CGA-BC Board Meeting• PD Event: Review and Compilation

Engagements (Pro II)• CGA team in 24 Hour Relay

Monday• PD Event: Small Audit Program

(Pro III)

Tuesday

• PD Event: Caseware• PD Event: Small Audit Program

(Pro III)

Wednesday• PD Event: Advisory Services and

Future-Oriented Financial Information(Pro IV)

CGA-BC

O n l i n e

AUG 2005Monday

• Professional Liability Insurance Renewal Due

• B.C. Day - CGA-BC office closed

Wednesday• PD Event: ACCPAC

- Beginners Level

Thursday• PD Event: ACCPAC

- Intermediate Level

Friday• Supplemental Exam fee deadline,

Exam Period 4Monday

• Exam Locations Booklet on the Web

Friday• Re-grades and Critique

(Exam Period 3) request deadline

SEPT 2005Monday

• Labour Day - CGA-BC office closed

Wednesday• Conference 2005 - Kelowna

Thursday• Conference 2005 - Kelowna

Friday• Conference 2005 - Kelowna

OCT 2005Saturday

• Conference 2005 - Kelowna- Annual General Meeting- President’s Banquet and

Awards Gala.

Sunday• Conference 2005 - Kelowna

- Farewell Breakfast

05282930

Disciplinary reportsavailable online

Disciplinary Activity Reportsare available on CGA Onlineat www.cga-online.org. Toview the latest report, sign into CGA Online. At the top ofthe main page, choose theStandards button and thenthe Regulatory Process but-ton. Then, from the naviga-tion section on the left sideof the page, select Discipli-nary Activity Reports. CGA-BC is required to publish itsdisciplinary activities to allmembers and students inaccordance with the Bylaws.

Find Out More

Information on Calendar ofEvents items is available onour Website at www.cga-online.org. To register forPD opportunities, sign inwith your ID number and password, click on PD andthen click on CGADirect toregister. For more information on PD being offered bychapters, sign in and click onPD and then Seminars.

Prepare for PD: Controller's Program Now in Three Parts

Building on our very successful three-day Controller's Program, the 2004/2005 professional development year sawthe addition of a one-day Introduction to Controllership and the two-day Advanced Controller's Program. We nowoffer PD seminars to match the needs of any CGA—from the accountant interested in advancing to a controller-ship position to the experienced controller looking for new, progressive and innovative ideas.

"Our partnership with Nick Shepherd, CGA has been very successful. Working with Nick in the development anddesign of these programs has created a significant benefit for our members," says Kathy Hurst, CGA, Director,Member Services. "We are recognized leaders in professional development and these programs have also provento be of substantial assistance to members all across Canada. With over 700 members having participated in thismulti-part program, the value speaks for itself."

Check the 2005/2006 PD Calendar, due out in August, for these three value-added sessions.

JULY 2005Friday

• Public Practice registration fees due• Canada Day - CGA-BC office closed

Thursday• PD Event: Work Place

Law 101• PD Event: How Not to Play

Office Politics

F i n a l Wo rd

Reflections on the Provincial Election

By Rita Estock, DBusMgmt, FCGA

B.C.'s fortunes still rely on economic performance.

The election was itself remarkable as thefirst in Canadian political history that washeld on a fixed date. This concept meansgovernments can't call an election justwhen they are riding high in the polls, nordelay to the last possible moment of theirmandate when they are unpopular. Pre-mier Campbell deserves recognition ofthis move in making government account-able and transparent. Here’s hoping ourfederal leadership takes notice.

Now the legislature can get back to work.It is critical that both the government andthe opposition remain focused on goodgovernance and economic stewardship.Political rivalry simply can’t be allowed to

compromise the incredible progress wehave made these past years.

There are still two key areas that needattention if we are to improve B.C.’s com-petitive position.

First and foremost, government mustresist the temptation to open up thespending floodgates. The budget is bal-anced and it is expected that we will havesurpluses for many years to come. Howev-er, the Association believes that all sur-pluses should be used to pay down thedebt. We were very impressed when theFebruary 15 budget saw a record paydown of nearly $2 billion, and we want tosee this tradition continue. Debt is really

t was supposed to be a ho-hum affair.The polls had predicted the outcome —another Liberal majority, a revitalized,

but small opposition — and there weregoing to be no surprises.

Premier Campbell had campaigned ongood economic management and theNDP, dogged by two terms of high taxesand big spending, pushed a modest agendaanchored to higher levels of spending onhealth care and education. There was littleelectricity generated by the candidates andnone of the drama associated with previousB.C. campaigns.

But the outcome was less than ordinary.

First, Mr. Campbell became the firstprovincial leader since Socred PremierBill Bennett to be re-elected. The relativestability resulting from the May 17 elec-tion communicated that B.C. is a goodplace to invest and do business.

Second, there was the resurgence of theNew Democratic Party — the scale ofwhich the polls had generally underesti-mated. Now, in the minds of many, bal-ance has been restored with a strongeropposition in the legislature.

Third, reform of our political system isdefinitely on the agenda. Although the ref-erendum on the Standard TransferableVote or STV failed to win the supportneeded to be implemented, its narrowdefeat shows there is a public appetite forreforming the first-past-the-post systemand developing a system that reflects thepopular vote. It's worth noting that theSTV received 57 per cent support acrossthe province and carried 77 of 79 electoraldistricts, an approval rating any politicalparty would covet.

just another form of taxation, one thatdestroys rather than pays for services.

We also have to address some tax funda-mentals. We must address the capital taxon large banks and credit unions. Thisregressive tax deters large financial institu-tions from expanding to and locating inB.C. As a result, financial institutions takejobs and the resulting spin-offs to friend-lier provinces.

The property transfer tax is still too high.This tax just aggravates sky-high real estateand deters key talent from moving to theprovince. Mr. Campbell's governmentdeserves kudos for the first-time-buyerexemption, but all buyers need some kindof relief.

And, top income and corporate tax rateshave to be reviewed. We are very compet-itive Canada-wide, but still not competi-tive with Alberta. On average, our highestpersonal and corporate rates are about fivepercentage points higher than Alberta’s.

With a stronger opposition, it will be diffi-cult for the government to push forwardon these items. But I believe that if groupslike our Association work with govern-ment and the opposition to help themunderstand how their policies influence allBritish Columbians, and not just theirfavored constituencies, our economy cancontinue to advance. In fact, that is theonly way we will guarantee the sustainabil-ity of education, health care and the otherprograms we so highly value.

On a personal note, I’d like to congratulateIda Chong, CGA, who was re-elected for athird term as MLA for the Victoria ridingof Oak Bay-Gordon Head. It’s reassuringto see a CGA close to the purse strings ofgovernment!

Debt is really anotherform of taxation —one that destroysrather than pays forservices.

Rita Estock, DBusMgmt, FCGA, is the President of the Certified General Accountants Association ofBritish Columbia. To have the president or another CGA-BC representative speak at an event, contact Tracey Tse at (604) 730-6212 or ttse@cga-bc.org.

outlook - CPA BC

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