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Canada’s magazine of Corporate Finance

Spring 2016 •


Your Team

Thinking of volunteering as treasurer of a non-profit?

Building team bonds



Planning, Budgeting and Forecasting What a difference a day makes The state of enterprise risk management in Canada



Canada’s magazine of Corporate Finance

Spring 2016 •

Table of Contents Departments & Columns 4

Industry Watch



Planning, Budgeting and Forecasting 10

What a difference a day makes A proactive approach can safeguard profit and working capital


The state of enterprise risk management in Canada


Features 18

Thinking of volunteering as treasurer of a non-profit? 10 considerations for CPAs to keep in mind


Your Team Building team bonds How personal connections can drive unprecedented performance


From anywhere to anywhere How mobility is changing the way we work

In the next issue:

20 Spring 2016

Growth, transition and monetizing the business plan



Industry Watch

Extended vacancy: on average, CFOs take four weeks to fill finance positions Imagine being without a valuable employee for a month. That’s the situation accounting and finance departments typically find themselves in when a member of the team moves on. According to a new survey from Robert Half Finance & Accounting, Canadian CFOs said it takes four weeks, on average, to fill an open staff-level accounting or finance position and six weeks to hire for a management-level role. “Considering the talent shortage in today’s hiring market for finance and accounting professionals, a drawn-out hiring process can prove detrimental for companies hoping to lock in the most skilled candidates,” said Greg Scileppi, president of Robert Half, International Staffing Operations. “Properly vetting potential employees remains essential, but hiring managers should be prepared to accelerate the hiring process in order to ensure talented candidates aren’t lost to more decisive and competitive offers elsewhere.” Scileppi added, “Professionals with specialized finance and accounting designations are in particularly high demand, and companies must be especially diligent in extending job offers to these candidates.” CFOs were asked, “On average, how many weeks does it typically take to hire for an open staff-level accounting or finance position?” The mean response was four weeks. CFOs were also asked, “On average, how many weeks does it typically take to hire for an open management-level accounting or finance position?” The mean response was six weeks. Robert Half Finance & Accounting offers five tips to help managers accelerate their hiring process: Move quickly. Develop an action plan that begins with creating a short list of potential hires and benchmarks for each step of the hiring process. The goal should be to carefully assess candidates, yet move swiftly toward extending an offer. Update your finance job description. Provide a clear summary of the skill sets you need, including technical and interpersonal abilities. A good description gives candidates a solid statement of your performance expectations. Solicit input. Enlist your top team members in updating the list of responsibilities, duties and requirements of the job and with evaluating finalists. While the final decision is yours to make, key staff members can help prevent making the wrong choice and wasting valuable time and resources. Help your company stand out. Get creative in promoting your organization’s unique corporate culture, growth opportunities and benefits. Ensure the compensation you’re offering is in line with competing employers by comparing it against data in the Robert Half Salary Guide for Accounting and Finance. Work with a recruiting firm. Staffing professionals interact with hiring managers and job seekers every day and understand current employment trends. By tapping their extensive network, you may meet in-demand candidates you couldn’t find on your own.

Spring 2016 Volume 25 Number 18 Publisher / Corporate Sales Mark Henry Managing Editor Sarah O’Connor Contributors Jackie Barretta, Author and Consultant Phil Beane, Senior Vice President, Global Field Operations, APEX Analytix Melanie Borho-Persechini, CPA, CA, BDO Canada LLP Creative Direction / Production Jennifer O’Neill Photographer Gary Tannyan President Steve Lloyd For subscription, circulation and change of address information, contact Publications Mail Agreement No. 40050803 Return undeliverable Canadian addresses to: Circulation Department 302-137 Main Street North Markham ON L3P 1Y2 t: 905.201.6600 • f: 905.201.6601 Subscriptions available for $40.00 year or $60.00 two years. ©2016 Lloydmedia Inc. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part,

without the prior written consent of the publisher. Printed in Canada Reprint permission requests to use materials published in Canadian Treasurer should be directed to the publisher.

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Spring 2016


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Industry news

Investment in FinTech is the future of Canadian banking According to PwC’s Canadian Banks 2016: Embracing the FinTech Movement report, Canadian banks are laserfocused on responding to the threats—and opportunities— posed to the banking industry by a group of new companies building financial technology (FinTech) solutions. FinTech offerings range from competing financial services such as alternative lending, to additive solutions atop existing banking services, to enabling technologies for the banks themselves. Capitalizing on the latest mobile, cloud and digital technologies, Canada is now home to many FinTech firms who are trying to shake up and be accretive to the banking value chain. According to the report, banks have a great deal to gain from FinTechs’ innovation which may become essential in propelling the sector forward by reimagining operating models, streamlining costs, increasing reach in underserved markets, innovating through new product development, and opening new revenue streams. The increasing momentum of FinTechs and their success is challenging banks to devise a spectrum of strategic responses; however, not all FinTechs pose the same threats or opportunities. In some cases, FinTechs will be viewed as enablers to

traditional innovation and continuous improvement. In others, it presents a series of disruptions and threats as they continue to make inroads into banks’ traditional territory by offering a competitive service or products. Canadian banks will ultimately employ parallel strategies that comprise collaborating with and leveraging some FinTechs while innovating to compete with others. “Canadian banks must stay the course with a long term view and continue, as they have, to respond to the needs of an evolving market to create a stronger ecosystem that will position them to be even more competitive on a global level. This must encompass business model innovation, technology and architecture enablement, as well as cultural evolution to align with the new realities imposed by the tremendous uptick in the FinTech space,” says Diane Kazarian, national financial services leader, PwC Canada. Canadian banks are not only including responses to FinTechs as part of their growth strategy; they are investing in ecosystems which will position them to better compete in the market. Building an environment that produces innovative offerings is essential to be competitive in the years to come. For Canadian banks,

embracing FinTech isn’t a short-term play. Here are six considerations that the financial services sector must consider when integrating FinTech in their strategy: Act now, but think long term. It’s time for the financial services sector to establish a clear, long-term FinTech strategy that not only allows for disruption, but embraces it. Think from the customer’s perspective. Gen X and Gen Y will assume more significant roles in the global economy over the next decade and millennials are bringing radical shifts to consumer behaviour and expectations. It’s vital that banks look at their own products and services from a customer’s perspective to better understand the points of friction. Adopt new thinking around getting concepts to market. The financial services sector should strive to emulate the start-up model and culture to attract talent and rapidly develop products and bring them to market. Invest in the future by investing in technology. Banks must continue to assess new technologies and invest in those that fit with their business strategy and help them become innovation leaders. Collaborate. Technology and customer expectations are changing quickly

and banks must respond with according speed. It’s about understanding what customers want and assessing whether banks have the skills and technology to deliver Stay the course—and don’t slow down. The financial services sector must stay focused on the larger goal and increase their investments in FinTech. They are essential to meeting the needs of not only today’s customers, but also tomorrow’s. Given quarterly financial pressure, the temptation to slow down will be considerable but not strategic. The report also indicates that Canadian banks continued to see strong performance in 2015, achieving positive revenue growth and posting solid returns. In addition, they improved their 2016 first quarter results over last year despite a slowing economy, slumping commodity prices and low economic growth. The Big Six banks’ average consolidated revenues were $21.4 billion in 2015, up 4.3% from $20.5 billion in 2014. From a productivity perspective, the banks continued their efforts to increase efficiency and streamline their cost base, however despite these efforts, the overall efficiency was 58.4 per cent in 2015, up slightly from 57.9 per cent in 2014.

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Spring 2016

Industry news

EY report: who’s the banker of the future? The brain drain is a very real outcome of the low loonie. U.S. companies can now offer more for high-demand talent in compliance and risk. It’s a worrying development for banks, but also an opportunity for them to re-think their long-term strategy and ask, who’s the banker of the future? “Since the financial crisis of 2008, banks have been focusing on their core businesses, redesigning their structures and reshaping themselves through the use of technology,” says Andre de Haan, EY’s financial services leader. “But to take their financial performance further, they also need to focus on their people, who will help them win in the future.” de Haan says in the face of continuously declining ROE, increasing regulation and pressure to reduce workforce, Canadian banks need to identify which employees really create value and what they need to do to attract and retain those individuals.

Assessing technology’s impact on the workforce

Understanding the expectations of a new generation of bankers

The key to creating a culture of innovation is encouraging diversity of thought. An adaptable, ‘intrapreneurial’, diverse workforce promotes innovation and there’s evidence that it leads to improved financial performance. To overcome traditional homogeneity, banks must draw talent from a broader pool and build a culture that supports and retains people from different backgrounds, with different views and experiences. For example, EY research across a number of industries shows that the highest-performing companies invest more in the advancement of women than their peers. “If banks want to attract and retain valuable, innovative talent, they need to transform their HR approach,” says de Haan. “Starting from recruitment all the way to performance reviews, banks should reconsider their employee propositions. Especially for millennials, who are set to become a significant portion of the workforce very soon, the salary alone isn’t an enticing enough offer. They’re looking for much more than that, and more often than not, they’re finding it somewhere else.”

Millennials (those born between 1981 and 2000) will constitute 72 per cent of the global workforce by 2025. Yet banks have little brand appeal to young employees. Globally, among IT and engineering graduates, banks are absent from the top 25 most attractive companies to work for. Banks will need these graduates in the future as they will require highly educated talent. They need to make sure they understand this generation and their expectations of: ◉◉ Greater labour mobility ◉◉ Greater technological capabilities ◉◉ More entrepreneurial mindset ◉◉ Greater sense of entitlement In addition, millennials are more likely to value flexibility, learning opportunities and mentorship more than monetary compensation. In choosing a place to work, they also consider whether a company’s values align with theirs. Purpose matters to millennials and banks must emphasize it.

Spring 2016

“In the coming decade, all things digital will revolutionize the banking workforce,” says de Haan. “There will be fewer bankers in traditional roles, and the roles of those who remain will be fundamentally different.” As the role of technology transforms from adding value in efficiency, cost, speed and accuracy and toward managing more complex tasks, banks will have to determine appropriate controls. In addition they’ll have to ensure that employees with the right skills monitor the correct and safe use of technology. Equally important is understanding, even if automation is possible, where it may not be desirable. This will help reallocate investment across the business and develop plans to retrain and redeploy staff to other parts of the business.

Changing culture to encourage diversity of thought

Ontario credit unions welcome progressive changes that will help them flourish Ontario credit unions will be able to better serve their members and their communities thanks to regulatory changes announced February 12th by Finance Minister Charles Sousa. “The advances announced by the Finance Minister will help Ontario credit unions attract more deposits, which we will turn into loans and mortgages to support small businesses and homeowners in our communities,” said Rick Hoevenaars, chair of Central 1 Credit Union, the trade association representing 77 credit unions with 1.4 million members across the province. Credit unions had asked for an increase in deposit insurance, which they finance through annual premiums. The province has agreed to raise the level to $250,000 per account, from $100,000. “The deposit insurance change brings Ontario into line with other provinces and reassures our members that their deposits are safe and secure,” said Hoevenaars, who is Chief Financial Officer at Libro Credit Union with headquarters in London. Credit unions are also pleased that the province will make it easier for municipalities, universities, schools and hospitals to hold their deposits in the local financial cooperatives where the money will be recirculated in their communities. The province also announced it will expand the range of subsidiaries that credit unions can hold, removing restrictions that have, for example, prevented them from owning insurance brokerages, as their counterparts can in other provinces. “We look forward to working with the province to strengthen consumer protection regulations and to developing a new legislative framework that will allow us to succeed in the rapidly changing financial services business,” Hoevenaars said.



Industry news

Energy pressures set to drive Canadian deal making in 2016

D&B rolls out next-generation risk intelligence platform

Robust inbound and domestic activity expected

Dun & Bradstreet have released D&B Credit, a cloud-based platform designed to provide more efficient credit and risk analytics to CFOs and finance departments in any industry. The platform will help finance professionals manage and monitor trade credit risk and leverages Dun & Bradstreet’s global database of more than 250 million business records updated five million times a day. “D&B Credit was built with our customers in mind so they can do their jobs more effectively and make incredibly important portfolio decisions,” said Bob Carrigan, CEO and director, Dun & Bradstreet. “We worked closely with our customers to build D&B Credit as an intuitive, modern, cloud-based platform that lets them access the world’s largest commercial database in user-friendly, customizable ways.” D&B Credit responds to businesses’ need for a powerful platform that can help today’s finance professionals maximize cash flow through smart credit management. D&B Credit also allows users to: ◉◉ Make more intelligent credit decisions faster through an intuitive interface. Simple search and filtering capabilities help users find the exact company they are looking for efficiently; and streamlined reports present critical summary information with just a click; ◉◉ Receive updates on the financial performance of their most important customers and prospects without having to initiate new searches; ◉◉ Monitor risk and opportunity across their portfolio and leverage flexible tags to create customized views that reflect their most critical customer segments; ◉◉ Access Dun & Bradstreet’s advanced analytics to make more informed decisions faster; and ◉◉ Customize reports to tailor information for “non-finance” line of business decision makers.

A new study by Citi shows that Canadian M&A activity is expected to accelerate in 2016, as low energy prices attract buyers to the market. The appetite for deals is broadly projected to rise: 70 per cent of respondents predict a higher level of M&A activity in the next 12 months, with 20 per cent expecting a significant increase. The report, called Brighter Horizons: A bolder future for Canadian M&A, found that the proper market conditions appear to be taking hold for an increase in deal volume in 2016. The primary driver will be the slump in commodities prices according to 38 per cent of respondents, followed closely by private equity demand (36 per cent). “2016 is shaping up to be an interesting year,” says Grant Kernaghan, managing director of Canadian investment banking at Citi. “In addition to the continuing demand from private equity, we are expecting higher activity levels in the mining and energy sectors, and a number of factors are converging that suggest an increase in hostile takeovers may be on the horizon.”

Other key findings from the report include: ◉◉ The biggest increases in Canadian M&A activity are expected in domestic and inbound deals. Forty-eight per cent of respondents predict an uptick in domestic deals and 81 per cent believe that inbound deals will increase, while only 33 per cent foresee a rise in outbound M&A. ◉◉ The greatest challenge to Canadian M&A in 2016 will be the valuation gap between buyer and seller according to 68 per cent of respondents, trailed closely by volatility in global commodity prices (62 per cent). ◉◉ When asked what sectors they think will see the most Canadian M&A activity, respondents identified Energy (50 per cent for Domestic M&A, 48 per cent for Inbound M&A) and Mining (34 per cent for Domestic M&A, 28 per cent for Inbound M&A) in 2016. This is the second year Citi has commissioned Mergermarket to survey 50 Canada-based senior executives directly involved in M&A decision making with the objective of gaining insight into the landscape for deal making in Canada over the coming year.

Josh Peirez, president and COO, Dun & Bradstreet, said, “CFOs today are required to play a much larger, strategic role to help the organization mitigate risk and uncover new sources of revenue. At Dun & Bradstreet we are proud to launch our next-generation credit solution. D&B Credit provides the capabilities that the industry and our DNBi customers value. It will help finance professionals more quickly monitor credit and cash flow in order to free up time to contribute to the company’s growth. It provides the tools needed to make more informed and confident credit management decisions.”

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Spring 2016

March 7-9 | San Diego Convention Center



Connect with Payments Insights Fraud | Strategy | Operations


BAI Payments Connect 2016 March 7-8

Bold Moves Require Bold Thinking. Register Now:

Register Now:

Gain a 360° View of the Payments Ecosystem

As the New Norm, What Does Open Banking Mean to You?

BAI Payments Connect 2016 focuses exclusively on empowering payments leaders, like you, to make smart business decisions with an unbiased, 360° view of payments fraud, strategy and operations.

Build meaningful connections and gain actionable insights into the key disruptive powers in banking today and into the future by engaging with the financial services industry’s most influential strategists and visionary thought leaders. They’ll take you beyond mobile—to the emerging world of open banking—and show you how to lead the way.

Register today and obtain: • The latest trends, innovations and technologies redefining payments now and in the future, including Bitcoin, biometrics and the Internet of Things. • A unique, holistic view of EMV, faster payments and blockchain technology across three summits: The Future of Payments Fraud, Payments Strategy and Enterprise Payments Operations. • Benefits from engaging with fellow payments leaders from Bank of America, Capital One, Fifth Third, Goldman Sachs, Key Community Bank, Navy Federal Credit Union, JPMorgan Chase, PNC, TD Bank, TIAA-CREF, Wells Fargo, and more. • Featured Session on Practical Innovation for Payments Today and Tomorrow, featuring John W. Thomas, Executive Vice President, U.S. Payments, TD Bank.

Get answers on forward-thinking topics from these visionary thought leaders: • Conny Dorrestijn, Woman in FinTech 2015 – Shiraz Partners will provide an introduction to the key disruptive powers in banking today, especially in payments, and HOW your banking organization can successfully find itself at the center of the transformation to this new world of open banking. • Matteo Rizzi, FinTechStage and Pascal Bouvier, Banco Santander will engage us in a dialogue around how to collaborate in the new world to build new business models and revenue streams in an open paradigm. • Patrick Moore, Capital One will guide us in a discussion around how the two worlds of disruptive innovation and compliance collide, including lesson’s learned for direct application to innovation strategy.

Engage with Financial Services Leaders Leading the Charge General Session

General Session

Unlocking the Power of Innovation to Transform Your Payments Strategy Featuring Arkadi Kuhlmann Founder and CEO Zenbanx

Insight and Updates on the U.S. Payments System Improvement Initiatives Featuring Federal Reserve’s Payments System Improvement Task Force leaders and industry perspectives from Task Force Steering Committee participants

Planning, budgeting and forecasting

What a difference a day makes A proactive approach can safeguard profit and working capital By Phil Beane


hen a house is on fire, firefighters spring into action. Why? Because the time sensitivity of the threat is evident and real. A home can burn to the ground in minutes, making every second count. The threat a company faces from fraud, duplicate payments and lack of consistent and high-quality continuous monitoring systems isn’t as obvious as a burning house, but it doesn’t mean consequences are any less dire. Just as lives can change forever in a matter of mere moments, so too can a company’s risk and exposure to fraud and overpayment increase exponentially in the course of a single day. Whether due to a system conversion, major accounting system upgrade, a new workflow process, a merger or acquisition or staff turnover, nearly any disruption in daily business



guarantees an influx of exceptions in the AP process. Consider: when a company goes through a system upgrade or conversion to a different back-office accounting system, there are typically huge spikes (due to overlapping systems and processes) in duplicate payments. In one example, a metal manufacturer my company worked with showed a one-month spike during a major system change of almost $700 thousand in duplicates that were mistakenly overpaid with their ERP system, but caught thanks to specialized monitoring software. Supplier fraud during times of transition is another concern. Asset misappropriation in the form of fraudulent disbursements (billing and payroll schemes, check tampering, register disbursements) is the most common type of

Spring 2016

Planning, budgeting and forecasting occupational fraud. And as the most recent ACFE Report to the Nations notes, “The longer the frauds were able to go undetected, the more costly they became.” As someone working in treasury, you are a steward of your company’s financial assets. As such, understanding and analyzing the AP process to understand how everything from invoice-approval processes to payment schedules influence cash scenarios and cash-flow forecasts should be a focus for your department. Whenever there is disruption, the increased risk for fraud and cash mismanagement is real. Putting early controls in place, however, can minimize and prevent one-time and ongoing financial losses. Outlined below are strategies to ensure that, in times of change, your company isn’t hit with financial Armageddon.

error has already fallen out of the financial period of either you or the supplier and 2) at some point the overpayment becomes uncollectable because you are no longer buying from that supplier or they have gone out of business. Such situations occur every day to the tune of millions of dollars. As you can see in the chart below, a Fortune 50 company APEX Analytix worked with found an average of $3.5 million per month that would have been lost in duplicate payments, while one of the largest consumer packaged goods companies in the world saw $28 million per month of duplicates prevented.

Partner with accounts payable for greater cash management strategy Although the day-to-day functions of treasury and AP differ, companies are best served by these functions collaborating. As noted in the September 9, 2015 LinkedIn article “Why Treasury May Soon Take Over Accounts Payable”— “AP is fundamentally a cash distribution function.” The author, a senior payables researcher at Ardent Partners, points out, “There is significant capital involved in paying an enterprise’s suppliers— hundreds of millions of dollars in some cases—which means that treasury must, out of necessity, be closely involved in managing payments in order to ensure that doing so is aligned to the enterprise’s greater cash optimization strategy.” Similarly, in the process of treasury taking on a larger role in mergers and acquisitions and managing capital in global markets by managing payment terms, there are consequences for the disbursements function. Let’s say your company decides to spin off a division. Once those ledgers are separated, invoices continue to roll in. Who’s paying them? Without controls in place, chances are strong duplicate payments are being sent. An internal review may eventually identify the error but the danger there is that it may take so long to find the overpayment that 1) the

Spring 2016

When you consider the volume of trade of these companies—tens of billions of dollars—the representative proportion of errors occurring in the normal course of business may seem small by comparison. But look at it this way: the $28 million per month in duplicates found by the consumer packaged goods company is equal to almost a million dollars a day—the equivalent of ten basis points on a billion dollars in spend —if they hadn’t had continuous monitoring in place.

That’s the difference a day makes.

Institute high-quality continuous monitoring technologies How do you identify overpayment errors like the ones above, as well as leakage due to fraud? Departments like AP, treasury and internal audit may already perform continuous monitoring and/or sample audits, but we know from experience that these departments operate with an overestimation of how strong their controls are. Even among Global 1000 companies, we fail to see consistent and high-quality continuous monitoring technology and processes in place. Here’s an example of a situation that is not uncommon. An internal audit department performs an annual sample check for fraud. They may even compare vendor TINs against employee social security numbers to check for commonalities. If this audit is done on January 1 of each year, the company may catch some discrepancies. However, the door remains wide open to fraud and overpayments for the remainder of the year. As the months go by, the amount of the fraud can exponentially increase.



Planning, budgeting and forecasting To repeat, as business is being transacted and funds exchanged between suppliers and buyer, there are rampant opportunities for leakage. One amusing story we heard had a company hiring a host of interns who went in and cleaned up the company’s vendor data. Which means, for that one day, the vendor data was probably in pretty good shape. The next day, however, with no monitoring controls in place, the vendor data became outdated. Here’s the difference: you want a continuous monitoring system that pulls data from all of your systems, every night and provides you with a workbench that gives you easy dispositioning and reporting on overpayments. The right continuous monitoring system will issue reports on duplicate payment prevention, vendor risk analysis, missed cash discounts, paid credit memos and tax analysis before payments are posted. The best-case scenario in vendor master monitoring is a push technology that dynamically vets vendors in your database against global tax identification databases, address databases, industry classifications and prohibited entity lists then pushes the changes for you to review and update in your ERP. The only sure way to identify errors as they occur is by having a daily feed of all the net change data. For example, let’s say you have 100 vendors in your vendor master database and you know the records are clean. Tomorrow, one of those vendors ends up on the OFAC list. The system you’re using should send you an alert that reports a change has occurred in this field and ask if you want to take action. That’s the value of continuous monitoring.

Adopt a proactive stance to fighting fraud While overpayments in the form of duplicates, pricing errors or other transactional issues that may be detected through an audit or continuous monitoring are straightforward and clearcut, vendor fraud is a more insidious and sometimes larger issue to which treasury must remain alert. According to the ACFE Report to Nations, the losses to undetected fraud



increase over time. If a fraud lasts more than a year, it doubles in losses to the company. If it lasts more than two years, it doubles again. Asset misappropriation schemes are the most common frauds as well. In our business, we often joke about “Sutton’s Law,” based on a rumored exchange between “Slick Willie” Sutton, the infamous bank robber, and reporter Mitch Ohnstad. Sutton was asked by the reporter why he robbed banks. According to Ohnstad, he replied, “Because that’s where the money is.” Likewise, the volume of asset misappropriation cases that target AP could be due to the fact that it’s where the money is… or, at least, where it’s spent. Among asset misappropriation schemes, as seen in the ACFE chart below, billing fraud is the highest risk category, accounting for 22.3 percent of asset misappropriations. And it’s something that can be detected early with the right monitoring software.

And yet, many Global 1000 and even Fortune 500 companies do a poor job at monitoring for fraud. Per the ACFE Report to the Nations, “…tips are consistently the most common detection method for cases of occupational fraud by a significant margin.” Until there is broader adoption of continuous monitoring, it’s difficult to say how many of the losses to fraud could have been stemmed earlier and kept profits from leaking out of the company. How initial detection occurs matters because frauds that were discovered by accident last approximately three times longer—and at almost six times the cost— than those caught through monitoring. That’s a breakdown that will directly affect any company’s bottom line.

What can be done? Daily monitoring in the form of risk scoring for all vendors goes a long way toward protecting your financial resources. Each day, AP adds vendors, vendor records are updated and changes occur with vendors that are not known to the company who is paying them—all of which potentially place your company at risk. A supplier portal with continuous monitoring checks for things such as prison or residential addresses, employeesupplier matches (collusion), prohibited suppliers, CPI (global Corruption Perception Index) scores, consecutive invoice numbering, small first payments and even dollar amounts. Similar to how a continuous monitoring system may notify you of changes in vendor status or duplicate payments, a continuous monitoring system for vendor fraud will likewise provide you with an accessible workbench for reviewing, confirming, denying and reporting on potential risk of fraud. The best systems are the ones that create a composite score, rather than run individual comparison tests one by one. Compiling a score for every supplier in your database, comparing supplier records against employee records, and doing so continuously during and after onboarding is one of the best practices of leading companies. Unlike duplicate and overpayments that noticeably spike when changes (mergers, system upgrades, etc.) occur, supplier fraud can hit at any time. That doesn’t mean that a day still can’t make a huge difference. In fact, companies operating on a “business as usual” platform are often more susceptible to fraud. For example, if AP doesn’t have a good segregation of duties between invoice receipt and approval, a highly trusted individual may be manipulating the process. As for internal sample audits, they are just that—samples—and are

Spring 2016

Planning, budgeting and forecasting often “check the box” procedures versus thorough reviews. An objective third party review for audit and process control is essential.

Why your ERP system isn’t enough If you’re relying on your Enterprise Resource Planning (ERP) payment platform to protect against duplicate payments and fraud, it’s time for a reality check. Yes, ERP systems have levels of controls built in them. But even leading systems like SAP and Oracle lack the sophisticated, multi-level controls required to prevent and detect duplicate payments and fraud. The primary problem with ERP systems is human error. Anything from a typo to a keyer adding a “1” in front of an invoice number to placate an irate vendor threatening to pull his inventory because he hasn’t been paid leads to an ERP’s inherent controls being circumvented. In addition, multiple ERPs compound problems. Unless your systems are integrated, there is no way for one system to see into another to catch a duplicate payment. It’s not unusual for businesses to operate with multiple ERPs. One large financial services company found that more than 25 per cent of the duplicate payments uncovered during a recovery audit were the result of the same invoice being paid on multiple systems. ERP controls can also slow your operations. Often the controls that are on the front end of a payment process are either too tied down (every entry results in an alert leading to frustrated data entry teams overriding them) or too opened up (too few parameters to scan). Either way, thousands of potential duplicate payments may escape detection. The bottom line is that both treasury and AP need to ask hard questions about what their control environment is really like. Don’t accept a casual response as evidence of strong controls. IT or your ERP vendor may tell you there are controls in place but dig past the surface and you’ll most often find the level of control is only superficial. While ERPs have revolutionized today’s business world, best-in-class continuous monitoring applications are required to shore up your ERP controls, eliminate

Spring 2016

duplicate payments, root out fraud and protect your bottom line. Above all, insist on the ability of your monitoring system to extract daily data feeds from your ERP for analysis without slowing down your operations. Ideally, you should be able to walk into the office each morning and review a single, concise report that ranks potential issues and provides all the information you need to intervene before disbursements are made.

Supply chain finance and dynamic discounting Beyond what’s been discussed here, treasury and AP both have many additional opportunities to maximize the use of funds. Treasury, AP and procurement are a three-legged stool in this effort; without active involvement by all three teams, the effort will fail. For example, more effective than typical static discount terms (2/10 net 30) are supply chain finance (SCF) programs, approved payables finance (APF) and dynamic discounting. Buyer benefits vary by program. With APF, the buyer typically has a financial institution fund the early payment to vendors and gains extended use of funds. With dynamic discounting, the buyer uses their funds to pay vendors early and reduces the amount paid by the discount, keeping the cash. Treasury’s involvement in the management of these programs can help maximize the benefit obtained and alignment with cash management objectives. Within all of these, treasury, AP and procurement each have roles to play. Typically, treasury arranges liquidity from financial institutions at competitive rates to fund APF programs and provides guidance regarding the acceptable rate of return for dynamic discounting programs. Procurement identifies which program is a fit for which vendors. AP typically manages the portal to suppliers to allow them the ability to check the status of their invoices and payments. State-of-the art portals provide not only daily calculation of discounts, but also can proactively market discounts to target suppliers. Therefore, a portal is enabling daily collaboration that provides working capital management strategies and benefits to both buyers and suppliers.

From the perspective of the supplier, they don’t have the problem of “frozen capital” as they wait the 30, 60, 90 or even more days to be paid. Every day, via Approved Payables Finance (APF) or dynamic discounting, they can see the discounted payment amount for that day and clear the receivable. What can that cash-in-hand represent for your cash environment—especially if you’re getting preferred interest rates? That’s where the time value of money comes into play. By partnering with teams like AP and procurement, treasury can target suppliers or commodity areas where extension of payment terms is possible. And configuring optimal payment terms is just the beginning. Are invoices arriving on time? Are payments being made too early against terms? Are discounts being taken where available? One day can make a big difference in a standard 2/10 net 30 payment term. If the invoice arrives late or “Dead on Arrival,” the company loses two per cent of the invoice amount. For a Fortune 500 company, where a single invoice can easily be $100,000 or more, that’s $2,000 out of the treasury coffers. It adds up. Treasury has an opportunity, and potentially an obligation, to collaborate closely with AP to get a more holistic view of the cash management picture in their company. While treasury has typically left AP and procurement alone to manage payment terms, for example, there are benefits to a more collaborative effort. By participating more actively with financial supply chain partners in procurement and AP, treasury achieves more control over cash flow and return. And once you take the steps to close the gaps where money is leaking, you can turn your attention to the more exciting and valuable daily recoveries and benefits offered by dynamic discounting and supply chain financing. As senior vice president, global field operations at APEX Analytix, Phil Beane leads the commercial and retail audit teams and our international operations. His focus is on ensuring the highest level of customer satisfaction and value creation, which has helped to fuel a period of double-digit growth. He was previously responsible for leading APEX Analytix’ audit and software implementation support teams in the Americas.



Planning, budgeting and forecasting

The state of enterprise risk management in Canada Prepared by the Chartered Professional Accountants of Canada and the Canadian Financial Executives Research Foundation


odern financial and operational threats range from international economic contagion in a connected global economy to the real and growing threat of cyber sabotage and natural disasters. Add to that the pressures caused by uncertainty around commodity prices, interest rates, foreign exchange rates and the very real possibility of internal business failures or shortcomings, and there are plenty of real and potential risks that organizations must identify and plan for. Yet risk, when managed correctly, can be a driver of new possibilities, growth, expansion and innovation. In general, large organizations have robust programs in place to manage risk and use those programs as part of their overall business strategy. However, almost 20 per cent of participants in a recent survey about the state of risk management in Canada conducted by the Chartered Professional Accountants of Canada and the Canadian Financial Executives Research Foundation report their organizations currently have no documented risk management program. The results of the survey suggest that many executives are actively dealing with rising uncertainty and risk. With more than 320 respondents answering the survey, the majority (66 per cent) described themselves as only “somewhat confident” in their organization’s ability to manage risk. A minority (20 per cent) described themselves as extremely confident. Overall, respondents generally believe that their boards understand the risks—both positive and negative—facing their organizations, have even



more confidence in their senior management’s awareness of risk but notably less confidence in the front line employees’ understanding of risks facing the company. The 2008 financial crisis and the great recession that followed reinforced the need for risk management while highlighting the threat of unprecedented and unexpected occurrences. High profile cases of cyberattacks on corporations have raised awareness even further. Organizations are paying attention, according to results of the survey: 93 per cent of organizations review new activities or initiatives during the planning stage to address risks, either through a formal, informal or ad hoc process. What risks are Canadian organizations most wary of? Getting the strategy wrong, it turns out. Beyond general economic and industry conditions, organizations worry about leadership, enterprise reputation and enterprise strategy, identifying these risks and others as major impacts or business continuity risks to the organization. Survey participants held a variety of opinions on who is and who should be responsible for identifying and mitigating business risks. Answers ranged from senior management to the board of directors to the CEO or the CFO. Some respondents said more corporate directors should have the ultimate oversight for risk than they currently do and some respondents said they thought CFOs should bear less of the burden of responsibility. Nearly two-thirds (61 per cent) do not have a chief risk officer or equivalent, while 38 per cent have at least one individual charged with risk management in either a full or part-time role. Risks are real and given the speed of change in today’s economy, the ability to identify and

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Planning, budgeting and forecasting address risks in a timely fashion is critical to an organization’s success. Risk and uncertainty are constant elements of the business environment. Risk is “the combination of the probability of an event and its consequence. Consequences can range from positive to negative” (The Institute of Risk Management). The study’s respondents believed that their organization has the ability to manage risk, with 66 per cent stating they are “somewhat confident” and an additional 20 per cent “extremely confident” in the processes to deal with both positive and negative consequences. Confidence in risk management processes was higher among not-for-profit, government and Crown corporations than privately held companies. Organizations with more than 500 employees were most confident, with 90 per cent somewhat to extremely confident.

The degree to which a risk management program is documented is closely aligned with the application or implementation of a risk management framework. Significance of different types of risk on organizations today Strategic risks are risks (opportunities and threats) that affect or are created by business strategy decisions. Included in this category are brand perception and value, changing customer needs, general economic and industry conditions, leadership, local, regional and national political environment. Among the four categories of risks, strategic risk was viewed to have the highest overall impact (55 per cent reporting a major impact and another six per cent believing business continuity is called into question). Strategic risk had large variability between private and government/Crown corporations (with 51 per cent and 79 per cent, respectively, stating it has a major impact).

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Operational risks are inherent, and reflect a company’s procedures, people and systems. Specific risk examples include business processes, surplus/shortage of capacity, change integration, channel effectiveness, customer satisfaction, operational efficiency, health and safety, product/service performance, service delivery, supplier failure (quality, quantity or timeliness), and operational technology failure. Overall, 54 per cent of respondents said that operational risks posed a major impact or were a threat to business continuity. Operational risks tend to grow with company size: 46 per cent of small organizations (less than $100 million in revenue) saw it as having a major impact or a continuity threat whereas 60 per cent of organizations with $100 million to less than $1 billion in revenue and 65 per cent of organizations with $1 billion or above in revenue felt the same. Among organization types, Crown corporations and government felt that operational risks posed the greatest threat (67 per cent) while NGOs had the lowest (41 per cent). “[Food safety] is only one of my risks… The second thing is the POS (point of sale) system, when the POS systems go down (technology), you can’t run a restaurant. You cannot collect cash without a POS system,” notes Ross Corcoran, CFO, Bantam Restaurant Group. Financial risks include the following: regulatory/compliance requirements, commodity prices and input costs, credit rating and access to capital, foreign exchange, interest rates, liquidity and cash flow, regulatory, legal and compliance, tax policies and laws. Overall, 46 per cent of respondents said that financial risks today constituted either a major impact on their organization or actually posed a threat to its business continuity. This assessment was highest for publicly traded companies (58 per cent) and lowest for Crown corporations/government (29 per cent). External risks are associated with factors outside of the organization and these occurrences are largely outside of an organization’s control, but the impact can be greatly influenced. Included in this

category would be the changing natural environment, natural disasters, attacks on personnel, terrorism, sabotage and cyber security risk. Overall, the expectation of a major impact or threat to business continuity from external risks is 43 per cent for public companies, with Crown corporations and government organizations most affected at 54 per cent. Those reported to be least affected by external risks are NGOs, with only 19 per cent expecting a major impact or threat to business continuity. “As a financial services company, we obviously have a lot of confidential information and so cyber security is one of our top evolving risks,” says Bev Davies, VP, enterprise risk management, Investors Group Inc. “We’re spending a lot of time on initiatives to manage that risk. It’s a lot about what you don’t know that can hurt you because you might find a solution to protect against the latest cyber breach methodology, but then something else could come up that you’re not protected against. As an organization, we devote a fair amount of time talking to our board about information security risk and the programs that are in place.” Unidentified risks: Participants were asked to identify major risks to their business not described in the survey. Notable responses included inclement weather, technology and worrisome employee demographics: ◉◉ “Since we are a housing construction company, longer winters will hurt our industry since outside work cannot be accomplished unless a higher cost is attached to it and it will also lengthen the construction period which will diminish the anticipated surplus.” ◉◉ “Inability to move faster on all IT related investment. Major changes in competitor channel delivery and use of internet can fundamentally change our business.” ◉◉ “Baby boomers departing all at once, impacting skill sets currently in place within the organization and succession planning.”

Risk management program According to the Institute of Risk Management (IRM), risk management is defined as the systematic process



Planning, budgeting and forecasting of understanding, evaluating and addressing risks to maximize the chances of objectives being achieved and ensuring organizations, individuals and communities are sustainable. Risk management also exploits the opportunities uncertainty brings, allowing organizations to be aware of new possibilities. Essentially, effective risk management requires an informed understanding of relevant risks, an assessment of their relative priority and a rigorous approach to monitoring and controlling them. With this definition in mind, do you have a documented risk management program? “We assess our risk profile at least quarterly, but, the more meaningful and deep assessment of whether they are within risk appetite is best when it’s an integral part of business planning. If it happens in a separate exercise, significant value is lost,” says Kerry Reinke, VP, enterprise risk management, group risk management, Manulife Financial. When it comes to actively managing risk, 80 per cent of organizations have some level of program in place, ranging from one that is robust and advanced (15 per cent), to somewhat developed (37 per cent) and minimally developed (28 per cent). A robust risk management program is most likely to be found at the largest organizations by revenue (44 per cent) or public companies (28 per cent). Participants reported similar percentages of implementation of a risk management framework: 16 per cent had one fully implemented and 54 per cent had one partially implemented. More than a quarter (28 per cent) however have not implemented a risk management framework. For those 61 per cent of respondents whose organizations have adopted a framework, less than half are using COSO (Committee of Sponsoring Organizations of the Treadway Commission) with the second most popular being ISO 31000. Interestingly, many indicated they were using an ‘other’ framework, such as the one developed by Office of the Superintendent of Financial Institutions (OSFI) for financial institutions, and many were using an internally created framework, sometimes with guidance



from the organization’s parent. As a result, our interpretation of the survey results is that the degree to which a risk management program is documented is closely aligned with the application or implementation of a risk management framework. “A smaller organization that we worked with undertook an organizational review of their risks and then went about the process of setting up an enterprise risk management program,” shares Karen Horcher, consultant, Hedge Rho Management Inc. “That was really enlightening because the organization had been doing some things well but informally. And so it was a real eye opener [for the company] to go through a formal process and engage employees in different divisions and different roles. The end result was a much more comprehensive approach to risk management than had previously existed.”

The range of risks, significant and insignificant, likely and unlikely to occur, known and unknown, is growing and gaining prominence. Who is and who should be primarily responsible for risk management? More than one-third (34 per cent) believe that senior management as a group is responsible for the oversight of risk management, followed by the CEO (23 per cent), the board (18 per cent) and the CFO (15 per cent). Asked who should be primarily responsible for risk management, the respondents’ answers were similar: 33 per cent stated senior management, 25 per cent stated for each of the board and the CEO and eight per cent for the CFO. The largest shifts between the present and target situations were the declining role for the CFO (15 per cent to eight per cent) and the roughly commensurate expansion of the board’s role (18 per cent to 25 per cent). “We actually have multiple boards and directors, because we own companies

and are in joint ventures that have their own boards,” noted an anonymous senior financial executive. “There should be separate oversight structures aligned to the way you oversee your overall business. This is just another element of managing your businesses, so however you do the rest of it, you should generally follow the same approach with anything risk related. That’s what we do, so that particular boards deal with risks for their different units, and the monitoring gets more and more high level as you go up to avoid duplicating efforts.”

Conclusion The world is becoming a riskier place for most businesses to operate and prosper. The range of risks, significant and insignificant, likely and unlikely to occur, known and unknown, is growing and gaining prominence as organizations find it necessary or are required to publicly report data breaches, cyber attacks and unexpected operational short comings that were once simply described as “surprises.” Canadian organizations have more work to do when it comes to recognizing and managing risks. While most organizations are concerned with risk, a significant number (one in five) continue to operate without a risk program of any kind. Perhaps unsurprisingly, more robust, institutionalized enterprise risk management programs are most common among large and public companies, where nearly one half have one in place. The percentages decline for smaller and private entities. Our survey found similar percentages for implementation of a risk management framework: 16 per cent had one fully implemented and 54 per cent had one partially implemented. More than one quarter (28 per cent) have not implemented a risk management framework. The survey results suggest more work has to be done to bolster oversight and operational responsibility for enterprise risk management by relevant levels and individuals in organizations, be they boards of directors, CEOs, CFOs, and the latest C-suite member, the CRO. This is supported by U.S. research from the 2015 Report on the Current State of

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Planning, budgeting and forecasting Enterprise Risk Oversight: Update on Trends and Opportunities which found that demands for board and executive risk oversight continue to rise. Enterprise risk management is still an emerging field for mid-sized organizations. While it remains a mostly informal or ad hoc process for small organizations, it has been ingrained in strategy and initiatives by large organizations, both private and government entities, as well as Crown corporations. What is becoming standard practice among large organizations with regards to risk management practices and standards will likely spread to smaller, private companies and NGOs as they seek to emulate their larger peers. “Many companies tend to focus on the formal aspect of their risk frameworks, and I find that sometimes it creates a bit of a false sense of security,” observes Michael Kobrin, president, Michael Kobrin Consulting. “Even if you have a great risk framework and documented procedures, if you don’t have an open, transparent environment in which people feel comfortable challenging ideas and a communication mechanism to facilitate this, those formal processes simply won’t be as effective. Often, boards look at their organizations’ formal frameworks and processes and say `Okay, we’ve got all these great matrices and colourful heat maps,’ but what they really need to ask is what is the true corporate culture with respect to openness and transparency, and how does risk management fit within the broader strategic plan.”

Case study: Risk assessment at Telus “At TELUS, about a decade ago, we implemented our own in-house developed risk assessment survey tool, and once a year, about 1,500 team members complete this e-survey. So the reported view of risk was statistically valid. “For senior executives, the top 10 risks were typically strategic risks. When you went down to the front line, top-rated risks were typically more operational in nature such as customer service related risks, or process related concerns. In other words, the things which were inhibiting their ability to do their jobs well. It is a great tool. The survey findings were transparent to the board including a compare and contrast of risk rankings by level in the organization. “One would see process breakdowns and customer service right at the top of front line concerns and yet, we’re supposed to be putting customers first as an overall corporate objective. I think it was a tool that actually allowed the organization to say, “We have to do a lot more than provide lip service to our stated priority,” and the entire organization has to put customers first and improve customer service. By the way, that is exactly what happened as TELUS made remarkable progress on this priority since 2008. “So, TELUS’ risk management tool helped shed light on whether what VPs and SVPs were reporting was actually what our frontline experienced. Our frontline responses were more correlated with the stats from our customers’ perceptions and so it was a great catalyst to doing something good in the organization to improve customer service, but the point being: Be very, very careful when compiling risk rankings. “You have to ask the question: Who is saying these are the major risks and what is their natural bias/perspective? Unless you have a cross-section throughout the organizational hierarchy of a large organization, as opposed to merely a survey of senior management, then you’re not going to really have a good understanding of the true risks the organization faces.” –Robert McFarlane, corporate director and former EVP and CFO, TELUS


7 Trends that will Transform P2P in 2016


June 2, 2016 7:30 - 10am The National Club, 303 Bay St, Toronto

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Presented by You must be registered in advance to attend.

Free to register




Thinking of volunteering as treasurer of a non-profit? 10 considerations for CPAs to keep in mind By Melanie Borho-Persechini


omeone has asked you to join a non-profit board of directors. Upon joining the board, they find out that you are a Chartered Professional Accountant (CPA). This must automatically qualify you to be the treasurer, right? People assume that because you have a professional accounting designation, that you obviously possess the specialized skills and experience to take on the treasurer role for your chosen not-for-profit organization. Think again! Here are some items to ponder before committing to the key role of treasurer.

1. How much time is required to be the treasurer for the non-profit organization? Have an honest discussion with the current treasurer to determine the total time commitment that is required. Since this is a volunteer role that you will be taking on, in addition to your day job, consideration needs to be given ahead of time as to the number of hours you are expected to commit to. An organization that is more volunteer based with less paid staff will tend to require more hours per month. This is because the treasurer is required to fill a financial role that is more hands-on, being involved in day-today transactions. A larger, more mature organization with paid staff may require less time and more of a high level role where the treasurer fills the role as a reviewer and advisor focused on financial analysis and providing recommendations. The time that you can commit will help to determine the type of organization you should join as treasurer.

2. Do you feel passionate about the non-profit organization? You need to ensure that the organization



is the right fit for you. As treasurer, you will be committing many hours to this cause, both on the board and to their fundraising events. Therefore you need to ensure you feel a connection to the mission and values of the organization. When you are passionate about something, the role becomes more enjoyable and doesn’t feel like a burden on your limited free time.

3. How will my corporate experience assist me in the role of treasurer and are my skills transferable? The accounting and financial analysis skills that you utilize in your day job are definitely transferable to your role as treasurer. However, those skills may need to be tweaked to adapt to the non-profit world if your background is for-profit, as the focus is different. Non-profits have limited sources of funds and are designed to have a balanced budget, rather than to budget for a large surplus. The atmosphere at a non-profit is different. The goal is to fulfill a mission for the greater good so utilizing a corporate culture based on the bottom line may not be well received. Implementation of accounting controls used in the corporate world would be an asset to the non-profit entity through your role as treasurer to help improve the financial health of the entity. Tone at the top is key so that everyone is aware that integrity is important and that as treasurer, you will uphold those values.

4. Is the treasurer responsible for ensuring the financial well-being of the organization? This is a question that is often misinterpreted. The treasurer is not responsible for ensuring the organization is sufficiently healthy from a financial perspective. Rather, they are responsible to report the financial results of the

organization to those that oversee the operations and to ensure that the board is aware of the financial health and accuracy of the financial results of the entity in order to make the best decisions possible. The treasurer definitely has more involvement in the financial wellbeing of the organization, ensuring that the bills are paid and that the lights stay on, given their role in overseeing cash management. That being said, each board member is responsible for the financial health of the entity—the treasurer is simply the messenger. The board of directors is liable for certain expenses should the organization be unable to cover the costs, so the financial reporting that is communicated by the treasurer is key. Oversight of the financial health of the entity is one of the main responsibilities of the treasurer.

5. What financial controls are in place at the non-profit organization? The implementation of financial controls at a non-profit is an area that is often challenging for multiple reasons. Some of these reasons include the experience of the people involved, the number of volunteers versus paid staff who work at the organization and limited funds to implement the level of controls that may be found in the corporate world. That being said, care needs to be taken to ensure the donations are being spent appropriately and in accordance with donor wishes. A key control that can be implemented, at even the smallest organization, is having dual cheque signatures. This ensures that more than one person is scrutinizing the invoices for validity and it makes fraud much harder to occur. As treasurer, you should be one of the signing authorities at the entity, which gives you more control and knowledge of transactions that are

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Feature occurring. Your skills and experience from the corporate world can be utilized to establish financial controls and policies to guide the organization. In a larger non-profit organization, you will be able to implement additional financial controls to strengthen the financial position of the entity.

6. What is the process surrounding the creation of the budget? At a non-profit, the budget is a key component to the success of the organization. If the assumptions made are inaccurate, then the entire document becomes useless and the entity may be doomed for failure. A process needs to be in place surrounding the creation of the budget. If no process is in place, this is an area that should be tackled immediately given the importance of the budget to the operations of the non-profit entity. In the ideal situation, the document is created by management, listing the assumptions for each revenue and expense line item, with the treasurer being the sounding board for critiquing those assumptions. The budget document then needs to be analyzed throughout the year, whether that be on a monthly basis or, at a minimum, on a quarterly basis. The actual expenditures need to be compared to the budgeted amounts and reasons for variances need to be identified. When shortages of funds arise, an analysis needs to take place to determine what happened and determine whether adjustments to the budget are required in order to achieve a balanced budget for the year. The document should identify those expenditures that are essential to the entity versus those that would be nice to have, so that when budgetary pressures arise it is easier to determine which expenses can be cut.

7. Do you know the filing requirements for a non-profit organization? As the treasurer, you are responsible for ensuring all filings with the Canada Revenue Agency (CRA) are up to date. This includes everything from annual tax filings to monthly payroll remittances and commodity tax filings, just to name a few. Non-profits have different filing requirements from corporate entities, so you need to be aware of what filings are

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required and their related deadlines. Some of these filings are quite complex, so if you do not have the required expertise you may need to acquire the expertise from outside of the organization. In addition to tax filings, charities have complex donation receipting rules and processes that must be followed for both cash and gift-in-kind donations. If these rules are not followed, the charity could jeopardize its charitable status. As treasurer, you need to ensure that the correct processes are being followed and proper donation receipts are being issued by the entity.

8. Does the organization have a good relationship with its auditor? The treasurer is the liaison between the non-profit organization and its auditor. This could be as the auditor’s contact as treasurer or as the chair of the finance and audit committee, if such a committee exists. As treasurer, you are responsible for the year end working paper package supporting the financial statement balances provided to the auditor. This does not mean that you need to create it yourself (though you may in a smaller organization) but you are ultimately responsible for ensuring the auditor receives the documentation that is required to support the financial statements and related notes. You are also responsible to resolve any potential issues that may arise between management and the auditor. It is wise to find out what sort of relationship the non-profit organization has with its auditor, as this relationship will become one of your main responsibilities as treasurer. If the relationship with your auditor is not a good one, then that is an area to focus your time on to make that relationship stronger and to use the expertise of the auditor as a resource.

9. What is the financial literacy level of the other board members and what is the expectation for your role? Consideration needs to be given to the financial literacy level of your fellow board members. As the treasurer, you will be responsible for ensuring that the board of directors understands the financial statements and results of the organization. The financial literacy level of the board

members will dictate the type of reporting that is required at your board meeting. There is no point in discussing financial results at a level that is too high or too basic, as this wastes precious meeting time. In my experience, I have found that sending the statement of financial position and statement of operations with financial analysis in non-accounting terms prior to the meeting is very helpful, as it gives the directors time to digest the information and to ask meaningful questions. It is also beneficial to survey the directors to find out if the level of detail is appropriate for them or if they would like more detail or less. This will allow you to tailor your financial presentation, ensuring that the board members are educated about the financial health of the organization.

10. Who will be your successor? Part of your role as treasurer will be to recruit and train your successor for transition when your term has finished. Once you have established a strong financial organization, you want to leave it in capable hands. In my experience, a replacement was brought in one year in advance of my term ending as assistant treasurer, so I could train and transition the responsibilities to her. This left the entity well positioned with the new treasurer upon my departure from the organization. Your professional accounting designation will give you the base knowledge for being the treasurer, but consideration needs to be given to the above factors as you are about to embark on your new role as treasurer of a not-for-profit organization. Think about the pros and cons of the position prior to selecting the entity. Having a skilled, qualified and experienced treasurer is key to the financial success of any non-profit organization. Melanie Borho-Persechini, CPA, CA has more than 15 years of experience in public accounting at BDO Canada LLP. She is an audit senior manager who specializes in not-for-profit organization audits. She previously served as treasurer of The Mississauga Food Bank where she was awarded the Ontario Volunteer Service Award. She can be reached at



your Team

Building team bonds How personal connections can drive unprecedented performance By Jackie Barretta


ecently promoted to director at a large software company, I was looking forward to attending my first leadership retreat. I’d wondered why the retreat coordinators had asked me to submit two pictures of my family a few weeks earlier, but when I walked into the conference room that morning I found my answer. Pictures of



my husband and me with our children on the beach flashed across a huge video screen to the accompaniment of uplifting songs like “In the Living Years.” I stood there with my heart in my throat as my family photos shuffled among those of the other leaders. Everyone stared at the screen. No one uttered a word. It’s hard to express all the feelings that flooded my mind and body at that moment. Pride, certainly. Happiness, of course. And, to use a word you seldom use in business, love. The family-like

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Your Team bond that formed that day between me and the other leaders in the company fortified us through many years of tough challenges and hard work and accounted for much of the tremendous success we built during the subsequent years. We’ve all seen or heard about teams in sports, music, the military or business that turn in performances transcending the ordinary. Somehow, each team member overcomes any personal performance limitations and attains an unprecedented level of energy and ability. What drives such team spirit, and can we intentionally create it?

Generate mutual care Most coworkers relate to each other at the surface level, where they see each other as both comrades who share the workload and, at times, as competitors vying for rewards and advancement. Some may bond more deeply and become good friends over time, but for a team to unleash its maximum creativity and full potential, everyone must relate at a deeper, personal level. When teammates relate to each other with a genuine feeling of care, they satisfy a primal need. According to Roy Baumeister, the eppes eminent professor of psychology and head of the social psychology graduate program at Florida State University, and Mark Leary, professor of psychology and neuroscience and director of the social psychology program at Duke University, we all yearn, at a fundamental level, to feel a sense of belonging with other people. This sense of community arises when we experience a personal bond, cemented by care and trust and emotional concern, with our teammates. We want more than a mere work relationship wherein we feel only a loose affiliation with our coworkers. We crave deeper, more personal relationships, the kind that fuel optimal emotions, ranging from delight and joy to contentment and calm. When we interact regularly with people with whom we don’t feel a strong sense of belonging, we often end up with potent and even toxic negative feelings, including fear, anxiety, depression and loneliness. I cared deeply about the well-being of all my teammates at the software

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company and knew that they felt the same way about me. Our mutual bond helped us all maintain optimal emotions, such as cheerfulness and optimism, which naturally evoke the most soughtafter contemporary competencies, from quickness, flexibility and resilience to innovation and complexity management. I have also worked on teams where low levels of concern thwarted or weakened relationships and prevented bonding. That type of team dynamic promotes negative emotions such as fear and anxiety, which limit cognition and creativity. A team grows strongest when each person feels a reciprocated emotional bond with each and every teammate.

Tighten the connections When your team members see each other as people worthy of compassion and concern, not just as coworkers sharing a workplace, they begin to bond. A team leader can do a lot to help the team take their relationships beyond the surface level of their work and connect at a more satisfying, primal level. It’s not easy because many people feel reluctant to expose their personal selves, especially in the early stages of their work with new colleagues. I’ve often used what I call a “pecha kucha” event to create the atmosphere of mutual care and respect that stimulates even the most reticent member of a team to open up to the others. Pecha kucha refers to the Japanese event where pictures appear in rapid succession on a screen. I invite each team member to provide five or six photographs of themselves, images that capture who they are and that move their soul or give their life meaning, along with short, descriptive captions for each photograph. When I present the slide show to a team, I flash each of the photos for six seconds. Imagine the scene. People get really excited as they see flashes of a colleague smiling on his wedding day, romping in the surf with her dog, standing between his parents on graduation day, crossing the finish line at the Boston Marathon or just making a funny face at the camera. Even people who have worked with each other for many years discover something new about a teammate. “I never knew

you work holidays at a homeless shelter!” “Wow, that is one ugly cat!” “Aw, you were such a pretty baby!” The event gets people interacting and laughing but more importantly it leaves everyone feeling more deeply connected to their teammates, often without realizing it.

Keep all eyes on the goal Do not let a team’s bond work to the detriment of its purpose. If your team concentrates so hard on bonding with each other, singing Kumbaya and telling jokes in the break room while customer needs go un-met, the business will suffer. To prevent this from happening, keep in mind the danger of bonding for bonding’s sake rather than for the sake of team and organizational performance. Emphasize that the goal of bonding is to strengthen the team’s ability to achieve its purpose and don’t let the bond between teammates become detrimental to the team’s relationship with the rest of the company or with customers. This brings up the heart-wrenching subject of firing a chronically underperforming teammate who has bonded with the team. As much as that can feel like a death in the family, such team members eventually impair the team’s performance, no matter how much people like them personally. This is the most emotionally difficult thing I’ve ever had to do as a team leader; but I knew that if I let poor performance persist it would eventually sink the whole team. If and when you must cut someone loose, you should do it with the utmost compassion and respect, not just for the sake of that person’s feelings but for the emotions of everyone else on the team. The most elite teams form a strong emotional bond that helps each individual perform at their peak but they always remember that achieving their purpose is their ultimate goal. Jackie Barretta has a 25-year history as a successful Fortune 500 C-level executive and Big Four consultant in the Information Technology industry. She has led large organizations with hundreds of employees through challenging times and major transformations. Jackie’s book, Primal Teams, defines the super-energy of elite teams and helps organizations create it in their own teams.



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Spring 2016

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2016 April 5-7 Smart Card Alliance 9th Annual Payments Summit Orlando, FL April 6-7 Payments eXchange Payments Awards 2016 Toronto, ON April 10-13 RIMS Annual Conference & Exhibition San Diego, CA April 11-14 NAPCP 17th Annual Commercial Purchasing Card and Payments Conference Tampa, FL April 19-21 Electronic Transactions Association 2016 Transact Las Vegas, NV April 17-19 Treasury Management 2016 TEXPO San Antonio, TX April 17-19 NACHA, The Electronic Payments Association, Payments 2016 Columbus, OH April 20-22 ABA Risk Management Forum

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Canadian Treasurer Spring 2016  
Canadian Treasurer Spring 2016