Monday, November 9, 2009

According to the Auditor General, Flaherty is cooking the books

Today I heard back from the Office of the Auditor General in response to my question about whether Flaherty’s tax leakage claims concerning income trusts are based on sound methodology or not. Turns out they are not. Flaherty’s tax leakage claims only arise when he leaves out the deferred taxes paid by income trusts held in RRSPs. Whereas including these taxes gives rise to tax neutrality for income trusts.

To include or not to include....that is the question?

This is so simple, even Flaherty could figure it out. Including these taxes is mandatory under the accounting methodology known as “Accrual Accounting”.

Could someone please inform Canada’s Minister of Finance that the Government of Canada, along with the Auditor General of Canada and the House of Commons Standing Committee on Public Accounts adopted the Accrual Accounting methodology in 1995 and it became fully implemented in 2003 as reference in the preamble to the Public Accounts of Canada for 2003 (see below). Could someone also inform Flaherty that he destroyed $35 billion of Canadians’ retirement savings for no good reason.....apart from the fact that Flaherty doesn’t know his accrual accounting from a hole in the ground.

Public Accounts of Canada 2003 reads (on page 7):

Budget 2003 announced the implementation of full accrual accounting, which is the basis of preparing the Government’s 2003 financial results. Annex 6 of the budget provides an explanation of full accrual accounting and its impact on the Government’s financial statements.

Full accrual accounting provides a more comprehensive and up-to-date picture of the Government’s financial situation. It is the accounting standard recommended for governments in Canada by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants and it has been strongly recommended by the Auditor General of Canada and the House of Commons Standing Committee on Public Accounts.

The Government’s commitment to implement full accrual accounting was made in the 1995 budget, but much work was involved before actual implementation was feasible this year.


Anonymous said...

I think Flaherty understands ACCRUAL accounting just fine. The tax on income trusts is about AS-CRUEL a tax on Canadians as you can find.


Dr Mike said...

It seems incredulous to me that these gov`t guys cannot be held accountable for their actions.

It is just ducky to say that accountability happens when it comes time to vote in the next election.

Well pffttttt to that one.

Minorities have been racked-on for centuries in the name of one thing or another , or in the name of one group or another , or on behalf of one group or another---this has been done with very little consequence throughout history.

In the case of the trust investor , he was the victim of a flowery name , Tax Fairness , & the victim of a totally uncaring gov`t who left the small investor to twist in the wind.

Who cared about us--sure not a jealous population who hates to see others do well--sure not the gov`t who had bigger fish to help--sure not the media who coveted gov`t attention.

So accrual accounting was the least of their concerns.

It was business as usual by Nov 1 2006 for everybody but us.

Thanks for nothing Jim Flaherty.

Dr Mike Popovich

Anonymous said...

Geez, even I had to take a 3 day course on accrual accounting when they changed; and I notice they're still offering it through the government intranet training site. tsk, tsk.

You'd think every Finance Minister would have to take it before he's allowed to play with the economy