Same old song and dance.

Year-end is the time to look back at what we have (or is that haven't?) accomplished in terms of improving Canadian corporate accountability, and also to look at what could be ahead for 2003. Company financial results for 2002 are likely to be overly optimistic and inflated because of several recent accounting rule changes. Investors have to realize that reported profit improvements in 2002 may have little to do with corporate efficiency and lots to do with questionable changes to the accounting rules. For proof, just look at some of the financial reporting choices that are allowed in Canada, but not in the US. Companies that suffered certain intangible asset impairments during 2002 were allowed to recognize the loss by retroactively reducing shareholders' equity as of the end of 2001. Tightening Canadian accounting doesn't seem to be on the radar screen for 2003, mainly because of the self-interest that exists in the standard-setting community. The Accounting Standards Board (AcSB) claims to have no connections to the audit practitioners, but who's kidding whom? The AcSB literally shares a home and budget dollars with the Canadian Institute of Chartered Accountants, or CICA (which includes the auditors who sell their services to the companies that benefit from the rules). The bottom line is that current proposals to fix corporate accountability in Canada seem grossly deficient. More Canadian investors will surely lose their savings, and more foreign investors will lose patience with Canada.