Chartered accountants weigh in on economy, surplus

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Chartered accountants in this province recognize the impact the global economy is having at home.

Richard Power, chairman of the Institute of Chartered Accountants of Newfoundland, was in Corner Brook this week to address the western Newfoundland chapter.

The Western Star had an opportunity to sit down with him and two of his colleagues to discuss the profession and get their views on the provincial surplus and an ebbing economy.

Richard Power, chair of the Institute of Chartered Accountants of Newfoundland, spoke to members of the western Newfoundland chapter this week. Looking on are Tashia Batstone, the organizations CEO, and Jeff Follett, past chair.- Photo by Cory Hurley/The

Corner Brook - Chartered accountants in this province recognize the impact the global economy is having at home.

Richard Power, chairman of the Institute of Chartered Accountants of Newfoundland, was in Corner Brook this week to address the western Newfoundland chapter.

The Western Star had an opportunity to sit down with him and two of his colleagues to discuss the profession and get their views on the provincial surplus and an ebbing economy.

At the provincial level, a revised Chartered Accountant Act is expected to be proclaimed in the coming months. Power said it will allow incorporation of professional accountants in this province for the first time and allow them to have limited liability partnerships.

Nationally, one of the major moves afoot is the recognition of international financial reporting standards (IFRS). In Canada, this set of internationally recognized standards will be implemented in 2011. It is expected to have a major impact on the profession, allowing all chartered accountants to feel comfortable viewing a set of financial statements from anywhere in the world.

"It's the way the world has moved and Canada has to lead and follow in adopting these standards," he said. "Lead, in terms of having input into these standards, and obviously to follow them."

These international standards are a result of high-profile cases such as the Enron case in the United States and are complex, Power said.

A separate set of standards for private enterprise will be established.

Much attention is being brought to the downturn in the economy and the devastating impact felt in some areas of this province.

"We have been lucky in Newfound-land because we are resource-based driven. That's where our wealth comes from," said Jeff Follett, past chairman of the board.

"If you look at where raw material prices for iron, nickel and those things have gone in the last few months, specific to the downturn in the States, it's smacked us right in the head."

Follett said the halt on expansion plans by the Iron Ore Co. of Canada in its mine in Labrador, layoffs at Voisey's Bay and the closure of the Abitibi pulp and paper mill in Grand Falls-Windsor are examples.

"The comforting thing, I believe, is it is short-term in nature and this recession probably won't go longer than 18-24 months," he said.

"We have a nest egg here in the province (the projected $1.3-billion surplus), for the province to manage it. That being said, the increases in minimum wage that is on the table and their own in-house negotiations with NAPE and CUPE employees, that is going to be challenging, no question about it.

"We flaunt a $1.3-billion surplus that won't be repeated this year or after if this recession is in place. If unions and government get together and agree, it has a significant impact at the end of the three- or four-year contract in terms of the impact on its bottom line. If this becomes an extended recession, there could become some real harm in this province specific to labour costs."

Meanwhile, Power said the provincial body has been typically pleased with the government's approach to sound fiscal responsibility and paying off its debt.

The Western Star

Organizations: Institute of Chartered Accountants of Newfoundland, Enron, Iron Ore Co. of Canada CUPE

Geographic location: Corner Brook, Newfoundland, Western Star Canada United States Abitibi Grand Falls-Windsor

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