[Set Slide Image]
PD Pathways is a monthly digital newsletter for CPAs and business professionals, showcasing the latest news and resources in CPABC Professional Development.
September 2022 Content
Risk Appetite: The Value of Working Through Contradictory Statements
By William Wesioly, CPA, CMA
Risk – organizations encounter it every day as they work through decisions that lead them to achieving their objectives. But what guidance are they using to determine how much risk to take?
Risk appetite is the level of risk that an organization is willing to accept while pursuing its objectives. When used properly, it can be an extremely effective decision-making framework. It can force leaders to have difficult conversations in order to understand potential contradictory risk appetite statements. This process is critical, because it allows those involved to work through potential contradictory decision options, or tension points. Oftentimes, these conversations are as valuable as the decisions they produce. Once leaders have reached a decision, they should communicate it to the rest of the organization to build understanding of its risk tolerance and risk management strategies.
To demonstrate this process in action, here are two examples of how organizations have used risk appetite to work through contradictory statements.
Example one: Funding a loan to a local foodbank
This scenario from COSO demonstrates the potential contradiction in decision making. The example is of a community bank that has, among its risk appetite statements, the following:
- We encourage our staff to offer financial products to our customers that serve their needs, but not where the credit risk exceeds prudent levels.
- We seek to support our local community in becoming a vibrant and diverse place to live within a profitable business context.
The bank has recently been asked to fund a loan to the local food bank to help it upgrade its premises to better serve the community. But there is an issue and a potential tension point.
The issue: The ability of the food bank to service the loan is questionable because it is highly dependent on donations, which can vary as social values and behaviors change.
Would the community bank be prepared to foreclose on a loan, and in so doing, cause people to go hungry? Does the risk of financial loss from a poorly performing loan outweigh the risk that comes from not supporting the local community and developing a strong business context in that sector? While the resolution to this scenario is not provided, it demonstrates how the natural tension within risk appetite statements helps to stimulate a deeper business conversation.
Example two: Offering in-person education during COVID-19
This scenario from Ontario Community College arose in September of 2020, before COVID-19 vaccinations were widespread. The college was considering how they could best offer their Fall 2020 course catalogue.
They started with two of their key risk appetite statements:
- We will ensure personal safety of all stakeholders – students, staff, contractors.
- We will seek to provide all educational offerings that are of top quality.
The issue: The college started with the premise that in-person offerings were of higher quality than online offerings. However, their contradiction, or tension point, was that this would violate their risk appetite statement of ensuring personal safety. As you’ll remember, at the start of the pandemic, people were being asked to avoid gathering in groups as much as possible.
So, how did they resolve the business decision of offering courses for the September 2020 term? The first major decision was to offer all second- and third-year classes online. It was postulated that those students already had the grounding of face-to-face sessions in their first year where they got to know their instructor and fellow classmates.
The second major decision was to defer all first-year classes until such time when vaccinations were widely available – which at that time was estimated to be in another nine months. The college could do this because there were sufficient financial reserves and political backing to defer revenues for nine months. With that important caveat in place, the college could then adhere to the two risk statements of personal safety and of offering in-person courses for first-year students.
Identifying and discussing contradictions in risk appetite statements can greatly alleviate potential problems before they occur. And remember, the results of these discussions among senior leaders must be communicated through the rest of the organization to increase understanding of its risk tolerance and risk management strategies. This is how risk appetite can be positively utilized, and not just exist as a stand-alone set of principles that is put on the back pages of an annual report.
William (Bill) Wesioly, CPA, CMA, is an independent risk management consultant and professional leadership coach. Prior to becoming an independent consultant, he worked in the financial services industry in risk management roles for Bank of Montreal and Royal Bank of Canada. He currently teaches the CPA ERM certification program in Toronto for CPA Ontario.
Learn more from Bill at his upcoming Enterprise Risk Management Fundamentals Program on November 7-9. This three-day, seven module program has been designed to help Finance leaders anticipate, prepare for, and quickly respond to evolving business threats and opportunities.
New Certificate Programs
Here are three new certificate programs to become a better CPA firm manager, design and deliver effective virtual presentations and help you master resilience, .
CPA Firm Manager Leadership Skills Certificate Program
This eight-module program has been designed specifically for new managers working in a CPA firm and focuses on refining the necessary skills to lead your team effectively to success.
Read more on CPA Firm Manager Leadership Skills Certificate Program
Virtual Presentation Design & Delivery Certificate Program
It is not enough to take a prepared live presentation and do the same thing in a virtual setting. This six module program will teach you how to design and deliver your virtual presentations effectively, confidently and with purpose.
Read more on Virtual Presentation Design & Delivery Certificate Program
Advanced Resilient Leadership Certificate Program
This four-part program is for those who are interested in fostering an environment where individuals may flourish and produce their best work providing a comprehensive collection of reflections and useful, transferable tasks.
Read more on Advanced Resilient Leadership Certificate Program
New Titles for Fall
Here are some of our exciting new titles this fall.
Digital Transformation Toolbox - Preparing for the future of Accounting
This session is ideal for Finance managers, CFOs, controllers and practice accountants who want to enhance their knowledge of Digital Transformation in Accounting. Through real-world examples and case studies, the speaker will show you how to leverage technology accelerators to create efficiency and reduce cost for your organizations.
Read more on Digital Transformation Toolbox
Ethics - More than just a Code of Conduct
This course is a thought-provoking discussion of ethical issues, from the CPA Code of Professional Conduct and elsewhere, in accounting, tax, and business. The presenter will share personal experiences with ethically challenging situations and their resolution.
Read more on Ethics – More than just a Code of Conduct
The Power of Habit
This session will help you find the real inspiration you need to make change and learn the success habits that build a happier, more productive life. You will see how your identity is shaped by your habits, how to build habits, the best way to start a new habit, why willpower runs out, how to build traction and momentum towards change and why support and systems are key.
Read more on The Power of Habit
Managing the New Hybrid Workplace
This course is designed for employers who are considering allowing long term hybrid and remote work or who have already transitioned to it but want to avoid unexpected liabilities and set reasonable policy limits on it.
Read more on Managing the New Hybrid Workplace
Income Tax - Investment Income
This course will review the basic concepts of income vs. capital and timing of income/gain recognition and apply them to investment products currently in the market, including put/call options and cryptocurrency.
Read more on Income Tax – Investment Income
PD Nexus Days
Check out our two Passport-valid, conference-style events that deliver inspiring keynotes and break-out sessions on emerging topics relevant to CPAs.
Business and Innovation Insights – Moving Forward
With relevant topics for today’s business leaders, our plenary sessions will address the emerging imperative for ESG reporting for businesses of all sizes, as well as explore the world of ethics and data. In addition, two streams of breakout sessions will address innovations in technology, cybersecurity, business models and how to adapt to meet the changing expectations of staff in this tight labour market.
Read more on Business and Innovation Insights
Public Practice Insights - Strength Beyond Numbers
Come join your practitioner colleagues at this annual conference designed specifically to address the challenges facing CPAs in public practice. With breakout streams on technical topics on tax and Handbook standards that will impact your practice, and plenary sessions on “What gets accountants into trouble?” and how to train your brain to thrive and cope better with stress, you will leave this day with the new knowledge and skills you need to thrive in public practice.
Read more on Public Practice Insights
Quiet Quitting – What is it and four ways to overcome it
‘Quiet Quitting’ is the latest buzzword and refers to the growing sentiment in employee disengagement. Employees remain at their jobs, doing just the bare minimum, and reducing their participation at work. According to a Gallup report, 85% of employees are disengaged in the workplace leading to 37% higher absenteeism, 18% lower productivity and 15% lower profitability.
Here are five ways to overcome quiet quitting, keep your staff engaged and help them reach their full potential:
Improve Your Communication
Scheduling regular one-on one interactions with staff through weekly or monthly meetings and actively listening to their concerns can provide insights to your employees’ well-being and help assess and define expectations. Routine check-ins can also provide opportunities to acknowledge contributions and accomplishments. According to global employee engagement statistics, 84% of highly engaged employees were recognized the last time they went above and beyond at work compared to only 25% of actively disengaged employees.
Create a Culture of Learning
According to a Gallup study, 87% of millennials say professional development or career growth opportunities are important to them in a job. Therefore, providing support through training programs, as well as tools and resources that develop and build skills can help create a more meaningful workplace environment.
Develop Your Managers into Effective Leaders
It is critical that leaders communicate well and connect authentically with each employee. By strengthening leaders’ coaching skills and improving emotional intelligence, effective leaders can empower their staff and help them build the confidence they need to perform at the highest level. The positive work environment leaders create can make a big impact on the overall performance of their teams.
Reassess the Workload
When you are in-tune with your employees’ strengths, you can appropriately allocate tasks based on their capacity and what they are good at. Also, regular check-ins enable you to assess and receive feedback on whether their work delegation is unreasonable or unattainable, they have capacity for more responsibility, or perhaps require more challenging tasks to keep them engaged.
Create a Path Towards Career Advancement
Design strategies for career development to encourage advancement within the organization. Providing resources in the form of coaching, mentorship, and training that allow employees to learn new skills, can help staff visualize their career growth within the company. Ensuring that they have growth opportunities will empower them to take ownership of their performance and stay motivated in their jobs.
Highly engaged employees can communicate authentically with their leaders, are more willing to go above and beyond their duties, and take ownership of their job performance. This will lead to higher productivity and a better organizational culture.
An Engaging and Dedicated Tax Instructor
Sandy Stedman, FCPA, FCA is a partner with Schibli Stedman King LLP CPAs in Victoria. He has been a course author and instructor for the ICABC/CPABC and other provincial professional accounting bodies since 2002.
Sandy Stedman, FCPA, FCA, joined Schibli Stedman King in 1996 after spending several years as an internal auditor for a large public company and a controller for a group of privately held companies. His practice includes accounting and tax advice for professionals, owner managed business, high net worth individuals, and groups of privately held companies.
Sandy has been a member of the Communications and the Practice Review and Licensing committees at the Institute of Chartered Accountants of BC and has been a member of the Tax Professional Development Group at the institute, now CPABC, since 2001.
You can catch Sandy at one of his virtual online seminars on Tax for Controllers, Corporate Restructuring – Application for Private Corporations and in-person seminars on Corporate Tax - Small Business Deduction and Private Corporate Groups and Corporate Tax - RDTOH, CDA and Other Tax Accounts
Here is what past participants have to say about their seminar experience with Sandy:
“Enjoyed his sense of humour and he really knows the subject and his materials. It is obvious he spends time on the content and material.”
“Very clear speaker, concise And under the circumstances (zoom), he did a great job of maneuvering through parts of the program that were intended to be more participatory.”
“Sandy's examples and presentation were excellent! So easy to stay engaged and follow.”
Free On-Demand Seminars
Are you looking for bite-sized informative on-demand learning? Here are three complimentary titles with eligible Ethics hours that might interests you:
Critical Thinking and Managing Bias for Objective Decision-Making
This session will focus on a key skill set that all CPAs need to hone as part of professional judgement – that of critical thinking, including the ability to identify and mitigate biases.
Read more on Critical Thinking and Managing Bias
Ethical Dilemmas: The Thick Grey Line
The course begins with a brief refresher of the CPA Code of Professional Conduct, followed by team-based evaluations of ethical scenarios and potential actions to determine where the line of acceptable behaviour is crossed.
Read more on Ethical Dilemmas
Anti-Money Laundering and Terrorist Financing Update
Learn about the latest changes in regulations to the Anti-Money Laundering (AML) and Terrorist Financing legislation, practical guidance for AML compliance, and an update on how beneficial ownership transparency is reflecting an evolving landscape.
Read more on AML
Purchase your 2022-23 PD Passports by September 15 to receive your early bird discount!
PD Passports can be used for seminars that run from September 1, 2022 – August 31, 2023. All PD Passports are currently discounted by 10%. Prices shown already reflects the discounts offered for the 2022-23 Passport Year.
Did You Know?
We have two new PD Series starting this fall!
This series of monthly 1.5-hour seminars from October to March is focused on developing skills, knowledge, and connections to support women in the accounting profession to move forward in their career and leadership journeys.
This series of monthly 1.5-hour seminars from October to February will highlight emerging tax changes as they are announced. Topics will be determined based on new and noteworthy developments in the world of tax.