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#Written by David Tam, 1997.           #       
#davidkftam@netscape.net Copyright 1999#
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David Tam
Monday, February 3, 1997.

                             BUSINESS PRESS REVIEW
                             =====================

Rowan, Geoffrey. "Accounting standard affects value". The Globe and Mail.
Thursday, January 30, 1997. B27.                      ------------------

    Many Canadian firms believe that Canadian GAAP rules are at a disadvantage
when compared to GAAP rules in the U.S.  The difference in accounting standards
between Canada and the United States can be a serious problem considering the
amount of commerce that takes place.  In particular, Canadian high technology
companies are voicing a lot of the concern.  The most notable advantage occurs
during acquisitions of other companies.  While U.S. companies may "pool" their
financial results, Canadian companies must spread the acquisition costs over
several years.  Consequently, under U.S. accounting rules, companies can
generally report higher earnings per share than under Canadian rules.  A
similar situation arises when accounting for research and development costs.
Under Canadian rules, R&D in progress is placed under assets and expensed over
a period of years.  This practice follows the matching principle.  However,
under U.S. rules, R&D in progress is expensed immediately.

    I believe that these differences in accounting standards should be quickly
resolved.  Many companies on both sides of the border realize the disadvantages
of not having uniform accounting standards.  Some Canadian companies such as
Hummingbird Communications Inc. have switched entirely to the U.S. rules in
order to remain in the competition.  Other companies such as PC Docs Group
International Inc. and SoftQuad International Inc. go to the trouble of
reporting financial statements under both standards.  Unfortunately, the
remainder find it too costly and confusing.  This non-uniformity is a barrier
to many potential business transactions.  A compromise between the two
standards must be agreed upon in the near future.