Letter of the month: caring for customers
Arriving in 1931 I was raised through the depression years. My father had a medical practice in a small Queensland country town. These were the days when nobody paid the doctor on the spot.
A lot of my early years were spent preparing the statements for mailing. As I grew into a teenager I started to take an interest in the amounts owing well beyond the acceptable limit of 30 days. One month I thought that I'd impress dad by attaching mild 'please pay' notes. But this had exactly the opposite effect. Dad was upset when he saw this and made a stern request: 'Go and tell me what you see in the bread bin in the kitchen.'
Of course I found two fresh loaves nestling comfortably in the bin. 'When you find nothing in there you can start pressing people for money, but not before,' dad said. 'Do you hear me?'
Subsequently I found that the baker was repaying his family's medical bill by supplying fresh bread daily.
It was a lesson in caring for customers that I've never forgotten.
Frank Millburn CPA, OAM
Pearce, NSW
The value of stories
Your June 2008 edition contained a lovely article on telling stories.
As an FCPA, a fellow of the Australian Institute of Company Directors, a part-time TAFE lecturer and a house dad, among other things, it struck a chord.
I use stories at TAFE when teaching in the diploma of business management to highlight for students the practical application of our study.
As far as my own story is concerned, I left a city chartered accounting office, became a member of the old Australian Society of Accountants, and it was the best career decision I ever made!
Jim Hayward CPA
Stirling, WA
Lecturer, TAFE SA, Mt Barker Campus
Message for those at the top
This is my first year as a CPA program student and I undertook CPA 108 Reporting and Professional Practice. As I read through the modules, I learned a lot more about the concepts of 'ethics' and 'professional independence'. Accounting practice in every aspect seemed to be near perfect if businesses followed the procedures as outlined in the modules.
The sad part was that as soon as I stepped into the 'brutal' reality of the accounting world, I realised things were not done the way they should be but the way the 'big bosses' would like them to be. Nowadays businesses go beyond their limits to achieve numbers that virtually seem quite static with the downward economic trend facing economies in the world.
If only all CEOs, managing directors and corporate board members were required to undertake the CPA Program. At least then they would be exposed to the concepts of ethics and professional independence.
We could then get at least some assurance that we would not have a repetition of the Enron or Arthur Andersen sagas in the near future
Richard Kumar ASA
Apia, Western Samoa
A clarification on Northern Rock
I refer to Declan Conry's letter in the June 2008 issue of INTHEBLACK regarding financially unpalatable issues.
He suggests that investors, including '
depositors in UK bank Northern Rock
' would not be assuaged by Brad Peters' earlier letter (INTHEBLACK, April edition).
I would like to point out that unlike the other examples quoted by Mr Conry, such as Bear Stearns, Allco and MFS, where shareholders did see their investments reduced substantially in value, as is also likely with shareholders (not depositors) in Northern Rock, actual depositors in Northern Rock did not lose anywhere as near as much. This is because the British chancellor of the exchequer stepped in to guarantee depositors' money and this has cost the British taxpayer in the order of £25 billion ($51.6 million) to shore up. This money is expected to be repaid as Northern Rock effectively sells its mortgages to other banks over the next few years, by 'helping' mortgagees borrow funds through refinancing from other banks and financial institutions
Depositors who did take their fixed term deposits out early from Northern Rock during the run on that bank were penalised by early withdrawal penalties, which actually gave Northern Rock a windfall profit of the order of £300 million ($619.2 million). But depositors who left their money in deposits with Northern Rock have lost nothing. Indeed, their investments are now essentially guaranteed by the government.
Peter Morris CPA
High Wycombe, UK
Is the GST fair?
The Australian Income Tax Assessment Act 1936 was originally intended to impose a tax on income to help finance the federal expenditures for the war effort and social welfare. This was achieved through a just and equitable system such as progressive tax brackets. The more you earn the higher taxes you pay. By and large the Commonwealth parliament has held this fair and equitable taxing principle ever since, until the GST system was introduced into the tax system on 1 July 2000.
GST is 10 per cent of 'indirect tax' levied on goods and services you and I pay every day. Comparing a taxpayer earning $200,000 a year, paying $300 GST on a $3,000 plasma television to someone earning $50,000 a year, paying the same amount of tax on the same plasma television - fair and equitable taxing system? I don't think so.
The government has been proactive to tackle the tax systems so that the low-income earner / family is relieved from paying too much tax via lowered tax brackets and greater family benefits. Many of this is well documented over the years through the Federal Budget Review. But not so much has been done to the GST system from an equitable point of view since its introduction.
More relevant to our daily lives, the government has taken a broad approach to make 'all' food for human consumption GST-free (section 38-2). Staples such as bread, milk and meat are GST-free but some food categories are still taxable. This includes hot take-away food, prepared meals, biscuits, etc. How a low-income earner can make a living after having to pay these indirect taxes on essential items is beyond me.
Also, businesses are allowed to claim GST input tax credits on their purchases. If the government is serious about tax reform the GST regime should be the first to be looked at.
William KW Chin ASA
Western Australia
Care to comment on any business or accounting issue, or want to let us know what you think of INTHEBLACK? Send your feedback to: INTHEBLACK.inbasket@itechne.com
Letters should be kept to fewer than 250 words, and may be edited for length and style. Next month, the writer of the letter of the month receives a bottle of Chandon Vintage Brut.
For further information, or to discuss topics with the president and other members, visit the president's blog.
Reference: August 2008, volume 78:07, p. 10-14
