Even with the best practices in “Internal Controls” your business may still be at risk due to opportunities for collusion and wrongdoings that can lead to significant business exposures and losses.
Most of us have heard the horror stories about embezzlement, misappropriation and outright theft that have brought more than one business to the brink of financial ruin. Bonding can help to indemnify a business for losses such as property, financial resources and money resulting from the dishonest acts of a “bonded” employee.
A first step in business assurance is to determine that you have appropriate internal controls in place, consistent with the needs of your business.
Another step, adopted by many companies, is to protect themselves from dishonesty by requiring employees that have access to sensitive business data, resources and finances to be bonded.
What is a Surety Bond?
A surety bond is a contract among at least three parties:
1. The party who is the recipient of an obligation,
2. The principal – the primary party who will be performing the contractual obligation
3. The surety – who assures the recipient that the principal can perform the task
Bond Types Include:
• bonds for individuals entering into contracts with performance obligations and are often seen in bonds for construction, manufacturing and other industries
• commercial surety bonds for individuals, businesses and organizations that guarantee that you’ll meet the legal obligations required by government bodies, contract terms and conditions, or other agreements and conditions
• Tarion Warranty Corporation Bonds. Tarion bonds are for home warranty and deposit insurance for the residential construction industry
• “Individual” bonds covering one employee – small family operated businesses are the usual purchasers of this type of bond where only one or a few employees may be involved
• “Name Schedule or “Position Schedule” bonds selected where either all the individuals in a position are bonded or the named individual s are assured
• Commercial Blanket Bond is a type of liability coverage for employers who want to protect themselves against losses resulting from dishonest employees. Commercial blanket bonds provide blanket coverage for all of an employer’s employees
As a developer or project owner, one of the best ways to ensure your goal of successful project completion is a surety bond to reduce the construction risk by guaranteeing that a contractor will get the job done
The costs of bonding will vary with the scope of bond coverage selected
Aylett Grant Chartered Accountants
We have extensive experience in:
1. Preparing financial statements for:
- bonding individual contractors, employees and businesses
- reporting to shareholders/managers for business operations management
- reporting to lending institutions for financing purpose
- reporting to the Canada Revenue Agency for compliance and annual filings
2. Auditing and implementing Internal Controls appropriate for your business
- screening practices for hiring
- periodic review of cancelled checks etc, for irregularities
- assurance of “least possible privilege” and controls in sensitive business areas:
- payroll – appropriate signing levels
- accounts payables
- accounts receivables
- petty cash
- cash disbursements
- accounting software applications
- separation of duties
- setting up an internal audit system to discourage potential wrongdoings
- developing and overseeing a regular inventory system
Engage a chartered accounting firm to conduct an annual audit of your cash and accounts.
AG Tax LLP Can Help
If you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with US and Canadian tax laws and can provide you the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to US, Canadian, and other international tax laws. We can assist with:
- Canadian Personal and Corporate tax returns
- Cross Border Taxation and Business Planning
- US Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.