March/April 1999
Table of Contents
In this Article
What about Provincial Health Plans
by Ernest H. Wolkin
If you use a computer and have not yet heard of the Year 2000 computer problem—Wake up! If you are expecting the problem to go away like a bad cold—Get your head out of the sand! The Millennium Bug or Year 2000 problem (as it is often called), affects everyone that utilizes computers. In your practice, it could result in major disruption to outright failure.
The Challenge
In an effort to save computer memory and money, computer manufacturers
and programmers in the 1960s and 1970s created software which identified
dates using only the last two digits for the year; for example 1998 =
"98". As a result, the approaching year "2000" raises
the issue: What will the computer think? 1900? 2000? or some other date?
The challenge is not restricted to the two-digit year coding. Leap year
(including 2000) is also a problem. A third potential problem is the year
1999. A two-digit year coding for "99" has been used in many
computer applications to represent infinity for purposes of storing data
or as a default date.
The computer industry has warned that existing software, if not changed, will either cause the computer to create incorrect output or cause the computer to "crash". Everything from airplane computers to programming your VCR is potentially affected. The challenge is so enormous that Gartner Group Inc., a company serving the computer technology industry, estimates the cost to correct the problem worldwide to range from $300-$600 billion U.S. (Canadian Institute of Chartered Accountants & American Institute of Certified Public Accountants, 1997). It also estimates that approximately 50% of those businesses affected by the problem will have some period of computer shut-down after January 1, 2000 because they won't be ready (Canadian Institute of Chartered Accountants & American Institute of Certified Public Accountants, 1997). You don't want to be one of them!
To make matters worse, computer consultants working on this specific problem will likely become overloaded as the Year 2000 approaches. This means finding help at a reasonable cost will be harder than ever.
Office Management Software
Where do you begin? Assess your office management software. If you have
not yet been informed by your software supplier of their plans, contact
them and find out. In my experience some suppliers are Year 2000 compliant
already while others are working on upgrading their software. DOS based
software will likely not be upgraded. Some suppliers are restricting their
efforts to Windows 95 operating systems or higher. In all likelihood,
you may have to upgrade your operating system and your hardware to use
the software.
What about Provincial Health Plans
In most provinces, office management software interacts with provincial
medical plans by computer, either by diskette or by modem. In Ontario,
OHIP has told us they are mailing out their Year 2000 specifications to
registered software suppliers in April.
Even if the software suppliers have implemented their own Year 2000 fix,
it will have to be compatible with the provincial planís specifications.
They will have to work quickly to ensure that there is sufficient time
to test the system.
Other Applications
No doubt you have other software applications on your computer. These
could include accounting, spreadsheet, word processing, communication
and games. It is possible that if these applications are not Year 2000
compliant, they, too, can cause computer failure.
Your operating system is also vulnerable. Microsoft, which runs most computers with its DOS, Windows and Windows 95 operating systems, provides information on their Web site identifying the problems with each application and the steps necessary to fix them. Apple Computers has indicated that their operating systems have been built to handle the Year 2000 and beyond.
Tax Relief
In June 1998, the Federal Finance Department introduced tax breaks for
small and medium-sized businesses to help them with the Year 2000 computer
problem. Specifically, Revenue Canada will allow accelerated write-off
of qualifying capital expenditures incurred between January 1, 1998 and
June 30, 1999.
The accelerated write off means that computer hardware will be deductible to the extent of 100% (normally 15%) in the year of purchase. Computer software will be deductible to the extent of 100% (normally 50%) in the year of purchase. In order to be eligible the expenditures must be made to replace existing hardware and software which is not Year 2000 compliant. The maximum write off is $50,000 per taxpayer or partnership. In addition, documentation must be provided to Revenue Canada in order to obtain the accelerated write-off. For those who have not begun the upgrade, you should note that the accelerated write off is only available for expenditures incurred up to June 30, 1999.
Survival and Beyond
As overwhelming as the Year 2000 problem may appear, there are steps you
can take to survive and you can start now:
Determine your office management softwareís ability to cope with the Year 2000 and beyond. Contact your supplier to determine what operating system it will work with, and the anticipated time frame for being compliant with insurance specifications. If your supplier cannot provide Year 2000 compliance, the sooner you find out, the better chance you have of implementing new software in time.
- Examine the rest of your computer system. Enlisting the services of your computer supplier or a computer consultant may be well worth the cost. But donít wait until mid-1999!
- Determine your requirements for upgrades in hardware and software. Develop a budget. Decide whether you will purchase or lease based on various factors such as cash flow, tax relief and the type of upgrading necessary.
- Determine a time frame for implementing new upgrades and testing. Testing should occur off-hours and the system should be backed up prior to performing any tests.
- Inform your staff. Enlisting their support can be crucial. Their assistance, from identifying critical software applications to the testing of your system can save both time and money.
- Establish solid support contracts with hardware and software suppliers. If your supplier is unreliable now, chances are he/she will continue to be when you really need him/her.
- Maintain a checklist of steps you should cover. You can obtain a free copy of our Self-Assessment Checklist by contacting our office.
- Stay informed. From now until December 31, 1999, many changes will occur. If you have access to Internet, the Canadian Institute of Chartered Accountants has published a list of ìselected internet sitesî which address the Year 2000 issue (Canadian Institute of Chartered Accountants & American Institute of Certified Public Accountants, 1997). See http://www.cica.ca
Planning now to survive the Year 2000 problem will ensure that when the clock strikes midnight on January 1, 2000 you will be able to party with peace of mind. Have and happy and profitable New Millennium!
References
Canadian Institute of Chartered Accountants & American Institute of
Certified Public Accountants. (1997). Potential Implications of Year 2000.
Ottawa, ON: Author.
Ernest Wolkin, C.A. is a Toronto-based chartered accountant who specializes in providing accounting and tax planning advice for physio and occupational therapists as well as other professionals. He can be reached at (416) 250-5636.
March/April 1999 Table of Contents
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