Accountants may very well be the secret agents working to change the world for the better.

Lucille Perreault, a PhD student at the Sprott School, Accounting, is no exception. Perreault is working under the tutelage of Dr. François Brouard and her research could have big implications in the business world—namely helping small- to medium-sized enterprises (SMEs) improve innovation goals and grow in the market. Moreover, it’s a win-win—for SMEs, as well as the Canadian government, because they’re the ones with a program that, with Perreault’s help, can make it happen.

profile photo of Lucille PerreaultThe program is called the Scientific Research and Experimental Development (SR&ED) federal tax incentive program and it’s at the heart of Perreault’s research. The program was introduced back in 1986 with the goal to encourage Canadian firms to invest in innovative research and development (R&D). As the biggest business program in Canada, it is open to all Canadian controlled private corporations and, as a basic description, provides tax credits and deductions on expenditures related to firm innovation projects. However, over the last decade, Statistics Canada has reported a substantial reduction in firm R&D expenditures, and this is were Perreault steps in.

“If the program is designed to encourage innovation, but in reality many companies aren’t taking advantage of the SR&ED program, nor are they engaging in R&D as extensively as before, something is amiss. This may suggest the program is lacking efficacy and not meeting the needs, specifically for SMEs. I’m very interested to know why.”

Perreault is focusing on the R&D practices of SMEs specifically because they seem to struggle the most with the success of the program. Perreault is highly interested in how and why SMEs make decisions to engage in, manage, and structure their R&D; and from this, Perreault is investigating how and why these decisions may (or may not) influence their decision to participate in the SR&ED program.

Perreault is taking a first-line, qualitative approach to her research questions and is currently in the data-collection phase of her research; interviewing Canadian controlled private SMEs on their R&D practices and how they utilize the SR&ED program. Perreault hypothesizes that SMEs struggle with the success of the program because of financial and resource constraints. While large firms can manage upfront financial costs associated with innovation and allow the program to simply let them save money each year without interfering with future R&D; SMEs must manage the risk of up-front costs in the hopes of getting reimbursed by meeting a strict set of criteria. Without the assurance of financial reimbursement, it may have a significant impact on R&D practices in subsequent years. This may be the reason they are less willing or able to participate in the program.

What is noteworthy is that Perreault brings a highly valuable and unique set of skills to her research. Working at high-level positions for many years—Director of IT at a large public firm and CFO at an SME—Perreault has wisdom, familiarity, and industry acumen that allows her to understand the inner workings of both large firms and SMEs. Perreault has witnessed the incredibly significant differences between large and smaller firms with the ability to apply to SR&ED and the access to valuable resources, such as talent and financial support. Moreover, she understands the complexity of filling out forms and going through the review with Canadian Revenue Agency (CRA) in order to understand the program criteria for valid R&D projects—something that is a very challenging element for many companies, particularly SMEs.

Perreault is passionate about helping make the system around tax incentives really work for SMEs to ensure their success and potential for growth. And, Perreault’s research, will no doubt, be highly valuable to the CRA and Canadian government alike in helping rethink and reshape SR&ED program policies. It’s vital for SMEs to benefit from innovation success in order to grow; and this in turn is vital for the Canadian economy—this is what makes Perreault part of the team of accountant-secret agents working to change the world for the better.

Monday, April 6, 2020 in , , ,
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