Subscribe to our weekly newsletter and get all the week’s stories. Click here to sign up.
TORONTO, Dec. 4, 2022 – This week, the Public Company Accounting Oversight Board in the United States released its eleventh inspection report of a Canadian accounting firm, a number approaching levels unseen since prior to the Trump administration. We have reported consistently in recent years on the higher level of transparency and disclosure of the US audit watchdog compared to its Canadian counterpart, the Canadian Public Accountability Board.
CPAB has promised “to make significant changes to the information we disclose about the results of our oversight of participating audit firms that audit Canadian reporting issuers.” The pledge was promised this past September following a stakeholder consultation process. The changes will be phased in over time with initial changes starting in 2023.
We mention this in relation to a David Milstead column in the Globe and Mail, If stock buybacks are worth taxing, they are worth tracking, on yet another weakness in Canadian business disclosure, this time in the tracking of buyback activity by Canadian public companies. (Milstead has also written on the subject of CPAB disclosure practices.) On the issue of investor ignorance of buyback patterns, Milstead writes: “The reason – and I know this will shock you – is that Canadian disclosure requirements for companies’ buyback activity have lagged U.S. rules for nearly 20 years.”
As Milstead indicates, the US provides a level of buyback transparency not required by Canadian regulators or International Financial Reporting Standards (IFRS), which are still regarded with suspicion in some quarters. And now, on to more news from the past week in Canadian accounting.
‘Tis the season to be tax-tipped
December is traditionally a time for pundits and analysts to weigh in on two types of advice: year-end tax planning and tax changes in the year ahead. From the Financial Post there’s December is the time to check your RESP withdrawal strategy to help cut any taxes and from the Globe and Mail there’s Top year-end tax strategies for 2022. (And that’s just two examples.)
Mondaq, the legal platform, has a wide array of legal articles on upcoming changes, from Ontario transparency register rules to Important 2022 Tax Year Deadlines In Canada to Major Canadian Tax Changes Coming In 2023.
When accounting clients complain about fees … in small claims court
What happens when a client takes an accountant to small claims court over fees? Glacier Media brought Manchulenko (dba EWM Consulting) v. Cright to our attention in B.C. tribunal nixes man’s ‘excessive’ tax accounting claim. The Vancouver accountant, Emil W. Manchulenko, CPA, CA is a member of CPA BC.
The details of the decision (available here) are well worth reading. The accountant assisted his client, Douglas Cright, with transitioning a business from a sole proprietorship to a corporation, including the incorporation process itself. In doing so, he subcontracted some work to another accounting firm, Alistair & Victor Chartered Professional Accountant, also based in Vancouver. The tribunal member found in favour of the accountant, Manchulenko, and order Cright to pay the fees and nominal costs.
Deloitte global trends predictions
We’re also getting close to predictions season. Deloitte released its Technology, Media & Telecommunications (TMT) 2023 Predictions report this past week. Unlike some business prediction lists, this report has a lot of information for the general consumer, especially if you watch a lot of media and content.
Case in point: Deloitte predicts that more streaming services will add on advertising tiers, and live sports streaming will be the next battleground. All of our internet use, include streaming, is increasing demand for broadband satellite service, meaning “Broadband satellites will need to navigate a crowded sky.”
There was a time, of course, that the notion of accounting firms weighing in on technology trends would seem ludicrous. But Deloitte (and specifically Deloitte Digital) has so completely changed the nature of its business services that it rivals the likes of IBM and McKinsey in its insights and consulting.
Retired EY partners kick back against split strategy
We missed this report from a couple weeks ago but consider it too important to ignore. The Financial Post in the UK reported that a memo from retired EY partners in the US with more than 150 signatories questioned the leadership of global chief executive Carmine Di Sibio and the business strategy to split EY into two separate businesses.
The Financial Post noted that “retired partners do not have a vote in the process, but they have significant interests at stake,” namely their pensions. The actual memo does not include the name of the signatories but they are clearly concerned that, “as some of the firm’s largest creditors,” they see the business strategy as putting their pensions at risk.
This past Wednesday, Sage announced the launch of Sage for Accountants in Canada, which “digitizes the tools accountants and bookkeepers use across their practice, from proposal to advisory services.” Customers will have access to a range of tools through Sage for Accountants such as GoProposal, AutoEntry, Sage Intacct and a cashflow metrics program called Futrli.
Quick Hits: Articles of Interest
Richmond, B.C., ‘tax protester’ gets 30-month sentence, $120K in fines, CRA says (CTV)
How ready are Canadian insurers for IFRS 17? (Canadian Underwriter)
Ottawa’s carbon crackdown in the East will blow a hole in provincial budgets (Globe and Mail)
Seniors can take advantage of RRSPs even after age 71 (Globe and Mail)
Optimism about the Canadian economy continues to slide: CPA Canada Business Monitor (CPA Canada, Q3 2022)
PwC targets rival EY in bid to expand partnership (UK Financial Times)
By Canadian Accountant staff.