Friday News Roundup July 10, 2020: Morneau fiscal update, Tax Court reopens, PEI AG spat, Nortel vs Huawei
Wrapping up the odds and ends in this week’s Canadian accounting news
TORONTO, July 10, 2020 – The top stories in the news this week were the fiscal snapshot provided by Finance Minister Bill Morneau and another brewing ethics scandal involving Prime Minister Trudeau and the charity known as WE. Here’s our own snapshot of the week’s news in accounting:
Canadian accountants eyeball Morneau fiscal snapshot
On Wednesday, Finance Minister Bill Morneau released a 2020 fiscal snapshot of the economy, including the impact of COVID-19 on the debt and deficit. Beyond the big numbers (a $343.2 billion 2020-21 deficit), the impact was underwhelming, as Canadians generally agree (look at the Liberals’ polling numbers) that extreme times called for extreme measures.
You could see this acknowledgment in the statement CPA Canada issued to Canadian Accountant: “The federal government’s response to the pandemic was historic in magnitude and implemented under extreme time pressures. The federal government’s top priority, and rightly so, has been to get money into the hands of Canadians and businesses to support the overall economy.
“While there were significant initiatives and programs announced, the size of the deficit still comes as a surprise. The snapshot brings into focus key challenges that lie ahead as the federal government must address a $343.2 billion deficit and diminished budgetary revenues.
“Canadians need a full and transparent assessment of all pandemic-related support measures/programs and the accompanying public expenditures so it can be determined what worked, what didn’t and what needs to be adjusted as we move to the next phase of the economic recovery. The government must also start looking ahead and lay out a detailed plan to address the challenges faced. We encourage the government to deliver this plan early in the fall as part of its economic update.”
Tax Court reopens with first decision in four months
Matthew Macisaac Consulting Inc. v. The Queen has the distinction of being the first decision to be published by the Tax Court of Canada since its closure in March due to COVID-19. It features an odd, arcane debate over wording in the Income Tax Act. The case was one of four published within two days of the reopening, a confirmation that Tax Court justices have been working on decisions during the COVID-19 closure, as indicated by Chief Justice Eugene Rossiter. Expect a flood of decisions to be published this month.
PEI public accounting spat ends with Noonan appointment
On Wednesday, Darren Noonan, CPA, CA, was officially announced as the new auditor general of Prince Edward Island, but not before a public spat with CPA PEI over his public accounting credentials. Noonan was appointed unanimously by the legislative assembly on May 26 but CPA PEI argued he could not sign off on audits, as the legacy chartered accountant did not hold a public accounting licence. (Noonan was a partner in an accounting firm but left to build a successful car dealership business.)
The dispute boiled down to which body has the authority to dictate professional credentials — an independent self-regulatory body (created by government legislation) or the provincial government itself. In the end, CPA PEI granted Noonan his public accounting licence, but not before the dispute was covered in local media.
Is Huawei really to blame for Nortel collapse?
For years, the basic narrative on the collapse of Nortel was a tale of financial engineering, rapacious stock options plans and troubled accounting relationships. But today (Friday), the Australian Financial Review published an alternate story line, revealing that the Canadian tech giant was hacked in 2004. According to the report, no less a figure than Frank Dunn, the CEO of Nortel, had his credentials hacked and Nortel had its intellectual property “sucked out” by hackers in China. The report links the obliviousness of Nortel executives to the rise of Chinese national telecom champion: Huawei.
Colin Ellis is a contributing editor to Canadian Accountant.