Sunday News Roundup 23.06.25: Who won round one in the Canadian accountants rift – and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, June 25, 2023 – The bell has rung on round one of the rift between CPA Canada and two of its most powerful provincial affiliates. CPA Canada is slightly ahead on points but CPA Ontario and CPA Quebec have bloodied both their opponent and the CPA brand in media coverage over the planned split.
Other than Canadian Accountant, the only outlets covering the dispute are The Canadian Press (the national news service) and the Globe and Mail. Both published two stories each and followed similar narratives. CPA Canada chief executive Pamela Steer was “disappointed and surprised” (Canadian Press) by “suddenly announced plans” (the Globe) that framed the provincial bodies as impetuous.
While key messaging from the provincial bodies spouted boilerplate jargon, Steer seized the debate by explaining the Collaboration Accord and pointing at issues of governance. Days later, the provinces were on the defensive, with CPA Ontario’s Carol Wilding calling Steer’s framing “disingenuous” (the Globe) and “CPA Ontario must maintain direct oversight over the profession” (Canadian Press).
Nothing could be more Canadian than a fight between feds and provinces over power and money. But for most observers, the key issues are only slightly clearer now than they were on Tuesday, when the story first broke. Because the Collaboration Accord is not a public document, few people other than insiders know the exact issues at play, although CPA Canada’s FAQs on recent governance developments provides the best insights.
What is crystal clear, however, is that most members don’t understand the dispute or the stakes. To read the comments posted online is to step inside a time machine and return to 2013. This is not a fight over legacy designations and whether chartered accountants are the best or simply blowhards. Nor does this appear to be a fight over the CPA program and certification.
This is a fight over who gets to do what and who will pay for it. Round one is over. There are many more rounds to go. Stick with us as we deliver the blow-by-blow.
And now, on to the rest of the news from the past week in Canadian accounting.
Hungry for more, the CRA is going after Shopify side hustlers and gig workers
Watch out, mompreneurs, passion-preneurs and side hustlers of all kinds. The Canada Revenue Agency is coming after you. Fresh off big victories getting contractor sales data from big-box builders like Home Depot and Kent Building Supplies, the CRA filed a notice in Federal Court back in April, “asking” Shopify to hand over records for more than 120,000 Canadian businesses to check for tax evasion, according to the Toronto Star.
Shopify CEO Tobias Lütke vowed to fight the action and called it “low-key overreach.” Regardless, it’s bad news for side hustlers and for Shopify. The pandemic spurred legions to get online and test their entrepreneurial skills, with some selling thousands and even millions of dollars in merchandise, and generating billions in economic activity. Did all those soap-sellers and gym rats and dream merchants declare their sales taxes? The CRA is about to find out.
After Canadian censure, Marcum hit with record US fines
Back in March, US accounting firm Marcum LLP made history as the first firm to be publicly censured under a new commitment to transparency by the Canadian Public Accountability Board. Now, the US Public Company Accounting Oversight Board has slammed Marcum with a $3-million fine, the largest penalty imposed on a non-affiliate firm. And that’s in addition to the 10-million bucks levied by the US SEC.
Apparently Marcum got into trouble over its work with hundreds of special purpose acquisition companies (SPACs), when its “quality control system did not provide reasonable assurance that it could execute these audits with competence.” Perhaps CPAB simply beat the PCAOB to the punch.
Expectation Gap? Not to the US audit watchdog!
The Public Company Accounting Oversight Board released expanded details this past week regarding its list of priorities for 2023 audit inspections. High on its priorities are all the things the accounting profession used to wave away under the term “expectation gap,” most notably risk of fraud, risk assessment and internal controls, and auditing and accounting risks, according to the Journal of Accountancy.
That’s a shift in the landscape that Canadian auditors working on US audits should remember going forward. Still, it will be interesting to watch what the PCAOB does with KPMG, for example, as KPMG’s Big Four Dominance on Bank Audits Shaken by Failures, according to Bloomberg Tax. The Big Four firm will face a Senate probe into its audit practices later this year.
Perhaps KPMG should call Jack Castonguay of Hofstra University to defend it. Just 15 minutes before Amanda Iacone’s article, Bloomberg Tax published Mr. Castonguay’s Don’t Blame KPMG Audits for the Three Regional Bank Breakdowns. One has to laugh.
Deloitte Canada: Indigenous opportunities in Canadian accounting
Providing opportunities at the Big Four accounting firms for Indigenous accountants is a worthy goal. Deloitte came out this past with its latest update report, Widening the shared path for reconciliation, coinciding with National Indigenous Peoples Day.
While funding and financial support is important, we were happy to see there has been a 38% increase in Indigenous professionals at the firm compared to the previous year and a significant uptick in applications in the second year of the firm’s Indigenous Student Scholarship and Internship program.
And this just in: Massive overhaul at CPA Australia
It's Monday morning in Australia and the Financial Review has just reported PwC Global has "seized control" of PwC Oz in a "desperate move" to save the firm's brand in the global tax leaks scandal. The firm is selling off its government consulting arm to a private equity investor group for just one dollar and is retreating to its core work. And PwC has flown in a top global boss to replace the local leadership in a fight for survival.
Quick Hits: Articles of Interest
Hamilton taxpayers can expect rate hikes to make up for $54M in lost development charges: city staff (CBC)
Price of home heating oil in N.L. will skyrocket with federal carbon tax, says finance minister (CBC)
Expanded rules for mandatory tax disclosures are now law (Investment Executive)
Joe Oliver: To make Canada more productive cut taxes, deficits, regulations and more (National Post)
2024’s hidden prize: The upper hand in tax ‘Armageddon’ (Politico)
BDO to Convert to a Corporation, Replacing US Partnership (Bloomberg Law)
PwC and KPMG drawn deeper into Brazilian retailer’s accounting scandal (Financial Times)
Why accounting firms need a strong strategic plan (Journal of Accountancy)
By Canadian Accountant staff.