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Sunday News Roundup 24.02.18: Fairfax’s financials, new trust rules and more Canadian accounting news

Wrapping up the odds and ends from the past week in Canadian accounting news

Author: Canadian Accountant

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TORONTO, Feb. 18, 2024 – While the biggest story of the past week in the Canadian accounting profession was the layoffs at CPA Canada, which we delved deeply into here, the biggest Canadian accounting story was Fairfax Financial being targeted by American short-seller Muddy Waters Research. At its heart this is a dispute over accounting standards, with Muddy Waters alleging asset value manipulation, and Fairfax pointing to the use of International Financial Reporting Standards in Canada. 

The transcript of this past Friday’s earnings call with investors makes for interesting reading. (Carson Block, the head of Muddy Waters, was allowed one question during the call.) “We remind everyone that Fairfax’s financial reporting framework is IFRS and not U.S. GAAP,” says Chief Financial Officer Jen Allen during the call, which delved deeply into the implementation of IFRS 17, which has been years in the making, as well as the impact of IFRS on the company’s financial statements in general. 

We’ve published plenty of content over the years that has been critical of IFRS but it’s what we use in Canada. The company’s share price dropped by double digits at the Muddy Waters news but has since recovered. As the Globe and Mail describes, this is not the company’s first “dance with the shorts.” 

And now, on to the rest of the news from the past week in Canadian accounting. 

Can’t get an accountant? Blame Canada!

There appears to be a groundswell of grumbling over the new trust reporting rules. No fewer than three articles on the topic have appeared recently, with two warning Canadians of an “accountant shortage,” because tax preparers are too busy with new rules. 

CPA Canada kicked it off by being quoted in the Globe and Mail’s Need an accountant? It may be hard to find one this tax season. That was followed by Kim Moody in the Financial Post telling Canadians to Give your accountant a hug. You may not find another one because of “incomprehensible new tax legislation.” Followed by Tim Cestnick in the Globe and Mail (again), railing that Uncertainty and complexity are the hallmarks of our tax system today

How odd. Personally, we’ve never known an accounting firm to turn down a new client, but we suppose it happens. But, if firms are looking for some guidance on trusts, we recommend the resources available at Clearline Consulting (which is associated with Clearline CPA in BC).   

Split … the bill comes to $700m for Project Everest

It turns out that the big EY Global proposed split of 2023 has left the Big Four firm with a hefty bill. The Telegraph recently reported that EY borrowed more than $700m for Project Everest — its failed plain to split its consulting and accountancy arms — and debt at the firm’s global operating business has more than tripled. The firm says it will have the bill paid off by July. 

Still, considering that global operations are funded by member firms, one wonders how much EY Canada will be paying. Unlike PwC Canada, which recently made headlines for its layoffs, no news of layoffs have occurred in relation to EY. 

Accounting Dealbook: Big Four acqusitions + Xero

Canadian Underwriter has reported that BDO Canada has sold its insurance claims practice to KPMG Canada. The acquisition effectively doubles the size of KPMG’s regional forensic practice in southwestern Ontario and eastern Canada both from a revenue and people perspective. Apparently the the BDO practice was itself an acquisition — of H&A Forensic Accounting in 2015. 

Meanwhile, KPMG Canada has kicked off 2024 by bolstering its footprint in Quebec, with a second acquisition announced in less than a month. First it was Ruby Stein Wagner, which has been around since 1949, followed Montreal law firm Sweibel Novek Rabbat. SNR helps to bolster KPMG in tax litigation and legal services. 

Deloitte Canada — the biggest of the Big Four — has added Flow, a Toronto-based consulting firm that helps startups source funding. And Equitable Value Inc., a Toronto-based property tax and valuation consulting firm, has been bought up by PwC Canada. 

And finally, Xero and Mazars are teaming up in a three-year global deal, in which Xero will be made available to Mazars member firms around the world as the firm’s preferred accounting solution. The Paris-based Mazars, which will become a Xero Global Partner, is one of the world’s largest accounting firms. It recently announced a deal to merge its North American operations with Forvis (Mazars has offices in Canada, Forvis has one in Toronto). 

Canada represented in new Caseware accounting firms trends report

Caseware has just  released its 2024 State of Accounting Firms Trends Report and Canadian firms had among the largest participation rates among the firms from 49 countries who participated. The report has plenty of interesting data and insights but, given all the new assurance and tax changes that have occurred recently, we found this quote from Sarah Coulson, Head of Canada Solutions for Caseware, most apt: “For several years, the assurance standards didn’t have many changes, and more recently they’ve changed every year with more changes on the horizon. With the goal of enhancing audit quality and recognizing the evolving world, assurance standards are evolving. This change started with the strengthening of the standard on identifying and assessing risks, and as a result is driving the evolution of the risk-based approach. This is having a trickle-down effect on all the standards.”

Top Employer Lists

BC accounting firm Smythe LLP has been named as one of BC’s top employers for 2024 by the editors of Canada’s Top 100 Employers.  Smythe was the only accounting firm to make the list. Its entry states that the firm “offers very generous referral bonuses when employees successfully help recruit a new candidate, from $2,500 to $10,000, depending on the position.”

Multiple editorials from Allan Lanthier in Financial Post

It’s been a while since we’ve done a regular Sunday News Roundup, so we’ve missed quite a few Allan Lanthier articles in the Financial Post on a variety of tax-related topics since the year began. For your reading pleasure, here’s a list of recent pieces:

Opinion: Revenue Canada should audit Trudeau's free vacations
Opinion: Dithering by Canada Revenue Agency leads to million-dollar loss
Allan Lanthier: CRA losing Tavares case wouldn’t help bring the cup home 

Quick Hits: Articles of Interest 


From Traditional to Tech-Savvy: Accounting Firms Plan Increased Technology Investment Over Next Two Years, According to Caseware Study (Press Release)
Business owner tells disciplinary hearing he didn't authorize payments to former Alberta accountant (CBC)
In the digital economy, accountancy faces an existential threat (Globe and Mail)
What justification is there for not changing tax laws to help Canadian media? (Globe and Mail)
Canada rebrands carbon tax rebates to fend off opposition attacks (Reuters)


‘No confidence’ in PwC’s ethics, senators say (Accountants Daily AUS)

By Canadian Accountant staff.

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