Sunday News Roundup 23.03.05: Future of accounting standards setters and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
Our weekly Canadian accounting news roundup includes a final report on the future of accounting standards setters in Canada, plus fraud, tax and much more.
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TORONTO, Mar. 5, 2023 – The question of who oversees and pays for the setting of Canadian accounting standards came to the fore this past week with the release of recommendations from the Independent Review Committee on Standard Setting in Canada. The final report laid bare some of the inner workings of the current accounting standards bodies. It proposed a new model of oversight and funding for the three legacy standard setters and a new sustainability standards board.
Perhaps the most interesting aspects of the final report are oversight and financing. In the United States, for example, the Sarbanes-Oxley Act grants oversight of the Financial Accounting Standards Board to the US Securities and Exchange Commission, although the relationship is a complicated one. In the United Kingdom, the controversial Financial Reporting Council, a private company limited by guarantee, sets accounting standards and is funded by the audit profession.
According to the Final Report of the Independent Review Committee on Standard Setting in Canada, CPA Canada funds all the costs associated with standard-setting activities ($13 million in 2022) primarily through membership dues. CPA Canada is the national member association of chartered professional accountants. Among its many roles are advocacy of behalf of its members and the administration of the national education program.
But standard setting costs are projected to increase by $10 million to fund the creation of the new Canadian Sustainability Standards Board at a time when members are complaining about the cost of membership fees. The IRCSSC is proposing a new independent legal entity (referred to as
“Standardsco”) with a diversified funding model through which CPA Canada and the federal government share the funding. Standardsco may “consider” other sources from others who benefit from reporting and assurance standards.
That’s a lot to chew on. CPA Canada has given the thumbs up. The new standard-setting recommendations are “good for everyone.” Pamela Steer, President and CEO of CPA Canada says “The outcomes of this review will bring significant benefits to the governance and structure of standard-setting and will further enhance Canada’s position as a leader in the international standard-setting arena.”
And now, on to the rest of the news from the past week in Canadian accounting.
Some fun fraud stories for a change
Yes, fraud is a serious matter and (mostly) nothing to laugh at, but still. For example, the Canada Revenue Agency is investigating 10 of its own employees, which the CRA suspects received the Canada Emergency Response Benefit, “while employed by the agency that was charged with doling it out,” as drolly described by the National Post.
And an alleged fraudster was arrested in Calgary this past week for posing as a “chartered professional accountant.” Congratulations to CTV News for taking the time to get the designation right and not just referring to “an accountant,” like the Calgary Herald.
Tax stories: CRA sends up warning flares
And speaking of the Canada Revenue Agency, they were busy sending up warning flares this past week to Canadians, in case we’re not declaring income from side hustles in the gig economy. (The CRA also announced it’s planning to spend about $1-billion trying to recoup the billions of suspected pandemic overpayments.)
According to an H&R Block Canada survey, nearly half (44%) of Canadian gig workers are willing to risk not declaring income in the battle against cost-of-living increases, and 51% say their primary employer is unaware of their side hustle.
And a special mention to the Fraser Institute, which has been busy providing the National Post with free content, with More than 70 per cent of Canadians feel the average family is over-taxed and the previously published Four in 10 Canadians prefer socialism but not higher taxes to pay for it.
High inflation, interest rate hikes, taking their toll
Insolvency numbers for January are in and they don’t look good. According to the latest statistics from the Office of the Superintendent of Bankruptcy, consumer insolvencies in Canada spiked in the first month of 2023, increasing 33.0% on a year-over-year basis, while business insolvency filings in January increased 55.4% year-over-year. Compared to the previous month, consumer insolvency filings in January increased 14.2%, while business filings actually dropped by 2.4%.
Across the country, Ontario (3,063), Quebec (2,167) and Alberta (1,370) saw the largest volumes of consumer insolvencies in January. The provinces with the largest percentage increases in consumer insolvencies were Manitoba (66.9%), Nova Scotia (55.4%), and Alberta (41.7%). All provinces experienced a year-over-year increase in consumer insolvencies in January.
Accounting Dealbook: MNP expands in Quebec
MNP has picked up another accounting firm in Quebec, this time in Berthierville, a town located about halfway between Montreal and Trois-Rivières. Gilles Ducharme CPA was founded three decades ago by the eponymous founder, who will join MNP with the firm’s second partner, Marie-France Beaufort, and their staff of 10 professionals.
You don’t often hear about Alberta and Quebec getting along so well together except in the accounting profession. Homegrown MNP is based in Calgary but has expanded its footprint in Quebec ever since buying Deloitte’s SME offices in the province. This will be MNP's first office in the Lanaudière region.
Quick Hits: Articles of Interest
Why Vancouver tax increases are set to go higher than ever despite Ken Sim's campaign rhetoric (CBC News)
Why this retired accountant is training to drive buses in the Bow Valley (CBC)
EY Targets Split Transaction by End of This Year, Partner Says (Bloomberg Tax)
Is China Urging SOEs to Phase Out ‘Big Four’? (China Briefing)
‘Big Four’ Accounting Firms Still Favored by Some China State Firms (Caixin Global)
Some highly rated US companies take unusual funding route as rates rise (Yahoo Finance)
Accounting giant Ernst and Young accidentally leaks personal details of current and former employees (TDPel Media, Australia)
By Canadian Accountant staff.