Sunday News Roundup 22.10.30: Cronos settlement, LDS tithes, taxes and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, October 30, 2022 – The accounting headline that dominated business news this past week was cannabis company Cronos Group and its settlement agreements with the Ontario Securities Commission and the US Securities and Exchange Commission. The company, which was based in Toronto but listed on the NASDAQ, had been charged with accounting misconduct and its former chief commercial officer, William Hilson, was charged with fraud.
Cronos agreed to pay an administrative penalty of $1.3 million, cover costs totalling $40,000 and submit to a review analyzing its compliance around financial reporting. Hilson, a member of CPA Ontario, agreed to make a voluntary payment of $50,000 to the OSC, pay costs of $20,000 and not serve as a director or officer of any reporting issuer for one year.
The SEC settlement was harsher. Hilson agreed to a three-year officer and director bar and agreed to be suspended from appearing and practising before the SEC as an accountant for at least three years. While the OSC press release thanked the SEC in its second paragraph, the SEC did not acknowledge the OSC until its last sentence.
In a related note, the SEC announced this week that it was finally following through with a clawback rule first proposed in 2015, in which executive compensation would be “clawed back” in the event of a financial restatement. The SEC has even extended the rule to cover both “Big R” and “little r” restatements.
One could see that, under such a rule, any compensation gains related to the restatements by Cronos would, as an example, be clawed back in the United States. That’s a significant development for corporate management accountants. And now, on to the rest of the news from the past week in Canadian accounting.
Mormon Canadian accountant blows whistle on LDS tax breaks
Nigel Kennett, a Mormon and an accountant from Alberta, is at the centre of a CBC exposé on the tax and tithing practices of his church. Apparently, Canada’s tax code legally allows the Church of Jesus Christ of Latter-day Saints to shift the revenue it raises from Canadian tithing across the border to its universities in the US. Ordinarily, this might be considered a matter for congregations, but Kennett points out that he receives a tax credit for his tithing donations, which in turn costs all Canadians.
The CBC exposé is a feature on The Fifth Estate and The Current. The last time The Fifth Estate got this riled up about taxes, it was going after KPMG and its tax avoidance shelters in the Isle of Man. Apparently the Australian government is looking seriously at the practice and is considering new rules.
Canadian accounting salaries and compensation
Money is on the mind of a lot of junior and mid-level accountants in Canada. Here’s a sample of the hottest Canadian accounting threads on Reddit these days: Is accounting in Canada really that bad, Is becoming a CPA in Canada worth it with the low salaries here?, and What can a CPA do as a side hustle?
I won’t spoil the fun but the general consensus is the entry-level salary of $55k+ ($60k+ in Toronto) is too low when compared to the US. Also, check out the threads on annual salary reviews at EY and Grant Thornton.
Would your company pay a ransom in a cyberattack?
Howard Solomon over at IT World Canada reports that Most Canadian firms hit by ransomware tell StatsCan they didn’t pay up. Experts are skeptical. The argument comes down to this: A recent StatsCan survey reported that eight out of 10 ransomware victims say they didn’t pay up and ransomware experts say victims don’t want to admit that they paid a ransom.
It’s an interesting article, considering that professional services firms (e.g., accounting firms) are high on the list of ransomware victims, second only to manufacturing companies. “I am not dismissing Statistics Canada’s methodology,” says David Swan, Alberta-based director of the Center for Strategic Cyberspace + International Studies, in Solomon’s article, “but Canadian organizations refuse to report.”
MNP picks up Southwestern Ontario accounting firm
It’s been quite a while since we’ve had anything to report on the M&A front among Canadian accounting firms. Things have been pretty boring out there for months, so we’re happy to report that MNP has purchased Bailey Kearney Ferguson LLP, formerly known as BKF Chartered Accountants, in Wallaceburg, Ontario. Partners Steve Outridge and Kevin Sabourin will both join MNP as partners.
Accounting Tech News
A couple of the guys who started Wagepoint, the payroll software platform used by many Canadian accountants, have started up a new fintech company called huumans. The company is a bookkeeping-as-a-service platform that connects small business owners with bookkeepers who provide weekly reconciliation, payroll, and unlimited dedicated support.
And Sage has launched its Sage Membership Masterclass in Canada, which delivers “videos, presentations and articles from more than 12 industry thought leaders, based on the current challenges faced by SMBs in Canada and abroad.” The platform was previously launched in the UK and US. A French-Canadian version will launch before the year is over.
Quick Hits: Articles of Interest
No end in sight in two-decade battle with CRA (Globe and Mail)
Canada's Ontario ups foreign home buyers speculation tax to 25% (Reuters)
Top 20 per cent pay 61 per cent of Canada's income taxes, 'more than their share': study (Financial Post)
Big Four Shunned SPAC IPOs But Now Flock to Audit New Companies (Bloomberg Tax)
Getting a head start on tax-loss selling? Keep these five things in mind (Financial Post)
The takeover law that has Bay Street rattled, complicating the Rogers-Shaw merger and HSBC Canada’s auction (Globe and Mail)
US accounting standards boss hits back at critics over pace of rulemaking (Financial Times)
By Canadian Accountant staff.