Sunday News Roundup 24.04.07 Bare trusts, KPMG decision, PCAOB-PKF, and more Canadian accounting news

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

Apr 8, 2024 Author: Canadian Accountant

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TORONTO, April 7, 2024 – The fallout from last week’s announcement on bare trusts continued this week. Both the CBC and Global News ran stories on the anger of Canadians who paid accountants to meet reporting requirements reversed by the Canada Revenue Agency. Both stories also explain the frustration of practitioners who — after putting in time and resources to prepare for T3 reporting — are now in the awkward position of dealing with frustrated clients.

One interesting note to the stories is that both outlets report roughly the same figure for T3 preparation: 700 bucks. One taxpayer had to pay roughly $1,000 to file two T3 forms — presumably a two-for-one deal. Cottage Life also tackled the story, with Armando Minicucci, a tax partner with Grant Thornton, explaining the estate planning aspect, while Joseph Devaney of Video Tax News offered some solutions to the Globe and Mail about solving the quagmire.

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

Getting the word out on KPMG decision in Quebec

In the past week, Allan Lanthier has been featured on both Bloomberg Tax and in the Globe and Mail, getting the word out on the ramifications on a tax case that slipped under the radar. One month ago, the Quebec Superior Court released a decision ordering KPMG to pay its client’s tax bill, amounting to several million dollars. The Court found that KPMG did not advise its client of the risks involved in a tax planning strategy.

Anyone following Mr. Lanthier on LinkedIn, however, would not have had to wait for media coverage. Here is his post from a month ago, complete with 49 comments from the tax community, warning tax advisors to beware. The decision will cost the firm $3.9 million.

PKF Antares disagrees with PCAOB inspection report

The Public Company Accounting Oversight released its first Canadian inspection report of the year this past week. The PCAOB inspected one audit conducted by PKF Antares Professional Corporation in Calgary related to “Issuer A” and the firm clearly did not appreciate the regulator’s conclusions.

Issuer A is in the consumer staples business. The PCAOB pointed to three areas — business combinations, accounts receivable, and journal entries — with identified deficiencies. PKF Antares disagreed, citing an external consultant “with over ten years of prior experience with the PCAOB.”

Not only did PKF Antares believe its engagement team obtained “sufficient appropriate audit evidence” but any contrary conclusion was “patently erroneous.” The firm then included both public and non-public attachments to its response that outlined areas of disagreement.

While the response to the inspection report was civil and respectful, we cannot remember the last time we saw a Canadian accounting firm disagree with the conclusions of the PCAOB. We thought 2023 was a rough year for inspection reports. But if this first report is any indication, 2024 is going to be a doozy.

RPA designation now an option for Soo students

We’ve been watching recent news around the Registered Professional Accountant designation with some interest. This past week, as reported by Soo Today, RPA Canada signed an MOU with Algoma University, that provides a pathway for Algoma University accounting graduates to pursue an accounting designation other than the CPA.

Anyone familiar with the history of the accounting profession in Canada knows that there has typically been multiple accounting designations. Designations such as the CGA or CMA credentials addressed niche markets outside of public accounting, growing from acorns to oaks before the consolidation of the profession into the CPA. Are we witnessing a similar rise with the RPA designation?

Not so fast with the gloomy predictions

It wasn’t so long ago that CPAs were predicting a recession in Canada and all was doom and gloom for 2024. But now comes word from Deloitte Canada that Canada looks set to dodge a recession: “The Canadian economy is proving its resilience, surpassing year-end expectations with solid labour market performance and sustained population growth. Many signs point to a recovery from the current economic slump in the latter half of the year.” You can download the Deloitte report here.

Our prediction? Canada is in for a soft landing with the Bank of Canada easing up on interest rates later this year. Deloitte remains cautious but says Canada appears poised to begin recovering from its current slump later this year.

SME accounting firms recognized for workplace culture, practices

Seven accounting firms were recognized this past week as among Canada’s Top Small & Medium Employers for 2024 by the editors of Canada’s Top 100 Employers. The firms offer a range of employee benefits and human resource services. Smythe LLP, which has three offices in British Columbia, was also recently recognized as one of the top employers in BC by the editors of the Top 100 magazine.