November News Roundup, 23-11: Australian lessons, CEWS clawbacks and more Canadian accounting news
Wrapping up the odds and ends from the past month in Canadian accounting news
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TORONTO, Nov. 26, 2023 – About five years ago, when we first launched Canadian Accountant, one of the first big stories we covered was not about Canada at all. Meltdown Under: How a governance controversy turned CPA Australia into a national scandal was a cautionary tale of what happens when regulatory capture occurs at an accounting organization, budgets spiral out of control, and members organize to take down leadership.
At the time, some of our readers may have dismissed the warning, as a foreign story about the Australian equivalent of certified general accountants. But the news this week that the Australian government will merge the profession’s three accounting standards bodies into one — without having consulted the association representing chartered accountants — must surely raise some eyebrows.
It is highly doubtful that this would have happened if not for last year’s tax leak scandal involving a chartered accountant at PwC Australia. The planned merger of the standards body includes a stipulation limiting the role of tax partners on the board, and is “a direct response to the regulatory gaps which have been identified” during the PwC scandal.
Coincidentally, an Australian academic hired to study financial reporting told an inquiry this week that his report, which was critical of the Big Four, was censored by the Australian Accounting Standards Board, because partners from PwC, KPMG, Deloitte and EY sat on the ASB.
And now, on to the news from this month in Canadian accounting.
Who are the third parties involved in CRA CEWS clawbacks?
One week ago we reported that a petition by an Ottawa accountant, Moe Tabesh, asking for CEBA forgiveness, had more than 15,000 signatures. This week, Canadian Press announced that the Canada Revenue Agency has partially completed an audit and is clawing back $458 million in CEWS. That does not bode well for CEBA loans.
Here’s one interesting tidbit from the report. While the CRA stated that overall compliance with the program was very high, “the agency, however, did find significant problems with claimants who used a third party [our italics] to prepare their applications, with 85 per cent of audits for such claims resulting in funding being reduced or denied.” Who were these “third parties” guilty of “aggressive non-compliance”?
Accountants, apparently. A CRA spokesperson said the agency was singling out accountants, stating that “while intermediaries like accountants are often an important part of the tax system, the agency conducts audits specifically targeted at weeding out third-party preparers who may be skirting the law.”
Further, many of these “preparer-linked claimants also applied for the Canada Emergency Rent Subsidy,” and some of the audits have resulted in claims being referred to the criminal investigations branch.
Accounting Dealbook: Deloitte acquires Fleet Challenge Canada
Lost in the bad news about layoffs at PwC Canada and the Big Four in general was the news that Deloitte Canada has acquired yet another consulting firm. As reported by Canadian Accountant earlier this year, Deloitte Canada tops rival Canadian accounting firms in annual revenue, largely on the back of its massive professional services consulting business.
And what is Fleet Challenge? It’s a consulting firm that specializes in the decarbonization, electrification strategies, and management of vehicle fleets. One of its specialties apparently lies in moving public sector gas-powered fleets to electric, and hence it’s seen as a sustainability driver.
According to Deloitte, “Combining Deloitte’s leadership and commitment to sustainability with Fleet Challenge’s industry expertise and client-centric approach strengthens the way we serve and deliver value to our clients in the climate, sustainability, and fleet decarbonization space.” Seems like a smart deal.
Quick Hits: Articles of Interest
UK audit watchdog told to consider Britain's competitiveness in its work (Reuters)
By Canadian Accountant staff.