Sunday News Roundup 21.11.07: Rousseau roils Quebec, Carney claims, missing sales taxes, and more 

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TORONTO, Nov. 7, 2021 – Not many people know that Michael Rousseau, the head of Air Canada, is a chartered professional accountant. Not many know Rousseau is an FCPA, FCA and was named Canada’s CFO of the Year in 2017. But everyone knows now that he has lived in Montreal for 14 years without learning a lick of French. 

You cannot underestimate the impact of Rousseau’s faux pas. The always insightful Chantal Hébert detailed the damage this past week in the Toronto Star. Not so long ago, Rousseau was a rising star and touted by the accounting profession as a visionary leader — we profiled his accounting strategies in a three-part series back in 2017. The fact that Rousseau was given explicit warnings from the highest political echelons before his speech to the Montreal Chamber of Commerce may cost the accountant his job. 

So what’s the lesson? The Canadian accounting profession portrays CPAs as credible corporate leaders. Since unification of the profession, it sees the MBA degree as the only challenge to the CPA education program. But the Rousseau fiasco suggests a critical failing to comprehend the bigger picture, either through a blind belief in the power of numbers, an eagerness to take advantage of opportunity, or simply arrogance. Just last week it was Steve Allan, FCPA, FCA and the Alberta war room fiasco. This week it’s Rousseau. 

There’s a lesson for CPAs in l'affaire du Rousseau. Maybe a lesson for all Canadian CEOs. Now on to the odds and ends in news from the past week in Canadian accounting. 

CPA Canada scores wins in climate change accounting

The big news of the week was the COP26 summit in Glasgow and the awarding to Montreal of a satellite office of the new International Sustainability Standards Board (ISSB). Former Bank of Canada governor Mark Carney played a prominent role at the summit. CPA Canada is featuring an interview with Carney on its website. A printed transcript from an upcoming issue of Pivot magazine issue is also available. 

It’s rare for a Canadian to be this prominent on the global stage. But, as Politico reported this week, environmentalists are wary of Carney, and the potential for greenwashing from the banking sector. The issue has to do with carbon offsets, regulation enforcement and Carney’s own claim that Brookfield Asset Management, where he is vice chair, had reached net zero with its portfolio. 

Carney was joined on stage at Cop26 by Justin Trudeau, who admitted the obvious: introducing a carbon tax in Canada was an uphill battle. Said the CBC: “While Trudeau boasted about the successes of the carbon tax his government introduced in Canada, he also ruminated on how long and rough of a road it was to develop, build support for and defend politically.” 

CRA owed billions by Canadian businesses

It seems that the Canada Revenue Agency is missing a whole lot of money from sales taxes. The Globe and Mail reported this week that Canadian companies struggling with pandemic and supply chain issues (really one and the same) are failing to remit their sales taxes. Fred O’Riordan (who has written for Canadian Accountant) of EY Canada notes that these businesses are not mom-and-pop operations. It’s an interesting article, given the next item in our weekly roundup … 

Insolvencies continue steep declines

Must be tough times in the insolvency business. Business insolvencies reached a new record-low in the third quarter and consumer insolvencies have seen a steep decline. How steep is the drop? Business insolvency proceedings have reached a 35-year low and the 7.8% drop in consumer insolvencies. And compared to the pre-pandemic third quarter of 2019, consumer insolvencies have decreased 39.2 per cent. 

“With the reduction of government support measures, we may start to see a gradual normalization of business insolvencies. Many fragile companies are already at high risk of default given the lengthy disruption caused by the pandemic,” says Jean-Daniel Breton, Chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). 

Considering the number of Canadian accountants working in the bankruptcy business, let’s hope so, or we may see Canadian accounting firms selling off their insolvency units to private equity, as has happened in the UK. 

November ain’t just about Movember

The month of November isn’t just about men growing moustaches to support male health causes. It’s also Financial Literacy Month and, on November 10, International Accounting Day — a celebration to promote the accounting profession. In the Financial Post this past week, Jamie Golombek asked How tax literate are you? Not enough if you're like many Canadians. CPA Canada has a number of initiatives related to financial literacy — check out their resources. 

Quick Hits

Allan Lanthier: Corporate taxes — what race to the bottom? (Financial Post)
Scotiabank’s $7.9-million tax riddle (Globe and Mail)
When interest rates run below the rate of inflation, wealth seeps away from savers to the debtors (Toronto Star)
Canada's high income taxes are making us less competitive (Toronto Sun)

By Canadian Accountant staff.