Sunday News Roundup 23.05.14: CPAB historic disclosure, PwC Oz, and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, May 14, 2023 – Just one media outlet, the Globe and Mail, took note this week of the first public censure of a Canadian accounting firm by the Canadian Public Accountability Board. For nearly two decades, CPAB has not disclosed enforcement actions following audit inspections, but that all changed on January 1, 2023.
It was disappointing that the announcement was not widely covered, other than in Canadian Accountant, as the change is a significant step forward in transparency by the audit regulator. “CPAB has been attempting to liberalize its disclosures, subject to federal and provincial statutes,” stated the Globe and Mail. While the penalty was severe, costing the accounting firm the audit fees of new clients, the knock-on effect to audit quality across the profession remains to be seen.
Meanwhile, however, it’s worth noting that CPAB’s counterpart in the US, the Public Company Accounting Oversight Board (PCAOB), just announced it has enhanced its inspection reports with a new section on auditor independence. The enhanced inspection reports also include more information related to fraud procedures and the identification and assessment of the risks of material misstatements.
And now, on to the rest of the news and links from the past week in Canadian accounting.
Watching the detectives: Big Four scandals
Canadian accountants are watching the detective work occurring in two foreign accounting scandals with some interest. We haven’t had a globally reported accounting scandal since KPMG Canada was hauled before the federal finance committee in 2016. (The notoriety didn't hurt KPMG, which is posted the second highest revenue among the Canadian Big FOur in 2022.) Now it’s the turn of PwC Australia in the world spotlight. The accounting firm is accused of using secret government tax information to target global tech companies with tax avoidance strategies.
The Sydney Morning Herald has published the emails between senior staff at PwC and they make for interesting reading. While there is talk of officially banning PwC from government contracts, insiders say a shadow ban has already begun, as no one in the Australian civil service wants to risk hiring the firm. (If you want to comment on the story, as some Canadians have, Allan Lanthier has posted it on LinkedIn.)
Meanwhile, in the United States, scrutiny of KPMG is increasing over its role in the collapse of three banks. KPMG says it is cooperating with a US Senate inquiry strongly defends the quality of its audits of the banks. Francine McKenna, one of the best accounting reporters in the US, has an interesting blog post about the audits on The Dig.
Quick Hits: Articles of Interest
Former federal researcher in Sask. fined $86,362 for tax evasion (CBC)
Accounting errors, overspending lead Canopy Growth to sour on its $50M BioSteel investment (BNN Bloomberg)
Why Graduates Aren’t Hot on Accounting Careers: Low Starting Pay, Onerous Testing (Wall Street Journal)
All the failed banks in the US had KPMG as their accountants (Taylor Daily Press)
Non-GAAP Definitions, Environmental Credits, ESG Data: Baruch Conference Highlights (CFO)
China’s Shift Away From Big Four Auditors Has EY Most Exposed (BNN Bloomberg)
KPMG, PwC Miss on China Audit Results After Landmark Deal (Bloomberg Tax)
Mechanizing the Ledger: The Essential Role of Fixed Asset Accounting in the Robotics Industry (Robotics & Automation News)
By Canadian Accountant staff.