Sunday News Roundup 23.08.06: CPAB auditor crackdown and more Canadian accounting news

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TORONTO, August 6, 2023 – The news this past week that Canada’s audit watchdog kicked out Hay & Watson public company audits surely sent a shiver through the accounting profession. This was not the first time a firm had been “terminated” from registration with the Canadian Public Accountability Board — meaning it can no longer audit public companies — but it was surely the first time that a termination had been made public.

Only two media outlets covered the news. (Three if you count our coverage.) The Globe and Mail, first to press, noted the unique nature of the action: “This is the first time the Canadian Public Accountability Board … has revealed the termination of an auditor because of an enforcement action since implementing a new disclosures framework in January.” 

The Glacier Media Group, on the other hand, noted that Hay & Watson had been previously censured by the PCAOB, and that the PCAOB imposed a monetary penalty on the firm and its owner. Both media outlets missed the news that CPAB censured PKF Antares on the same day, bringing to six the number of firms that have been publicly censured since the year began. 

All of which begs the question, what is going on with Canadian auditors? After years of secrecy at the national regulator, suddenly the dirty laundry is getting aired in public. Only two things are for certain: one, the regulator is cracking down on small firms that audit risky companies; and two, the penalties are publicized under new disclosure rules. 

Just how bad were things in the past? We’ll never know. That’s not how CPAB was set up when it was first created. But you can't say auditors weren't warned. We gave the heads up in Is Canada’s audit watchdog ready to bare its teeth? over a year ago.

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

Tech Titans versus Canada

Lord knows it’s a rare occasion when Americans pay attention to Canada. There were the burning forests earlier this summer. And now The New York Times and the Wall Street Journal have written stories about Canada this past week. The reason? Our new digital sales tax. The Times article focuses largely on the impact of a Meta ban on Canadian news. 

For an interesting perspective, we recommend There Is No One to Cheer for in the Clash Between Tech Titans and Canada’s News Media, from Jacobin. The author, David Moscrop, points out that Canada’s online news act will invariably serve the interests of large media outlets, rather than independents. He notes the irony of an American tech titan like Meta being forced to pay millions to the National Post, which is owned by … Americans. Or that the prime beneficiary of Australia’s similar fight against Meta (Facebook) and Alphabet (Google) was NewsCorp (Rupert Murdoch). 

Quick Hits: Articles of Interest 

Canadian

Tax reform badly needed to help fix Canada's productivity problem (Financial Post)
The CRA has clarified the rules for its new home renovation tax credit: What you need to know (Financial Post)
Carbon tax ineffective in curbing fuel emissions, majority of Canadians say (CTV)
Canada Transfer Pricing Reform to Trigger More Audits, Disputes (Bloomberg Tax)

International

Australia announces tax adviser crackdown after PwC leak scandal (Reuters)
Who Audits Those Who Audit the Auditors? (Wall Street Journal)
KPMG warned Brazil's Americanas about lack of financial controls in 2019, partner says (Reuters)
UK accounting watchdog appoints CEO, new powers still awaited (Reuters) 

By Canadian Accountant staff.