The top Canadian accounting stories of 2023

From greedflation to a CPA standoff, it was a year when regulators got tough with auditors and the Supreme Court of Canada issued an earth-shattering tax decision

Feb 4, 2024 Author: Canadian Accountant

TORONTO – Better late than never to round up the top accounting stories of 2023. Many chartered professional accountants are happy to wave goodbye to 2023 as it was a year that saw several stories that rocked the accounting profession. For a supposedly boring profession, the year will be remembered for a professional standoff that threatened the CPA brand, regulators getting tough with Canadian auditors, and court decisions that trashed tax planning schemes.

Here, in reverse order, are the top accounting stories of the year, with honourable mentions at the very end:

10. Attention Shoppers: IFRS is now open for business at a Loblaw near you.

Back in March, Canadians learned that, under current accounting standards, companies could combine operating segments. What’s that got to do with the price of bread? A lot as it turns out. Suddenly, pundits were pointing out that Loblaw could hide greedflation behind standards that allowed revenue from clothing (Joe Fresh), medicine (Shoppers), and groceries at the Superstore to be combined. The lesson? Some say (especially after the cannabis collapse) don’t trust IFRS. We say: Never trust a billionaire in a fuzzy sweater.

9. Land ho! Jumping the sustainability standards ship to the CSSB.

Back in April, we reported that Charles-Antoine St-Jean — the former president and CEO of CPA Canada — was jumping ship from one sustainability standards organization to another. A remarkable voyage for St-Jean! After less than two years at the helm of the CPA luxury liner, St-Jean disembarked to skipper the new Montreal office of the International Sustainability Standards Board — just as we predicted — which was launched to great fanfare by none other than Chrystia Freeland. Since then, the CSSB has appointed a number of resource sector pros to its board, and is all set to launch draft standards for consultation this spring.

8. MNP continues its long march towards the Big Five.

Perhaps we're exaggerating about the “Big Five,” but then again, stranger things have been known to happen. Homegrown national accounting firm MNP LLP continued to buy up accounting practices across the nation in 2023 and it kicked off 2024 by picking up another firm in Quebec. It’s been remarkable to watch this Calgary-based firm expand its footprint in BC, Ontario and especially Quebec, after its big deal with Deloitte.

7. KPMG ranks number two in revenue among the Canadian Big Four.

If MNP ever joins the Big Four team, it won't be at the expense of KPMG. Canada is one of the few countries in the world where "Klynveld Peat Marwick Goerdeler" ranks second in revenue. Now, you may ask why this is such a big story, and maybe you're right. But until Canadian Accountant came along, no one had ever reported on the revenue of the Big Four in Canada.

6. Accounting firms strike million-dollar settlements with CPA Ontario.

CPA Ontario closed the year by closing million-dollar settlements with two accounting firms. Just how rare is that? The last time a settlement occurred was in 2014 — the year the three designations merged. But, as reported by Canadian Accountant, Deloitte Canada (backdating) and Marcum LLP (unlicensed audits), both settled with CPA Ontario after similar actions taken by the PCAOB and CPAB. What's next, we’re wondering. BF Borgers?

5. Tax workers go on strike, accountants abide.

Hard to believe that, less than one year ago, tax workers at the Canada Revenue Agency went on strike, and people panicked over their tax returns. But while some folks were losing their freaking minds, predicting the collapse of the entire accounting profession, we explained why a CRA strike may be limited in its impact on tax preparers, and was ultimately good for Canadian accountants. And we were right. The tax workers stayed on strike a little longer than their PSAC colleagues and got little to show for it.

4. US accounting watchdog sinks its teeth into Canadian firms.

In 2023, the US Public Company Accounting Oversight Board issued three enforcement actions — all against firms in British Columbia — continuing a trend of penalizing Canadian firms. The watchdog also published seven inspection firms that found auditors at fault more often than not. The problem with the PCAOB is it’s political. Under the Trump administration, regulatory agencies including the PCAOB were rendered toothless. The current crackdown under the Biden administration must feel like whiplash to accountants on both sides of the borders.

3. CPAB gets more transparent, auditors get shamed.

Speaking of regulators, after years of mystery surrounding audit engagement failures and who did what to whom, the Canadian Public Accountability Board changed its disclosure rules on January 1, 2023 and finally began to name names. Some might say that Canadian regulation was purposely set up to protect auditors from public exposure and had begun to suffer in comparison to the US. Regardless, under the new rules we learned the names of multiple audit firms under censure, and we learned that most were in BC (and several were already under the scrutiny of the PCAOB).

2. Supreme Court goes GAAR, tax professionals go “grrrr.”

In May 2023, the Supreme Court of Canada, in a majority (7-1) decision, changed the landscape of tax planning with the earth-shattering, Deans Knight interpretation of the general anti-avoidance rule.

Some pundits, like Allan Lanthier, who had previously implied GAAR was “toothless,” called the ruling a “breath of fresh air.” But others (many, many others) were outraged, cheering on Justice Côté (the lone dissenting opinion), who wrote the majority decision in Alta Energy, calling the ruling “unclear,” “inconsistent” and “confusing.”

Suffice it to say that many, many talented tax professionals are hard at work right now, parsing every word in the decision and legislation for loopholes. So we will leave the final word to Vern Krishna, whose scholarship was cited in the decision: GAAR clips Westminster’s wings.

1. CPA profession splits as Ontario, Quebec call for new Collaboration Accord.

Not since the CPA profession first formed back in 2014 (or thereabouts) has there been a bigger story in the profession than the standoff between CPA Canada and the two largest provincial bodies. When CPA Ontario and CPA Quebec announced that they were willing to go it alone rather than sign another Collaboration Accord with CPA Canada it was big-enough news to be covered on the front page of the Globe and Mail. Who knows how the standoff will end but the clock is ticking as withdrawal from the Collaboration Accord takes effect at the end of this year.

Honourable Mentions

The Foix decision for foreshadowing the Supreme Court's GAAR decision. Layoffs at PwC Canada for the bad press over severance agreements. CRA clawbacks of CEWS and CEBA. And the federal government's battles with American tech giants over a digital services tax and the Online News Act.

By Canadian Accountant staff.