Sunday News Roundup 22.03.06: Big Four audit censures, BVI tax scheme, quick hits and more
Wrapping up the odds and ends in this week’s Canadian accounting news
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TORONTO, March 6, 2022 – As the Russian invasion of Ukraine continued to dominate the news cycle this past week, two stories emerged from the world of Canadian accounting that caught the attention of the general media outlets.
The first was the censure of PricewaterhouseCoopers LLP by both the Canadian Public Accountability Board (CPAB) and the US Public Company Accounting Oversight Board (PCAOB). PwC Canada was fined by both audit regulators for a lack of internal controls over a four-year period that could have stopped the widespread sharing of answers to internal mandatory testing. We at Canadian Accountant were not the first to report on the censure and financial penalties against the accounting firm but our coverage differed from other media outlets.
First, we were the first to note that the combined penalties exceeded one million dollars Canadian, a figure that earlier reports did not note. We also avoided repeated use of the word “cheating” as the behaviour was so widespread at the firm — including at the partner level — that it appeared standard practice. Finally, we noted responses to the news from the accounting community on Reddit, as well as recent PCAOB actions against other Canadian firms.
Coverage in the Globe and Mail, which was published 10 days after the enforcement action, chose to also report on a CPAB enforcement decision against Deloitte Canada from September 2021. In its headline, the Globe reported the respective fines as “dings” and did not report the larger PCAOB fines until the ninth paragraph of its story. The accounting news website Going Concern had the most plainspoken take on the wider issue of test cheating at accounting firms.
New light shone on the BVI tax avoidance scheme
The Canadian (mainstream) media has been slow to pick up on the multiple cases before the Tax Court of Canada involving non-CCPC conversions and tax-friendly jurisdictions such as the British Virgin Islands. It took the efforts of Allan Lanthier, in both the Financial Post and Canadian Accountant, to shine some questioning light on what we can safely refer to as the BVI scheme.
But this week the Toronto Star attached a famous name to the scheme: Jim Balsillie. (When the details of a scheme are too complex for average Canadians to decipher, it helps to have a little human interest for readers.) Not surprisingly, the Star reached out to two tax experts who have written extensively for Canadian Accountant: Allan Lanthier and David Rotfleisch.
CPA Canada: Third round of ethics papers focuses on bias
Since our first two items covers issues of questionable ethics, now is the time to note that CPA Canada, in cooperation with the Institute of Chartered Accountants of Scotland (ICAS), the International Ethics Standards Board for Accountants (IESBA), and the International Federation of Accountants (IFAC) have released Identifying and mitigating bias and mis- and disinformation, the latest publication in a series examining the impact of rapid technological change on ethical leadership and the accounting profession.
The third installment in the four-part series was written by Brian and Laura Friedrich, who have also written on accounting ethics for Canadian Accountant. “We need to be diligent in applying professional skepticism and an inquiring mind to ensure we help combat these issues, in line with our public interest responsibilities,” says the Friedrichs.
Ukraine and the Alberta Heritage Savings Trust Fund
The Globe and Mail reported this past week that Alberta plans to use its current budget surplus to reduce or eliminate withdrawals from the Alberta Heritage Savings Trust Fund. The Heritage Fund is often compared to the similar sovereign wealth fund of Norway, currently worth $1.5-trillion, as a cautionary tale of poor provincial leadership and vision. What the story does not note is Alberta may have a short window of windfalls due to high oil prices and the Russian invasion of Ukraine.
Pandemic has exacerbated tax-season anxiety, accountant says (Global News)
KPMG Canada makes NFT purchase after investing in cryptocurrency (Consulting.ca)
Accounting firms KPMG and PwC to exit Russia (Reuters)
Few Canadian seniors are deferring retirement benefits, when doing so could mean tens of thousands of extra dollars (Globe and Mail)
Killing the ‘carbon tax’ is back while some Conservatives seek credible climate plans (Canadian Press)
Canada Isn’t Keen On Foreign Buyer And Vacancy Taxes After US Warns Retaliation (Better Dwelling)
By Canadian Accountant staff.