Sunday News Roundup 22.08.07: Economic pessimism, tired leaders, rising insolvencies and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, August 7, 2022 – A slew of reports characterized by bleak news and narratives came out this week from accounting stakeholders. CPA Canada, for example, declared that “business optimism is crashing and inflation is the main culprit,” in the headline for its latest edition of the CPA Canada Business Monitor. Supply chain challenges are also impacting business operations in terms of availability, delivery dates and overall capacity.
The Business Monitor is really a reflection of how CPAs themselves feel about the economy, as its research “draws upon business insights of professional accountants in leadership positions in privately and publicly held companies,” and the demographics skew heavily (seven out of 10 respondents) toward CFOs and controllers.
"Canadian business leaders are now clearly concerned about economic issues whereas, several months ago, the pandemic was top of mind." says David-Alexandre Brassard, CPA Canada's chief economist. "Our results show that 70 per cent of these business leaders say inflation is currently hurting their businesses and 44 per cent expect that to continue for a year or more." About half of the respondents said they feel extremely or very concerned about the state of federal finances, with many calling for hard limits on government spending and indebtedness.
One surprising revelation from the report is that CPAs in business leadership positions value the federal government taking action on the environment. More than twice as many of these business leaders (61 per cent) said the federal government should focus on mitigating climate change. That would represent either a significant shift in the perspective of the profession on climate change or a significant split between leaders and the rank-and-file given past opinion on the issue.
Business leaders tired, says Deloitte
Speaking of business leaders and pessimism, Deloitte Canada and Lifeworks shows an overwhelming number of senior leaders feel depleted from the impact of the pandemic. Eight out of 10 leaders reported experiencing exhaustion, and half of leaders are contemplating exiting their roles, resigning, retiring, taking a leave of absence, or moving to part-time work. The findings come from a new report titled Inspired Insights: Well-being and resilience in senior leaders, which reveals that the top source of work-related stress (68%) was the sheer volume of work.
Hiring and salary hikes increasing, including for accountants
One suspects that stress will continue, as organizations are facing labour and talent shortages, and scrambling to shore up productivity. A Robert Half survey, for example, reported that managers at Canadian firms expect to fill existing vacancies and 40 per cent intend to hire more people through to the end of 2022. Most managers (89%) are concerned about employees quitting — with human resources and finance and accounting teams seen as the riskiest in this regard.
Amid all the happy talk about tight labour markets and salary increases, roughly one-in-four Canadians (27 per cent) feel worse off financially than they did a year ago, while just over one-in-three (34 per cent) are optimistic that they'll be better off financially a year from now, according to a new survey from CPA Canada. Money-related stress remains high, with almost two-thirds (65 per cent) of Canadians agreeing that they worry about money.
Similarly bad news was reported by the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). Business insolvencies were up 30.9% in the second quarter of 2022 compared to the same quarter last year, and are up 26.3% in the first six months of 2022. And consumer insolvencies climbed 9.2% in the second quarter over the previous quarter, reaching the highest volume in two years as Canadian households face a cost-of-living squeeze.
On a final note, the Canadian Press reported this past week that an American economist took a close look at pandemic benefits to Canadian individuals and businesses, and came to the conclusion that CERB was a success and CEWs was a failure. This analysis is in direct contrast to the views of Canadian accountants, the majority of whom believed that support to individuals during the pandemic was “too generous,” and to business not generous enough.
We won’t spoil the article for you but it included this food for thought: The danger of the wage subsidy program is that it sets a precedent for providing excessive subsidies to businesses and thereby stifling innovation. “We’re almost moving towards a basic income for small business rather than a basic income for individuals,” according to the economist quoted by Canadian Press.
MNP poaches three partners from Vancouver accounting firm
Homegrown national accounting firm MNP continues to build its presence on the west coast through mergers and acquisitions. The firm has poached three partners from Harbourside CPA, a public accounting firm in Vancouver, which has had a strong track record of new audit engagement clients over the past few years.
According to Consulting.ca, the three partners — Sean Akeroyd, Khalid Amlani and Cara Pavlakovic — “were previously part of boutique CPA firm Akeroyd Leung Amlani, which merged with Buckley Dodd in 2020 to form Harbourside CPA.” Con Buckley and Geoff Dodds continue to anchor Harbourside while the addition of the three partners to MNP “brings greater bench strength that will help us service clients across Vancouver.”
Quick Hits: Articles of Interest
Meet the accountants who may become the new power brokers of taxes. (Wall Street Journal)
IFRS Consolidates with Value Reporting Foundation (CPA Practice Advisor)
Opinion: 'Shiny ponies' Greater Sudbury's political folly (Sudbury Star)
Lifecos face 'really epic' accounting change - here's why it matters (BNN Bloomberg)
Jack Mintz: Report subsidies as negative taxes (Yahoo Finance)
Tax & Spend: The melting value of Ontario’s prepared-food tax break (Globe and Mail)
By Canadian Accountant staff.