Despite challenges in technology and recruitment, Canadian accounting firm leaders remain optimistic on their ability to react to global uncertainty and make the most of commercial opportunities.
International Accounting Bulletin’s Canada rankings 2017
Canada is the 10th largest economy in the world and the IMF predicted year-on-year growth for 2017 of 1.9% and 2.0% for 2018, which is broadly in line with the GDP growth of other advanced economies.
Interviewed accounting firm leaders agree that the major impact on the country’s economy are trade and environmental issues because it is so resource based, especially in Western Canada.
“In Canada we have a high proportion of mining, oil and gas companies, so the low oil prices and depressed metal prices that we’ve seen have had an impact on those entities and it has an impact on M&A activity,” says Karen Higgins, managing partner of the national office, Deloitte Canada.
International Accounting Bulletin 2016 rankings’ of Canadian accounting firm and network revenues showed many changes, including that Allinial Global dropped down in the table from 2nd to 4th place, pushing up BKR International and DFK International.
Almost all of the networks achieved positive growth, with the main change being that Mazars has overtaken Kreston International, which lost 18% in revenue from last year, dropping from 12th to 13th place. MGI Worldwide had the highest negative growth in Canada of -77%.
The EU-Canada free trade agreement is something that accounting firm leaders see great opportunity in. It opens up more business both ways between Canada and Europe. While the USA remains the country’s biggest trading partner, there is also trade between China and India, which means any economic slowdown there could have an impact.
Some firm leaders have mentioned that newly-elected president Trump will make changes that could affect Canada, such as the lowering of the corporation tax. As they say: when the USA sneezes Canada gets a cold.
“There is anticipation that Trump will try to loosen the regulation about the growth of pipelines, which Obama had stopped. As pipelines grow again that improves the Canadian economy,” explains Allen Sloan, Sloan Partners managing partner.
There is a possibility that businesses could move into the USA to take advantage of that, however, some interviewed firm leaders think that there are too many factors that would mean otherwise.
“It’s hard to know if Canada will move business into the USA if Trump lowers the corporation tax. Theoretically, you could see that it could happen but there are a lot of reasons why companies do business in the places that they do them,” Higgins comments.
Jerry Cukier, managing partner, Crowe Soberman, explains that Canada, unlike the USA, has increased regulation and follows IFRS standards, as well as having accounting standards for private equities.
In terms of recruitment and retaining talent, all interviewed firm leaders had much to say on how the baby boomers would soon be retiring. The need to acquire new talent and recruit young people was the key concern. The key to retaining them was clearly an emphasis on technology and providing staff with the best work experience possible, with programs and summer schemes from each of the firms.
“There’s so much competition with those individuals in terms of them being able to go down different career paths and different industries. They are looking for challenges, rapid advancement and more differentiation between what they learn and what they do,” says Susan Hodkinson, COO at Crowe Soberman.
When it comes to technology, firm leaders see challenges happening now but also changes in the future. With the rise of technology, Canadian firms are looking to advisory services more than ever before, and have seen an increase in service lines related to advisory and technology, that most firms intend to continue advancing with.
Suzanne Grant, partner at Crowe BGK says: “Technology is an opportunity, a drastic change I see happening in the future regards virtual auditing and data analytics. With the concept of a paperless society for banking and tax, we are going to have to adapt how we audit. ‘
“The drastic change in technology has already happened. The challenge is accepting that it won’t stop changing. Everyone in the profession has now pretty much accepted that resistance is futile,” Hodkinson adds.
Overall, the key trends in accountancy have remained the same in Canada, except for recruitment and the unprecedented need for people. Technology is constantly changing and regulation remains a concern, but firm leaders have nevertheless outlined trade as their key global priority.