Update on public company auditing in Canada

There’s some interesting Canadian audit industry data in the March 2007 CA Magazine.

In an earlier post I revealed my ignorance when it comes to public company auditing in Canada. I was incredulous that the small, one-office accounting firm could attract large, public company audits, simply because the perception in industry is that only a Big 4 firm has the necessary expertise.

Apparently that is simply not the case, and my eyes have been opened to the true situation. From the short article:

Another interesting finding, not shown in the chart, is that the number of firms auditing companies listed on Canadian exchanges has dropped to 236 in 2006 from 307 in 2005, a decrease of 23%.

236 different firms have public company clients in Canada? That’s quite a lot! And 307 in the prior year?

What is really driving this spread is the market capitalization of the public companies. There’s a chart (referred to in the quote) that shows that the Big 4 overwhelming audit the public companies with substantial market caps.

So the smaller public companies tend to choose the smaller firms. That makes sense.

Either way, lesson learned on my part.

Accounting Blogs

‘Tis the season for giving links

Dan Meyers of Tick Marks is caught up in the spirit of giving in his own way – he’s revisiting his special 12 Blogs of Christmas from last year around this time and giving us all a refresher on the more memorable posts from the accounting blogosphere from the year nearly ended.

Since my blog wasn’t around this time last year I wasn’t featured, so I’m going to help Dan out and highlight what I think are the best posts I’ve made in the 10 months or so I’ve been blogging about the accounting and audit professional industry:

  • Income trust tax loophole gaining popularity
    One of my most popular posts in terms of number of comments, I discussed the tax law and theory surrounding income trusts in Canada, which quickly became one of the most controversial aspects of the still relatively new Conservative government here.
  • Terrorist accounting
    I’m still pretty proud of this little nugget, even though as I was writing it I was a little worried it might offend more than it entertained. It’s a flight of fancy as I try to get inside the head of a terrorist organization’s bean counter. It was timely and creative, if nothing else!
  • UFE results dreams begin
    Surprisingly my most visited post, possibly due to its primo position in Google’s search results, it was short but sweet and captured the growing anxiety I was feeling as UFE results day approached. I think most people who click on the link in Google are hoping for a wilder dream than the one I described!
  • Global ethics and international accounting standards
    Probably my most ardent foray into accounting related activism, the post details the struggle the Publish What You Pay campaign has had in lobbying for an international standard mandating companies in certain industries report payments they make to governments, in an effort to put an end to the injustice of corruption in the third world.
  • The CA Advantage – marketing the profession
    The profession debuted a new ad campaign highlighting the skills a CA can bring to an organization, and I compared it to the successful marketing of a rival designation here in Canada, the Certified Management Accountants.

The [professional services] sky is falling!

If you’re into this sort of thing, you have probably noticed that about 95% of accounting related blogs are focused on the impending death of professional services firms, because of course all PS firms have lost the plot and have ceased to be useful to business.

I can’t even link to all of the accounting blogs bemoaning how horrible PS firms have become and how business no longer finds their services useful or wanted. Actually, by default I’m already linking to them in my blogroll, because by default (it seems) all accountants writing blogs hate the industry they’re in.

Maybe I’m just a starry-eyed optimist with my head in the clouds, but I’m not buying it. There’s certainly nothing wrong with my firm – client service and professionalism are cornerstones. I know it because I see it, every day. I know it because I’m doing it, every day.

And who loves an audit anyway? It’s not the management of a company that benefit from audits (necessarily), it’s the shareholders, potential investors, debt-holders, and other public stakeholders who do. I don’t want to give the impression I’m not always thinking of ways to improve my client’s business, because I am, but I’m realistic when I recognize that first and foremost we’re there to make sure the financial statements are all good.

The bottom line is this – we’re hired because of our knowledge, and we try to help our clients every chance we get. Maybe there are some bad apples in the barrel, but we aren’t all bad. And if value-based pricing is so great, the market will decide. If there are some bad communicators out there with CPAs, the market will even things out.

Let’s find something else to blog about.


The CA Advantage: Marketing the profession

The Institute of Chartered Accountants in Canada has recently launched a new ad campaign extolling the virtues of the designation. The campaign shows CAs joining various sports teams and helping the team. The message: CAs can complement your business’ existing expertise.

Here’s the copy from one of the print ads:

Sometimes even great teams need more skill and more ability. That’s what you get with Chartered Accountants. CAs bring superior financial expertise, strategic thinking, business insight and leadership to become an integral part of the team. Give your team an edge. The CA advantage.

Hmm. Sounds similar to how the CMA designation is promoted. Certified Management Accountant is a competing designation here in Canada. Direct from CMA Canada’s website:

CMAs are leading strategic financial management professionals who integrate accounting expertise with advanced management skills to achieve business success.

So it appears both professional bodies have identified the primary area of growth for accountants being strategic business/financial expertise services. But is there room (and enough work) for both designations? Are we destined for more merger talks in the future?


Clients are the best part of my job

Yesterday I posted about an article in BusinessWeek featuring an interesting interview with the head of campus recruiting for KPMG. I talked about their international exchange program. Today I’m going to talk about clients.

From the article:

We also tell them if you’re in audit, we go out to the client. So they’re going to be traveling to clients and they’re going to be working out of the client facility. They have to understand that they will be with clients every day and talking to clients, and they have to like that, vs. in tax, they do most of the work in the office.

This is basically my favourite part of my job. I’d much rather be at a client’s doing an audit (or anything, really) than be at the office. And we’ve got a great office. It’s just that much better at a client’s location.

I have one client that I started last year, whose audit is coming up in October. And the hours are insane, because there’s a tight deadline between year-end and the annual general meeting (AGM). But the employees are so wonderful to work with that I’m really looking forward to the job.

And this client isn’t the exception either. I’ve found in my still somewhat limited work experience that most clients are great to work with. No one seems miserable in their job, and no one seems to hate the auditor either! Maybe they just hide it well!

In what other job do you get to go into a different workplace every week or so, meeting new people and seeing and learning many different types of businesses from the inside out?