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April 30, 2008

Challenging conditions fail to dampen growth

Challenging conditions fail to dampen growth

A rise in the Canadian dollar and the US subprime crisis has increased the volatility in the Canadian economy but the country’s accounting profession has enjoyed 10 percent growth despite its clients facing increasing economic challenges, according to this year’s IAB Canada survey (see IAB Country Survey: Robust profession rises to the challenge).

Lionel Goldman, who chairs Praxity Global Alliance participant Collins Barrow, explained that the Canadian dollar’s performance has dominated the financial headlines in 2007. “This single factor presented challenges for every public accounting firm’s manufacturing and distribution clients, as well as other clients involved in cross-border and international commerce,” he said.

Deloitte chief executive Alan MacGibbon said the firm’s clients were preoccupied with “navigating the credit crisis and dealing with the volatility of the Canadian dollar”.

Strong oil profits and a stable regulatory environment have insulated the Canadian profession from many of the pressures facing its clients, with industry revenues rising to C$5.9 billion ($5.9 million). MacGibbon said the Canadian economy continued to grow, albeit at a slower pace from previous years. “There are significant regional differences between the various parts of the country. Western Canada is surfing the oil wave and Eastern Canada is seeing a much slower economy with the difficulties of exporters who have to deal with a Canadian dollar that is at a 30-year high. All of these factors suggest a challenging yet exciting year ahead for the professional services industry,” MacGibbon said.

Canadian firms speaking with IAB have also reported more comfort working with the regulatory oversight bodies such as the Public Companies Accounting Oversight Board and Canadian Public Accountability Board. Most firms anticipated a steady increase in work relating to the changeover to IFRS from 2011, which is expected to be announced in March by Canada’s Accounting Standards Board. The country’s coming shift to IFRS is “the most important regulatory change we see on the horizon”, KPMG chief executive Bill MacKinnon said.

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