Accounting for the Future BDO Canada

Having robust internal controls is necessary for accurate financial reporting. In this episode, host Anne-Marie Henson is joined by Michael Crolla, Partner and National Capital Markets & Public Company Services Leader, and John Asher, Partner and Risk Advisory Services Leader in Western Canada. Drawing from their experience, they discuss the current Canadian regulatory landscape for public companies, how strong governance affects audits, and the role that strong internal control environments play in financial reporting. Explore the challenges companies face when establishing internal controls, best practices for building an audit committee, and special governance considerations for companies planning to list. Plus, discover key insights for optimizing internal controls in an evolving business landscape.
 
What you’ll hear in this episode: [01:30] An overview of the Canadian regulatory landscape for public companies.
[03:56] The importance of establishing and maintaining strong internal control environments.
[06:11] How a strong control environment affects the audit process.
[10:11] Challenges companies face when trying to develop internal controls.
[15:06] Top qualities an audit committee should have to maintain strong governance.
[22:47] Advice for companies that want to improve their control environment as they prepare to list.
[23:34] Strategies for optimizing internal controls.
 
Mentioned: Anne-Marie Henson
Michael Crolla
John Asher
  Quotes: “The regulatory landscape for public companies is really multifaceted and involves several levels of oversight to really ensure the integrity of financial reporting and the internal controls that feed into financial reporting.”
“Having robust internal controls ensures accuracy and reliability of financial reporting.”
“Some of our clients are very busy with acquisitions, and so anytime you have an acquisition, you're bolting on another set of controls, you're bolting on another set of information systems.”
“If you do have that tone at the top, that leadership buy-in, it can really result in a very strong internal control program that really will help mitigate any risks and there's actually more benefits than pain points.”
“The world continues to evolve and change, and there's different risks that we're talking about on this right now that could affect the business as you look into the future.”
“Focus on some of those key issues or key areas that may have a little bit more risk. Try to mitigate that first, see how it's working, and then obviously keep implementing as you go along and adjusting as you go along.”
“Avoid control creep…meaning avoiding adding more controls for the sake of having controls.”
“We talked about tone at the top, but it's really important that there's strong commitment from leadership to ensure that staff are knowledgeable and that they're aware of regulations.”

Navigating the complexities of fraud prevention and detection in your organization is critical. In this episode, host Anne-Marie Henson is joined by Alan Mak, Partner and National Leader of BDO’s Forensic Disputes & Investigations, and Mary Mathews, Partner in BDO’s Accounting Advisory Group. Drawing from their expertise, they delve into the pervasive issue of fraud in today's financial landscape, discussing current trends, examples of fraudulent activities ranging from small-scale employee expense frauds to larger procurement frauds, and the psychological and societal implications of fraudulent behaviour. Discover key insights into the indicators of fraud in financial statements, the role of auditors in detecting fraud, and practical strategies for implementing effective controls to mitigate fraud risks.
 
What you’ll hear in this episode:
[1:35] An update on the latest fraud trends and status.
[2:11] Explanation of the fraud triangle.
[4:15] Examples of fraudulent activities.
[5:57] Examination of types of fraud and occurrences across different company sizes.
[8:25] The psychological aspects of fraud.
[13:17] Indicators of fraud in financial statements and the role of auditors in detecting fraud.
[17:10] Strategies for reducing the risk of fraud.
[23:15] Reflection on the societal perception of fraud and the need for robust consequences for perpetrators.
 
Mentioned:
Anne-Marie Henson
Alan Mak
Mary Mathews
BDO
 
Quotes:
"Fraud is one of those things that is very personal, even when it's a big company. And the reason why is because fraud inherently involves trust."
 
"As auditors, we have to meet high professional standards, a financial statement audit doesn't actually serve as a guarantee against any fraud or detecting fraud."
 
"It starts with good governance in place... putting in checks and balances to reduce those opportunities and the risks of fraud where opportunities might exist."
 
"We look at the world through one of several ways in terms of risk assessments for fraud, and a common framework that we use is something called the fraud triangle."
 
"Perform reconciliations with the right level of detail and attention... doing it thoroughly, properly, reviewing budgets to see how performance is going."
 
"The fraud triangle lists three elements that are necessary in order for frauds to exist or to occur. They are opportunity, rationalization, and motivation."

How can Canadian companies prepare to comply to Bill S-211? In this episode, host Anne-Marie Henson is joined by Pierre Taillefer, Partner and National Sustainability and ESG Leader at BDO Canada, in a discussion on the evolving landscape of ESG reporting and compliance. He sheds light on regulatory requirements in Canada, specifically, Bill S-211, highlighting the importance of understanding and addressing compliance obligations regarding supply chain management and the mitigation of child labour and forced labour risks. The episode offers valuable insights into the challenges faced by organizations and provides practical strategies for navigating the complexities of reporting obligations.
 
What you’ll hear in this episode:
[1:55] ESG regulatory and reporting landscape update.
[7:35] Introduction to Bill S-211.
[10:50] Compliance and reporting obligations.
[15:38] Impacted industries
[21:40] The role of Governance (the G) in reporting obligations.
[23:30] Challenges and response strategies.
[26:26] The future of ESG reporting.
 
Mentioned:
Anne-Marie Henson
Pierre Taillefer
BDO
 
Quotes:
 
“We're seeing a lot of activity over the last couple of months on Bill S-211, which is Canada's Anti-Slavery Act.”
 
 "Demonstrating that you've done something and that you have a plan for improvement is crucial, and it allows you over time to implement a more robust process around managing that risk in your supply chain."
 
"We're not trying to boil the ocean. The idea here is not perfection, it is to demonstrate that you have done your work. An organization that needs to comply has done work to evaluate its supply chain and has a plan, a plan for improvement."
 
"The objective is that Canada's supply chain adequately manages the risk of child labour and forced labour within its supply chain."
 
"It's not only “what is the financial result you achieved,” but how did you achieve it, and that trend is not going to go away."
 
“We definitely see Europe ahead in terms of integrated reporting, and they will continue on that trajectory. It does have an impact on Canadian/US organizations that are selling into Europe.”

From enhancing audits to streamlining processes and predicting financial outcomes, AI is here to empower the finance function. In this episode, host Anne-Marie Henson is joined by David McKellar, a Partner and key leader in BDO’s Innovation & Change team and Senior Leadership Team, to discuss the impact of artificial intelligence (AI) on the accounting and finance function. Together, they explore how AI, including generative AI, can benefit financial statement auditors. The episode also touches on the potential applications of AI for CFOs, discussing its role in pattern recognition, prediction, and transparency. Addressing governance, the episode emphasizes the importance of data quality, security, transparency, and addressing potential biases in AI algorithms.
 
What you’ll hear in this episode:
[2:30] Understanding artificial intelligence (AI) vs. generative AI and the difference between the two.
[6:00] AI in financial statement and auditing.
[11:27] AI's impact on the finance function and CFOs.
[18:30] Governance considerations for AI adoption.
[26:30] AI and the society: The importance of education and embracing AI.
[27:35] Optimism about the positive impact of AI and democratization of knowledge.
 
Mentioned:
Anne-Marie Henson
David McKellar
BDO
 
Quotes:
 
"I think a lot of us understand that in some way, AI and how businesses will be using it in the future, is completely accepted."
 
"AI is not going to replace people's jobs; it's going to replace the jobs of those that don't embrace it."
 
" When you're looking for different patterns, instead of a human sorting through different files, no matter how fast they are, there's only so much that you go through. Now, we can actually leverage AI to drive through much more data and still pick up on the trends."
 
"The more AI gets out there, the better the models get, and the more they get fed, the more they learn.”
 
 “I think we're going to see a level and a layer of regulation that will likely create some opportunity and some challenges from a finance function of just understanding what's there."
 
"The more AI starts to enable an organization, the more important understanding how biased your data and your algorithms are because you're going to be asked for that"

Despite the effects of the great resignation, there is still appears to be a scarcity of financial talent. In our latest episode, host Anne-Marie Henson, Partner, Eastern Canada & SMB Leader for Markets & Industry Canada, and Barbara Palmegiani, National Leader for CFO Services at BDO Canada, explore the challenges of hiring and retaining financial talent and the evolving role of CFOs, emphasizing their transformation into Chief Value Officers (CVOs) with a focus on purpose and value. The episode underscores the importance of CFOs cultivating "value acumen" and a growth mindset through continuous learning. Additionally, it addresses leadership styles, diversity and inclusion, and the CFO's pivotal role in leveraging data analytics and technology to drive organizational value.
 
What you’ll hear in this episode:
[1:42] The great resignation impact; is it still happening?
[5:33] Exploration of the evolving responsibilities of CFOs and the concept of becoming Chief Value Officers (CVOs).
[10:38] Defining value and the CFO's role in driving value.
[11:33] Skills CFOs should develop to navigate the changing landscape.
[16:12] Evolving leadership styles for CFOs, with an emphasis on “extreme ownership” and the shift towards a more sustainable, inclusive approach.
[19:51] The importance of diversity, equity, and inclusion in building effective finance teams.
[22:59] Data ownership and technology.
[26:17] Advice for CFOs and controllers.
 
Mentioned:
Anne-Marie Henson
Barbara Palmegiani
BDO
 
Quotes:
“As we continue to manage so much uncertainty about the future, we have to be adaptive so we can't be afraid to be wrong.”
 
"There are definitely more and more finance teams that are much leaner these days."
 
"If you talk about what does value mean, it is very widely held that there is no one definition of value for all CFOs in all organizations."
 
"CFOs need to manage legitimate short-term performance pressures and, at the same time, drive long-term behaviors."
 
"As a key player on the executive team, it's that play to win attitude. You have to know that you're not afraid to fail, that whatever you undertake, you either win or you learn along the way."
 
"Be not afraid of going slowly. Be afraid of only standing still."

Audit quality is a key issue for the interest and governance process of both auditors and companies. In today’s episode, host Anne-Marie Henson, Partner, Eastern Canada & SMB Leader at BDO, welcomes BDO’s Head of Global Audit Quality, Nazia Lakhani for a look at the importance of quality assurance, the challenging power of CSQM1, recent changes in assurance and quality standards and what the future of quality assurance holds. 

 

What you’ll hear in this episode: 

[1:05] An overview of the goals of BDO’s first Head of Global Auditing Quality. 

[2:52] Insights into BDO’s decision to publicly release an annual audit quality report. 

[5:52] Navigating the intersection of transparency and protection of investors and public interest. 

[8:20] Report content details, including diversity and partner statistics. 

[11:41] The impact of CSQM1 on firm process monitoring and commitment to improvement. 

[16:14] Advice for CFOs regarding improved audit quality. 

[17:35] Steps to enhance proper governance on all sides of audit quality decisions. 

[20:51] A five-year look at the future of audit quality. 

 

Mentioned: 

Anne-Marie Henson 

Nazia Lakhani 

BDO 

Audit Quality Report 2022-2023 

 

Quotes

 

“Quality is such a spotlight that a role has to be created because of it.” 

 

“Quality is a journey, and I like the use of that word because it should be interwoven in what we do on a daily basis.” 

 

“Our role as auditors is to promote quality and elevate our role in protecting investors and the public interest.” 

 

“CSQM1 provides a roadmap to areas that might need improvement.” 

 

“Quality should be intertwined into what you do on a yearly basis, it’s not just a check that you do once a year.” 

 

“Quality is continuous improvement that is always in the back of everyone’s mind.”