The coronavirus pandemic, the war in Ukraine, supply chain interruptions, money laundering risks, and inflation have created increasing challenges for Chartered Professional Accountants (CPAs) in Canada. The interdependency and compounding effect are making these issues even more difficult to manage.
CPAs need to continue to do their part to handle the economic and financial disruption caused by these disruptions. Having conversations about them can help companies move forward in the recovery process.
Learn how some of the current disruptors are impacting the roles and responsibilities of Canadian CPAs.
Supply Chain Challenges
When the coronavirus pandemic began, many Canadian companies moved their production and manufacturing offshore to save money. However, increasing freight costs and longer lead times have been affecting operations and production. Setbacks and increased costs are the results.
CPAs had to gain certain skills to improve the supply chain processes and reduce risks. This included using system-generated data to perform cost-benefit analysis to determine which options may be most effective going forward. Other actions included the following:
- Forecasting and budgeting weekly or monthly rather than longer
- Using technology to connect supply chain management systems with financial forecasting and modelling
- Preparing detailed scenario planning for all potential outcomes
These actions help leadership alter course during disruption so the company can navigate through the uncertainty.
Money Laundering Risks
The start of the pandemic and the restrictions and prohibitions related to Russia have increased the risks of money laundering. CPAs and other professionals handling activities covered by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) need to be aware of these risks.
- There are anti-money laundering and anti-terrorist financing (AML/ATF) directives relating to North Korea and Iran.
- There currently are unique measures involving Russia.
- CPAs under the PCMLTFA must be aware of the potential for money laundering due to restriction evasion efforts and prepare to respond.
The growing risks of cyberthreats require frequent discussions, reviews of business continuity plans, and assessments of third-party and vendor vulnerabilities. CPAs also need to stay current on regulatory and legislative changes affecting cybersecurity incident reporting and disclosures.
- CPAs identify the risks and develop steps to prevent cyberattacks and the steps to take in case of an attack.
- Organizations should have multiple plans to reduce the risks related to cyberattacks.
Inflation and the market conditions related to the conflict in Ukraine are impacting corporate budgets and reporting. As a result, additional disclosures are required to clarify the operating and financial exposures and their potential impact on the organization.
- CPAs need to report the impact that inflation and volatility have had, the exposure to downside risk, and the measures being taken to help the situation.
- CPAs have to focus on the projections and cash flow management to anticipate and manage potential obstacles and minimize their impact.
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