You Can't Touch This: Accounting for Intangibles to Unlock the Future of Canada's Economic Growth - New Report from CPA Ontario
Rethinking the intangible asset debate
TORONTO, Dec. 1, 2021 /CNW/ - In the 21st century, Canada's primary source of economic growth has shifted from physical goods and the delivery of services towards data, software, intellectual property and algorithms, also known as intangible assets. Yet, despite the increasing importance and rapid rise of intangibles, accounting rules and financial reporting for these assets has not kept pace.
Today, CPA Ontario is releasing a report exploring the rise of the intangible economy and what that means for the way companies think about and report their growth and value.
Currently, around 70 per cent of the value of the Toronto Stock Exchange consists of intangible assets1. Further, research shows companies across all sectors that invest in intangible assets grow faster than those that do not.
According to the report titled You Can't Touch This: The intangible assets debate there is an ongoing debate among the economic and accounting communities about whether to account for intangible value drivers in organizations, and if so, how.
"Today, seven of the world's ten largest companies are built on a data-first business model2," says Carol Wilding, FCPA, FCA, and CEO of CPA Ontario. "We know intangible assets are a key driver of the future of Canada's economy but current accounting standards—developed for physical assets—treat intangibles as expenses to be written off rather than investments to be cultivated. Intangible-intensive companies, particularly in the tech ecosystem, have developed their own unstandardized measures."
CPA Ontario will launch the report with a special virtual event this afternoon, Wednesday, December 1. Jim Balsillie, FCPA, FCA, Chair & Founder of the Council of Canadian Innovators (CCI) and former Co-CEO of Research In Motion (BlackBerry), Professor of Marketing at NYU's Stern School of Business, Scott Galloway, and author and former BNN journalist Amber Mac will discuss the growing demands for a better approach to intangible assets as well as the challenges—and risks—facing CPAs who take on this task.
"No matter the ultimate outcome of the debate, CPAs will play a critical role in guiding business through this transition, creating measurable value for companies and helping to secure Canada's economic future," says Wilding. "More specifically, it's critical that our profession work as quickly as possible to define our role within the intangibles economy – this paper is meant to help us move the needle in accounting practices to facilitate intangible capital."
About the Chartered Professional Accountants of Ontario
We protect the public. We advance our profession. We guide our CPAs. We ensure that our more than 97,000 members and 21,000 students meet the highest standards of integrity and expertise. We help them stay ahead of global market trends and abreast of regulatory change. CPAs represent a globally recognized, premium designation. Our Chartered Professional Accountants are valued by organizations in all industries for their financial expertise, strategic thinking, management skills and leadership. For information on the profession visit: cpaontario.ca.
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1 |
Sean Speer and Robert Asselin. "An Increasingly Intangible Economy Ruled by the Innovation Sector Requires Shifts in Determining Competitiveness." The Globe and Mail (March 31, 2019). |
2 |
PwC https://www.pwc.com/gx/en/audit-services/publications/assets/pwc-global-top-100-companies-2021.pdf (May 2021). |
SOURCE Chartered Professional Accountants of Ontario
Mark Gamache, Communications Manager, [email protected], Ph. 647-654-8213
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