Return to economic growth by mid-2010: Canada’s CAs
TORONTO, April 29, 2009 — Two-thirds (67 per cent) of senior level chartered accountants interviewed for the most recent CICA/RBC Business Monitor (Q1 2009) expect Canada to experience economic growth by the end of the second quarter of 2010.
In the interim, respondents predicted declines in revenues and profit for their own businesses in the year ahead - averaging a 3.9 per cent decrease in revenue and 4.3 per cent decrease in profit, which is a significant shift from the same time last year when respondents predicted revenue growth for their own businesses of 2.4 per cent and profit growth of 1.3 per cent.
Overall, national economic optimism remains at historically low levels at four per cent, a considerable decline compared to Q1 2008 (24 per cent). Optimism for the respondents’ own businesses is also low at 21 per cent, down considerably from a year ago (48 per cent).
Not surprisingly, when asked about share price, almost all respondents (92 per cent) who work for public companies indicated that they believed their share price is undervalued.
“It is good to hear that a majority of our CA respondents expect a return to positive growth next year,” said Kevin Dancey, FCA, president and CEO, Canadian Institute of Chartered Accountants. “While the optimistic outlook is welcome, tough challenges remain and Canada’s chartered accountants are valued professionals that an organization can trust to help guide key decisions.”
To mitigate the challenges of the respondents whose companies are negatively affected by the economic downturn, over half (67 per cent) indicated they had reduced labour costs, reduced travel expenditures (64 per cent) and delayed capital expenditures (61 per cent). Additionally, almost half (48 per cent) have reduced advertising/marketing costs and delayed expansion plans (46 per cent.)
“There is a distinct need and opportunity for all of us – banks, professionals and government – to find ways to provide support and ensure Canadian business’ long term survival,” added Shauneen Bruder, executive vice-president, RBC Business and Commercial Banking. “With Canadian and U.S. policymakers becoming increasingly aggressive in implementing measures to reverse the economic downturn and boost growth, we believe Canada's recovery will gain momentum in 2010.”
The CICA/RBC Business Monitor is issued quarterly, based on a survey conducted by The Canadian Institute of Chartered Accountants (CICA). The report draws upon business insights of CAs in leadership positions in privately and publicly held companies across Canada. For this Q1 2009 report, emailed surveys were completed by 539 CAs of 3,724 identified by the CICA as holding senior positions (CFOs, CEOs and COOs) in publicly or privately held companies in Canada. The response rate was 14 per cent, with a margin of error associated with this type of study at ± 4.2 per cent, with a confidence level of 95 per cent.
The CICA/RBC Business Monitor (Q1 2009) is part of an international initiative. The American Institute of Certified Public Accountants (AICPA) in the United States and the Institute of Chartered Accountants in England and Wales (ICAEW) in the United Kingdom also undertake quarterly studies that tap the insights of members in senior positions to provide a barometer of economic activity in their nations and as a basis for future comparative analysis across countries. The CICA/RBC Business Monitor (Q1 2009) is available online at www.cicarbcbusinessmonitor.com.
The Canadian Institute of Chartered Accountants (CICA), together with the provincial, territorial and Bermuda Institutes/Ordre of Chartered Accountants, represents a membership of approximately 74,000 CAs and 10,000 students in Canada and Bermuda. The CICA conducts research into current business issues and supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government. It issues guidance on control and governance, publishes professional literature, develops continuing education programs and represents the CA profession nationally and internationally. CICA is a founding member of the International Federation of Accountants (IFAC) and the Global Accounting Alliance (GAA).
RBC delivers a wide range of financial services through a variety of channels to individuals, small and medium-sized businesses and commercial clients, including deposit accounts, investments and mutual funds, credit and debit cards, business and personal loans, and residential and commercial mortgages. It is the personal and commercial banking division of Royal Bank of Canada (RY on TSX and NYSE).
Interviews can be arranged with Shauneen Bruder, executive vice-president, RBC Business and Commercial Banking, by contacting:
Jackie Braden, (416) 974-2124 or c/o email@example.com; or
Janet Gibson Eichner, (416) 974-7622 or c/o firstname.lastname@example.org