January 17, 2012
Dear Member:
Today, Canada’s accounting bodies are providing members an update on the progress of the unification discussions. Unification has become the most important initiative the profession has ever embarked upon. Regardless of whether unification is ever realized, the repercussions will have a lasting impact. In consideration, you are strongly encouraged to study the new updated documents (Unification Framework and CPA Certification Program) and to critically reflect upon and discuss with your colleagues the information and observations they contain. Your Board also will be considering the developments carefully to determine the most appropriate course of action for CGA Manitoba. Undoubtedly, they will question again whether the time has come for CGA Manitoba to reenter the process.
To help ignite member discussion, I will take this opportunity to offer you my personal perspectives. Give them some thought and challenge those you may not support by expressing your opinions in CGA-Exchange.
The most notable change is that the unification initiative has evolved to become a merger of equals. Leaders of the CGA, CA, and CMA bodies have realized a merger can only be achieved if it includes all three of Canada’s accounting bodies. Considerable progress also has been made in clarifying a number of the more contentious issues found in the initial Uniting The Canadian Accounting Profession position paper.
Consider for example, the issue of designation tagging seems to have been addressed. While members of the three designations will still be required to show their legacy designation together along with their new “CPA”, linking them with a comma is a more appropriate format. More importantly, the update confirms that this linking requirement will only be in place for 10 years. As well, members will be entitled the flexibility of continuing to use their legacy designation indefinitely.
Progress has also been made to handle Mutual Recognition Agreements (MRAs) appropriately. All existing MRAs will remain in place until they expire. As MRAs are updated or negotiated, they will be done so to the benefit of the entire CPA membership, irrespective of legacy designation.
Interestingly, though not surprisingly, the proposed education and certification models appear to be close imitations of what CGA currently uses and has been evolving to. The certification program will encompass the use of common required modules (including FA, MA, AU, TX, and FN competencies), advanced elective modules (two of: AU, TX, FN, PM), and a capstone module. All candidates will be required to pass a common final examination. At this point, it is unclear how this final exam intends to assess the competencies of all four elective modules (when students only complete two). In addition to the certification program, it is proposed that a separate foundation studies education program be developed and delivered (seemingly, something like CGA levels 1-3). Notably, efforts are being made to provide a reasonable level of access to the profession by making some accommodations to support mature, college, and university student categories.
The practical experience period for certification is being described as 24 months in duration. Currently, both the CGA and CA normally require 36 months of relevant experience along with the demonstration of an appropriate standard of competency. While this new experience standard would satisfy the minimum IFAC standard, it appears to be less than what the CGA and CA currently have in place.
While considerable progress appears to have been made on solving a number of the initial merger concerns, disappointingly the unification documents continue to base their rationale to unify on a host of unsubstantiated assumptions and risks. Furthermore, a number of key issues remain unresolved.
Consider for example, there is little or no evidence to support any of the Risks of Continuing as a Fragmented Profession listed in the document. For instance, while it is true the ACCA has attempted to gain recognition in Canada for many years, the reality is they have no prospects of success. An equally valid assertion might be that a monopoly of the profession could motivate the government to allow the ACCA to compete in Canada.
A key question that has not been addressed in the update: What will constitute a go-forward decision? It is not clear whether the decision might require that members of all 40 accounting jurisdictions support the merger or only a 50+% majority or if affiliates will make individual piecemeal decisions. To my knowledge, this challenging and controversial question has received very little discussion. Considering the concentration of members in Ontario, the reality may be that Ontario CGAs, CAs, and CMAs ultimately determine whether a merger moves forward or fails nationally.
Should the time come that members are asked to decide between a unified or competitive profession, there are two fundamental questions they should resolve before voting:
1) Will a unified profession offer a higher or lower level of protection and support to the public interest? To help answer this, members need to understand whether a unified profession would do a better or worse job of researching and advancing regulatory, certification, and accounting/assurance standards. Also, can we expect a unified profession to provide a sufficient supply and quality of accounting students and professionals to the business, government, and not-for-profit communities?
2) Is it likely that a unified profession will enhance or diminish the value of the members’ professional designation? To assist answering this, members need to understand if it is likely a merger will realize significant efficiencies and economies of scale. Further, will a unified profession advocate for member interests and promote the value of the designation to employers to a greater or lesser extent than what the competitive environment currently offers?
The key to answering these questions may be to understand that the Canadian accounting profession is regulated provincially. Therefore, the profession’s decision making power is in the hands of provincial affiliate Boards, not the national body. With this in mind, members must determine for themselves whether it is reasonable to believe that Canada’s provincial affiliates will work together collaboratively and harmoniously over the long-run to achieve the synergies a monopoly potentially offers - irrespective of affiliates’ best intentions at the outset of a unification agreement and in the absence of any competition. If members trust this will be achieved, it becomes much easier to support a merger. However, there is persuasive evidence to the contrary. Consider the United States’ monopoly experience. From several member service and public interest perspectives, Canada’s competitive accounting profession is significantly more advanced than the US CPA driven profession.
Unfortunately, our profession has not yet done the due diligence of researching and objectively analyzing the impact of a merger on the value of a member’s designation. Nor has it assessed the public interest value, an issue that governments and employers should be particularly concerned with. Without this research, members will be challenged to confidently answer the important questions. The Canadian Academic Accounting Association (CAAA) may be coming to the rescue. The CAAA recently sent its members a call for papers to research the value of a merger and add an academic dimension to the merger debate. The CAAA has asked for the papers to be received by February 21st.
Grant B. Christensen, B.A., B.Comm.(Hons.), FCGA
Chief Executive Officer
Certified General Accountants Association of Manitoba