100,000 Strong

By Robert Colapinto
Illustration: Brad Yeo

The new profession will create more opportunities to be competitive, offer enhanced programs and services, and be more attractive to the best and the brightest candidates in the country

So that's it then: a proposed merger that could lead to the creation of one of the largest and most powerful bodies of business professionals in the world. We now have a clearer picture of the accounting profession's strategy to confront a future filled with both extraordinary challenges and opportunity.

For some, this amalgamation of CAs and CMAs (as well as CGAs in Quebec) into a "new profession" may seem like a bold and startling stroke; for others, it is a measured and meticulously considered move to tackle, head on, a myriad of environmental factors that will, if left unchecked, not only erode the CA market, but allow competing professions to gain a stronger foothold in a range of potential services the CA profession is just as well equipped to deliver.

In Quebec, the specificities of the professional environment made it possible for the Ordre des CA, the Ordre des CMA and the Ordre des CGA to begin talks with a view to merging all three accounting bodies. Quebec differs from other provinces in that each ordre is governed by the same legal framework (i.e., the Professional Code). Because of this, and the unique nature of Quebec's education system, it is possible to take an additional step and contemplate a merger of the three bodies.

The mandate of the Council of Senior Executives' Strategic Planning Task Force in August 2003 brought into stark relief the array of short- and long-term problems facing CAs. The first task force was to identify these negative environmental factors as they affect the inherent strengths of the CA profession. Only through this process, it concluded, could the task force accurately develop its future vision and mission for the profession. It solicited views from hundreds of CAs from every sector, including sole practitioners and members from small public practice firms. And on the client side, the CSE interviewed 21 senior executives who hire or retain CAs, as well as recruiting firms that specialize in finance and accounting. By analysing these stakeholder concerns, the CSE has assembled a list of recommendations and laid the foundation of a strategic plan that it expects will turn seemingly intractable challenges into opportunity and growth.

The most prevalent factors addressed were competition, demographics, globalization, the effects on CAs and perception by the public and client-community of recent business failures, market diversity and the need for more effective liability reforms. A slew of ancillary factors, of course, follow in the wake of these broad concerns. To be sure, such a merger is not expected to provide cure-all solutions for the wide swath of concerns. The CSE and future task forces will have many gruelling days ahead as they tackle this ever changing landscape.

But the CSE has ascertained that the merging of these accounting bodies will, without a doubt, have a powerful impact on many of these factors. And, indeed, it offers a persuasive argument for long term positive change for the remaining, admittedly enervating, laundry list of issues to be addressed.

One of the more obvious of these is "designation clutter" within an increasingly competitive marketplace. Steve Glover, chairman of the InterInstitute Strategic Planning Task Force, puts it succinctly: "Competition is more intense than ever and there has been a concerted effort by a wide variety of competitors to blur the differences among designations." When this confusion begins to take hold within the fold of the accounting family — CA, CMA, CGA, CPA — it is argued, some clarification is called for. "The accounting profession is increasingly global," Glover continues, "particularly in the setting of standards in accounting, assurance and corporate governance. In this context, the existence of multiple accounting bodies and structures can make it difficult for individual countries to be heard on the international stage."

The CSE's findings not only express the import of the profession's future place and leverage in the new-era global economy, but the sense that, within and without, unchecked competition creates a risk to treasured standards — and, as well, the potential for over-reactive "standards overload." The proliferation of designations could also erode standards and create confusion for clients and employers.

In the longer term, there is also significant competition for the best students. As has been well reported over the past decade, the number of new CAs entering the workforce is woefully short of projected demand. For example, given the age structure of the profession, it would need 2,000 new CAs annually to meet a projected demand for 74,000 in 2006. Over the past three years, the number of new members averaged just less than 1,700. Confronted with not just growing demand but exponential demand for specialization, the situation simply becomes unsustainable.

The CSE task force has determined that new market growth and the ability to effectively attract top candidates into the CA pool demands a refocus on market needs and the removal of certain structural impediments — such as the training of all prospective CAs in assurance. Such training exists despite the task force's determination that more than half the country's 68,000 CAs work in the public sector and industry (a large majority of CMA's 35,000 members also populate these areas of practice).

The task force's analysis and recommendations for the proposed merger are to train the new profession of CA/CMAs for specialized competencies centered around three main streams: audit and assurance, tax and management. CMA Canada Chairman Michael dos Santos and CICA Chairman Pierre Brunet agree the CMA's forte in strategic management will be an invaluable asset in the development of core and specialized competencies in the merged profession. "It would generate growth for the new profession," says dos Santos, "and provide its members with broader career choices and enhanced opportunities."

Both men, the CSE and the majority of CAs, industry leaders and focus groups it polled, affirm that CMAs are "the right fit." But only as long as they conform to the 125 years of strength, standards, competence and clarity the task force has identified as the core qualities of its presently constituted membership. The merged profession will jump to more than 100,000 CAs (plus 18,000 students) from 68,000 CAs, making it one of the largest and most influential in the world.

As for clarity, the proposed merger obviously creates a major consolidation within the accounting industry; if the CICA has its way, the new CAs will be the dominant "Canadian voice" of business globally, while stakeholders will be assured of the necessary transparency and increased coordination required of the profession. This will improve the confidence of employers, clients and the public.

THE CASE FOR MERGER  by David Smith Since mid-May, when it was announced that CAs and CMAs had entered into formal merger discussions, I've been asked many times, "why is the CA profession doing this?" My answer is simple — a CA/CMA merger makes sense, from a public interest perspective and from a business perspective. From the public interest perspective, the merger would provide greater security for those who employ or engage members of the new profession. It would also create opportunities to enhance standards, particularly in the areas of corporate governance, financial management and audit and assurance. As well, the presence of members of the new profession in a broad range of financial positions and advisory roles in industry, the public sector and other organizations would enhance audits and the protection of the public interest. From a business perspective, it's no secret that the CA profession, like many other bodies, is facing a number of issues, including flat growth, changing demographics, increased competition and marketplace confusion due to the proliferation of accounting and other designations. In fact, according to research conducted a few months ago by the Council of Senior Executives' Strategic Planning Task Force, members believe that competition and attractiveness are two of the most serious challenges facing the profession.  A merger would go a long way to address these business challenges. It would provide opportunities for the profession to grow and be more competitive. It would also make the profession more attractive to the best and brightest candidates, by offering broader career choices and the enhanced programs and services that a larger, stronger, more influential profession can provide.   Here are a number of other reasons why I believe the merger is a positive step. Strength and standards The merger would create Canada's most recognized, respected and influential business professionals, who would offer a range of services in three principal areas of practice — management, audit and assurance and taxation. They would be accountable to a profession that requires adherence to the highest professional standards of certification, continuing education, integrity and discipline, enforced by a strong, well-resourced professional body. In today's environment, businesses are expected to operate according to the highest standards. The new profession's Rules of Professional Conduct would be the CA Rules of Professional Conduct and would take effect on the date of the merger. The multistream feature of the merged profession would also provide opportunities to further enhance competencies and standards in each area of practice. The merged body would be larger, stronger and more influential, able to supply its markets with Canada's preeminent business professionals. In fact, with more than 100,000 members and 18,000 students, the new organization would be one of the largest professional bodies in the world. More than half of Canada's 68,000 CAs and the vast majority of Canada's 35,000 CMAs work in industry, the public sector and other organizations. The merger would enhance programs and support for the 70% of members of the new body working in this sector. It would also expand the reach of CAs into management and the opportunity for CMAs to qualify to practise audit and assurance. Members would belong to a larger, stronger professional body able to combine its resources to offer enhanced, coordinated services and support. The merger would strengthen Canada's voice in the increasingly globalized accounting profession. It would combine CA and CMA expertise in research and standard setting, create a broader base of resources for standard setting and give the majority of Canada's professional accountants a single voice on the international stage. Canada's CAs and CMAs also have multiple interactions with federal and provincial regulators, universities and other educational bodies. The merger would streamline and strengthen these relationships. In the case of universities, this would permit the development and provision of enhanced programs for the new profession. Competence and clarity The merger would provide greater security for those who employ and engage members of the new profession, because they would know exactly what high standard of competence and ethics those members have met, and would continue to meet. The new profession would also bring greater clarity to the accounting profession in Canada by eliminating much of the current confusion that arises from multiple accounting bodies. Members of the new profession would build on each other's expertise and experience to deliver a broad range of services, according to one high professional standard. Decreased marketplace confusion and broader career choice would also help continue to attract the best students. The need to act If you have been following the work of the Strategic Planning Task Force in CAmagazine articles over the past few months, you will know the task force's research and deliberations articulate a compelling case in favour of strategic options that encourage growth and change, while preserving CA values and professional standards. In numerous interviews with members and corporate executives, the task force was told, repeatedly, that the status quo is not an option. I agree. I also believe the merger would accomplish many of the objectives the task force has identified. Pursuing a merger is a bold step. But it is also a sign we are prepared to confront our challenges and seize opportunities.  In the course of our discussions with CMAs, I have been impressed by how much the two bodies share in terms of objectives, values and complementary strengths. A merged organization would combine the common as well as the unique qualities of each designation, further equipping members to take on an even broader range of career opportunities and leadership roles in Canadian business. It would permit two outstanding professional organizations to combine to create a well-resourced, respected body that is ideally positioned to address common, complex issues, such as the rapid pace of change, increased competition, globalization and shifting demographics. The final decision on the merger will, of course, be made by you, via membership ratification this fall by each provincial and territorial body. I urge you to consider the issues carefully. The questions and answers accompanying this document may help address any concerns or queries you may have. For more information, visit www.cica.ca/perspectives, or contact me or your provincial institute/ordre. David W. Smith, FCA, is President and CEO of the CICA. He welcomes comments at david.smith@cica.ca.

For most CAs, the question is whether this acquired rather than organic growth from within will, in fact, help build the brand, attract the best and brightest and, in the end, be the catalyst for enhanced standards and the protection of the public interest. From the CSE's perspective, these core qualities and objectives will be met with the new membership and their unique skills in industry. Of this, David W. Smith, president and CEO of the CICA, has no doubt both from a public interest and business perspective. "Everyone who enters this profession," he says, "would be accountable to a profession that requires its members to adhere to the highest professional standards of certification, continuing education, integrity and discipline, enforced by a strong, well-resourced professional body."

Indeed, the merged profession's Rules of Professional Conduct would be the CA Rules of Professional Conduct with "the CMA Code of Conduct reviewed to ensure that all relevant provisions are covered in the CA Rules of Professional Conduct," says Smith. For Smith, the merger is a chance to confront the profession's challenges and seize its beckoning opportunities. The merged profession will develop an organic growth component as the members interact and build on each other's expertise. "The merged organization," he argues, "would combine the common as well as the unique qualities of each designation, further equipping members to take on an even broader range of career opportunities and leadership roles in Canadian business." And as the CSE task force assures, the morphed CA/CMA body would be "the right people with the right skills in the right positions to make the right decisions."

Such people, the task force report asserts, will be carefully crafted and fitted into a well defined CA market where they can reasonably expect to become the preeminent market leaders. The task force is presently identifying just what components within business and finance, public and private companies, academia and NPOs best suit the multi-varied skills of the merged profession. The CA market, as it is currently identified, cannot be fully realized without the expertise of those in strategic management. Without value added roles in both operational and strategic decision making as well as compliance information, large portions of the financial and business markets, which should be ideal areas for exploitation, may be left to other and less competent professions.

The task force has also concluded that the client and employer base has grown to include a highly segmented group from global corporations to midsize and entrepreneurial enterprises and individuals. Success in each segment, it is concluded, is dependent on a far more specialized, numerous and powerful accounting body. CMAs, with their skill sets, are expected to help fill the leadership and decision maker roles that the current undermanned membership cannot hope to encompass.

On the business side, the CSE task force has been clear in its highlighting of finance advisory roles as a key market niche for CAs — and ones where CMAs have a tradition of the highest competencies. It has found that the Canadian market for finance-related competence is large and expanding due to economic growth and the increasing need for financial advice, sophisticated financial expertise and auditing/assurance. This expansion, the task force believes, creates opportunities for CAs and their competitors.

CICA QUESTIONS & ANSWERS about the proposed merger Q: What's in the merger for CAs? A: There are many benefits, including a larger, stronger profession, reduced marketplace confusion, broader career choices, a strengthened brand and competitive position and improved services for members. The multistream feature of the new profession recognizes chartered accountants' roots in audit, assurance and tax, as well as the fact that more than half of Canada's CAs currently work in industry, the public sector and other organizations. It would expand the reach of the CA designation into management and give CAs the benefit of CMAs' outstanding programs and experience in strategic management. Q: Why couldn't the two bodies just do more things cooperatively? Why the full merger? A: We certainly discussed other options. However, as discussions progressed, merger began to emerge as the preferred option, due to its overwhelming benefits. Q: Are you lowering standards? A: No. The new profession's Rules of Professional Conduct would be the CA Rules of Professional Conduct and would take effect on the date of the merger. The CMA Code of Conduct would be reviewed to ensure all relevant provisions are covered in the CA Rules of Professional Conduct. All members of the new profession would adhere to the same high standard of certification, continuing education, integrity and discipline. In fact, there would be new opportunities to enhance standards. Q: How would the public, clients and employers know in which area of practice (management, audit and assurance, or tax) a member of the new profession is qualified to practise? A: To practise in an area, a member must have the required knowledge, training and experience. To practise in a regulated area, a member must demonstrate competence in that regulated area. Members providing certain professional services would have to meet any applicable professional, regulatory or statutory requirements. For example, candidates who successfully complete the audit and assurance area and wish to practise public accounting would be required to satisfy the applicable licensing requirements in their jurisdiction. Fair and reasonable provisions would be developed to allow members to bridge  the areas of practice. Q: How would this affect the Canadian profession internationally?  A: Canada plays a prominent role in the international governance of the accounting profession, including the setting of standards in accounting, assurance and corporate governance. The merger would combine CA and CMA expertise in research and standard setting, create a broader base of resources for standard setting, and give the majority of Canada's professional accountants a single voice on the international stage. Reciprocity agreements would be unaffected. Q: How much money would this merger save? Are member dues going down? A: While that is difficult to answer at this point, it is certainly our intent to maximize cooperation and improve services to the public and members resulting from economies of scale and increased coordination. Member dues would be equalized over a two- to four-year period, with annual increases limited to a predetermined maximum. Q: How would you make sure one group doesn't dominate the new profession? A: Regarding the areas of practice, the new profession would fulfill its statutory responsibilities, including supporting standard setting for accounting and assurance and its mandate to protect the public interest. During the transition period, the new profession would, at a minimum, maintain its current combined levels of commitment to research, development, education and member support in each area of practice – management, audit and assurance, and tax. Q: Who would be the presidents and CEOs, nationally and provincially? A: We anticipate one board of directors, one CEO and one management group in each jurisdiction (national and provincial/ territorial) by the anticipated date of the merger – January 1, 2005. Q: Under the new education and training model, would certification in some areas of practice be easier than others? A: The new certification process would be designed to ensure that educational and practical experience requirements in each area of practice are of equivalent rigour and duration. Q: How would you ensure there are enough training positions in industry? A: We believe that many employers in industry, the public sector and other organizations would find the new program very attractive and be more than willing to train those admitted to the new body's professional program. Q: What happens to the new CA qualification process and all the effort that went into it? A: The new certification process would maintain the current high standards of excellence, integrity and ethical conduct of the CA and CMA professions. We would incorporate the best of both certification programs. Q: What would happen to CA candidates and students who are partway through their program? A: Joint CA/CMA Certification Task Force has been established to work out a detailed plan for the new certification process. We would expect that plan to be worked out by September 15. Current CA and CMA candidates would be given a reasonable length of time to complete those programs and new education and evaluation requirements would be phased in with sufficient lead time for candidates to adequately prepare.

Steve Vieweg, president and CEO of CMA Canada, is confident his 35,000-strong membership will not only find a home in the community of CAs but will also enrich the new profession, providing the much needed value-added component proposed by his counterpart Smith and the CSE task force. From the public interest perspective, "clients, employers and the public would have their needs met through a broader variety of experiences and competencies in corporate governance, financial management, management accounting, tax and audit and assurance," Vieweg said in his May 11 statement announcing the proposed merger. "Collectively we will be able to offer outstanding skills, knowledge and expertise to strengthen corporate accountability and restore investor and public confidence in our capital markets."

For Vieweg and Smith, the refocus on creating a strong force of specialized leaders in accounting and financial decision making can only assure this outcome. "CMAs and CAs," says Vieweg, "share much in terms of objectives, values, qualifications and complementary strengths." On the business side, he agrees the merger would generate growth for the new profession, offering CMAs broader career choices. "It would provide enhanced opportunities for CMAs who wish to qualify to practice in audit and assurance or taxation, without requiring the establishment of new certification programs."

The onus for creating a new education and training model will be on the Joint CA/CMA Certification Task Force. Despite the rigours and machinations that finally resulted in the new (and now potentially old) certification process, a newer process, which will reflect the proposed multistreaming model, will, according to Smith, "maintain the current high standards of excellence, integrity and ethical conduct of the CA and CMA professions. We would incorporate the best of both certification programs."

Although the elected governing bodies were scheduled to adopt the principles of a merger by May 31 — with a request for ratification by vote from the full membership this fall, and if the merger is approved, the new profession will be formally created on January 1, 2005 — a three year transition period will be in play within which the certification task force will address and develop the new program. The detailed plan for new certification is expected to be worked out and ready for membership critique by this September 15. CA and CMA candidates presently slaving away at their programs, and wondering whether all or part of what they are doing is for naught, would be required to complete their program. The new evaluation and education requirements would have a fair phase in period within which to prepare.

In essence, the certification task force envisions maintaining the foundational structures of accounting certification: academic study, professional education and the completion of requisite practical experience. The UFE will, naturally, loom for all of the new profession's CA candidates. The mix of areas of practice (audit/assurance, taxation, management) would, at the very least, maintain present standards and the same set of core skills. Of course, each area of practice would have its own focus and determine what depth of education and practical experience is best suited to that particular practice.

Some CAs will wonder whether those in one area of practice will dominate within the new profession. Smith offers the following: "During the transition period, the new profession would, at a minimum, maintain its current combined levels of commitment to research, development, education and member support in each area of practice." With the proposition of one national body and one body for each jurisdiction, it is anticipated that few members will have cause for concern. The composition of each body would, quite simply, reflect the proportionate numbers of CMAs and CAs, or at least one-third CMA representation — whichever is greatest. Crucial to the success and fairness of the process — after membership approval — would be each jurisdiction being onside in applying the principles developed.

Equally important will be the ability of these bodies to articulate the structure of the new profession and its training and certification process to those employers in industry and the public sector who will be saddled with providing the requisite number of training positions to these recruits. During the CSE's discussions with these stakeholders, this subject was broached, and the majority found the program along with the general concept of merger and multistream education and certification compelling and necessary. As a result, they were equally willing to train new prospects within the parameters of the new program. It can be inferred that employers of members of this merged accounting body are as aware as any of the need for the clarity, strength and the new focus on specialized competencies this proposition is expected to offer Canadian business.

The prevailing sensibility of this merger proposal has been one of a proactive rather than a defensive or reactive response to the negative forces gnawing away at the profession. This perspective supports, with equal emphasis, the design of a strategic plan that will provide what many consider a leading player in the business world with the tools to take advantage of a future rife with opportunity.

Robert Colapinto is a Toronto-based writer