To merge, or not
By Marcel Côté
Change is relentless and accelerating. The institutions that provide society's economic and social structures must also adapt to changing needs, technology and new organizations. Professional organizations don't escape the pressures for continuous adaption. Whether or not the CA and CMA associations merge, the institutional structures of accounting professions are bound to change significantly in the coming years.
There is no better indication of the changing CA environment than the significant drop in the number of students registering to become CAs, a drop of more than 50%. While this is mostly due to the decline in available positions at accounting firms, the fact remains that the number of students in business is growing. The CA formal education track is tailored best to a shrinking marketplace — the services of public accountants. Degrees and professional titles such as MBA and CFA have more cachet. One may feel students do not have the wherewithal to assess the relative merits of professional degrees. But these young men and women di- gest much information, from a broad range of sources. The net result is an increasing number chose not to become CAs.
The changes in a CA's work have also been dramatic. Most now work as management executives, in jobs that often do not involve compliance tasks, although their CA training is valued as a sound preparation for working in business.
The CA professional societies were developed to protect the public by defining and enforcing the professional criteria required to certify financial statements and ensuring a common, accurate language to communicate financial information. They also became "confréries," sharing values and educational backgrounds. In a way, that later role has become more important, in particular for the CMA and CGA who never had strong certification roles, but also for CAs who as a majority are not in public practices anymore yet hold proudly to their title and association with like-minded CAs.
CAs have to face the consequence of their successful ex- pansion beyond public practices and certification. Whether there is a merger or not will not reduce the increasing pressures for dramatic changes in their structures stemming from this broader reach. Most CAs don't work as public accountants and their professional needs are different from those of public ac- countants. The skills and training needed go beyond what the UFE demands. This inadequacy explains part of the growing difficulties of the profession to attract students, despite a booming demand for people with financial and accounting backgrounds. This alone justifies the proposed changes, in particular the definition of three practice areas. Merger or not, these changes should be pursued if CA associations want to stay relevant.
As a non-CA, I am less affected by the consequences of a merger. Whether that makes me a better assessor of its merits, or someone less qualified to do so, is a discussion I won't engage in. Nevertheless, here is my 2¢ worth of wisdom.
By merging with the CMA, CAs are extending their reach, away from their audit roots. Was the broadening of the CA profession years ago to management from audit a good thing? Did it weaken the association's ability to self-police public accounting? I don't think so. On this basis, I find it difficult to fault the merger proposal. Given the strong signals sent by students' choices, the future of the CA profession lies in extending its reach. By merging, it also reduces the confusion in the marketplace of the multiplicity of titles.
Much of the debate will be about the effect of the in-creased number of CAs on the value of the CA title. Outside the profession, this issue draws a big yawn. It is internal to the profession as competitors now will share a title. But competition within the profession has always existed. As most CMAs are in management, letting them join CAs will not make much difference.
Whether or not there is a merger, major changes loom for the accounting professions. competition in the knowledge economy is more open, and specialists come in all shades and hues. Moreover, productivity has reduced the need for pure auditing work. At the same time, changing views on governance and auditor independence is bringing change in the industry structures. merging two accounting professional associations is a minor decision, compared with other changes the profession will have to cope with. The proposed merger is accompanied by significant changes in how the profession is structured and operated. This is the most important aspect of the proposal on the table.
Marcel Côté is a partner at SECOR Inc. in Montreal |
