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The merger: your pressing concerns

The driving force behind the work of the Strategic Planning Task Force has been to identify the best possible route to a future that will clearly identify the CA designation as the gold standard in both the traditional skills of the premier accounting profession and as a brand capable of adapting to an increasingly competitive and complex marketplace. An important aspect of the task force's mandate has been to closely examine the financial and business markets within which CAs must excel, if the brand is to flourish.

The task force analysis of the profession's strategic options and growth potential was always focused on maintaining and strengthening the profession's ability to produce trusted, internationally respected leaders in senior management.

The proposed merger will create a new profession and a new brand identity. The traditional — albeit incorrect — image of pigeonholed "bean counters" will be no more.

Key to this focus on bolstering the CA management stream has been an understanding that time is of the essence. The environmental factors playing upon the profession pose both opportunity and challenge. And it is far too likely that other professional designations will irreparably degrade the CA profession's dominance as market leader, if the membership opts for a long-term rebuild of the management stream solely from within.

All of the above objectives would be for naught, if the proposed merger were, in fact, an act of desperation, a rushed decision not based on careful analysis of the market and the needs of the profession. The time-sensitive nature of the challenges and opportunities facing the profession should not be seen as proof it has not carefully consulted key stakeholders and considered the latest studies, surveys and research. Concerns about dilution of the brand, for example, are uppermost on the task force's mind as it continues to prepare and disseminate the necessary information that will allow the membership to make an informed decision on the question.

It would be tragic, should the merger weaken the value of the CA brand rather than strengthen it. In considering such a threat, CAs must examine it from a number of perspectives.

Standards
Lowering of standards has often headed the list of concerns at the many town hall gatherings around the country. The standards of qualification, for example, for both the CA profession and the CMA profession are currently different insofar as the CA profession focuses on education and training in audit and assurance, while the CMA profession concentrates on management.

Both programs, however, require a university degree, specific prerequisite university courses, successful completion of a national examination/evaluation, the completion of a professional program of studies beyond the university degree requirement — CMAs must undergo continuing evaluation throughout and at the end of their Strategic Leadership Program — and a period of practical experience.

For some CAs, a natural suspicion of the rigour of the CMA qualification process remains. As one member recently wrote of the merger proposal: "I cannot believe that you would 'dumb down' the profession in this way." Richard Korzeniewski, CMA, MBA, CFA, CPA, hopes there are better ways of presenting "a balanced argument without labeling and deg-radation." Given his credentials, he offers this: "I would like to let [that member] know that I will do my best not to dumb down the profession." The task force is confident it can ensure that the proposed new profession combines the strengths of both programs and will allow students a choice of training streams in audit and assurance, management or taxation. This multistreaming formula will not dilute the CA designation; it will, instead, make it a more attractive choice for potential students.

One core strength presented in the merger is the assurance that an even larger percentage of professional accountants are subject to the most stringent rules of professional conduct and generally accepted accounting principles.

Based on the guiding principles for the merger, it has been agreed that the Rules of Professional Conduct for the new profession would be the current rules required by the CA profession. If anything, it would be enhanced by the CMA profession's Code of Conduct in areas that would strengthen the current CA rules.

As to the contentious issue of public practice, all members would be subject to the CA profession's practice inspection program, while members who audit public companies would be subject to review by the Canadian Public Accountability Board. Indeed, CMAs currently in public practice in most provinces are subject to practice review every three years, and in Saskatchewan and BC this work is carried out by the provincial institutes of chartered accountants.

In 2003, the CA profession approved the new Rule of Professional Conduct 206. This rule requires that all members ensure that financial statements are presented fairly in accordance with generally accepted accounting principles. By merging with the CMAs, only one high standard would be followed. Clearly, this would provide greater protection of the public interest and help to strengthen the value and perception of the CA designation.

Compensation levels
On average, CMAs' salaries and billing rates are lower than CAs'. From this, some members conclude that CMAs offer commensurately less value to their clients and organizations. The logical next step is to also assume that a CA/CMA merger will result in CAs being paid less. Carrying forward with this fallacious momentum, they worry that, with more CAs in the market, compensation levels will drop.

The research conducted for the task force has found that the market remunerates for a position and the experience of the individual filling that position. The simple presentation of the designation on a CV, interestingly, is far less important to prospective employers. Korzeniewski's educational qualifications, for example, are impressive, but his dumbing down potential is based on more concrete, real-world criteria. Research shows that industry employers do not pay based solely on one's accounting designation. Instead, they tend to pay according to the position being filled and the personal qualities of the individual filling it.

"I do not subscribe to the theory that the proposed merger will 'dilute' the CA designation and have a negative impact on salaries," says John Watson, FCA, executive vice-president and CFO of Calgary's EnCana Corp. "I believe the market is efficient and able to absorb these new realities. The market," he explains, "can determine what the appropriate salary level is for individuals based on their résumé, how they have performed, their role within the company, and a whole host of other factors."

"Just because someone has one designation or another, or one degree or another, that by itself is never the deciding factor," he continues. "You look at people in their entirety, and what they bring to the table." For Watson, past performance, leadership skills and how the individual applies those skills in a variety of situations is what counts. "Those are the things that ultimately make the difference," he insists.

Opportunities in the marketplace
A number of recent graduates and candidates from the student base have expressed concern that the merger's creation of more CAs in the marketplace will make it difficult to compete for positions. In fact, the opposite is true.

Interviews with business leaders and recruiters for financial positions have now established that the market is far from saturated. Because of the growing complexity of compliance requirements for businesses of all sizes, it is highly unlikely that the job market will contract in any foreseeable future. "We are examining the needs of each segment," says task force chair and ICAA CEO Steve Glover, "how those needs are currently being met and how they might be met in the future. This analysis also includes an assessment of the growth potential and competition in each segment, as well as the key factors for success in each segment."

Nathalie Francisci, president of Montreal recruiting firm Venatus Conseil Ltd., points out: "Public accounting is very much in demand. The most recent changes in financial reporting and compliance, and the new requirements of various authorities, have had a significant impact on recruiting in the financial and accounting sector. There is currently a shortage," she explains, "of qualified people in certain fields of practice [internal auditing, Sarbanes-Oxley, consolidation and financial reporting, etc.]. Add to this the CA demographics problem and the odds are that the profession will soon be on the 'endangered' list. The CA/CMA unification will facilitate the transfer of expertise and break down traditional barriers between the two groups."

If significant steps to achieve growth in the profession are not taken, research shows we will see a decrease in the size of the membership within five to 10 years. "The marketplace is evolving and offers numerous opportunities," Francisci insists. "But the base of candidates is sometimes limited. The candidate shortage creates a tight market that could eventually damage the profession's reputation because enterprises will have no choice but to recruit other profiles."

There is an increasing perception that CMAs are both worthy of these positions and, indeed, offer highly valued skill-sets not normally associated with CAs. Research also indicates a perception that CAs lack certain skills in the corporate and management context. Human resource management, strategic influence and political influence — as they relate to starting and maintaining projects — are non-traditional roles for the majority of CAs. CMAs, who tend to work deeper within an organization, dominate in these areas and are not exclusively found in accounting and finance.

Still, the business community has found it increasingly dif-ficult to differentiate between the two professions. In the nine focus groups of CAs interviewed by the task force, this inability to differentiate among competing designations was one of the top three concerns. The focus groups simply confirmed that when hiring candidates, businesses look at the entire résumé and not the CA, CMA or MBA attached to the end of a candidate's name.

Grandparenting of CMAs
Many members have indicated they would support the proposed merger if the CMAs were not automatically awarded the CA designation. They argue that existing CMAs did not have to obtain a university degree, did not have to successfully complete the UFE and have not had public practice training experience.

Members must recall that not all of today's CAs were created equally. The CA profession has also evolved over its many decades. A large number of veteran CAs sit in senior positions with no university education; fewer still have experienced the training regimen required of today's new recruits. The notion that many veteran CAs would be unable to succeed in today's education and training environment has done little to dissuade the profession from embracing change and shaping our future.

Changes in the practical experience and audit hours requirements, the move to a competency map and the competency-based UFE have been positive adjustments to a profession long respected for its focus on the future, not the past.

Like the CA certification process, the CMA process has evolved significantly with a similar focus on ensuring future excellence. In addition to technical and management skills, the CMA brand of strategic financial manager is also an individual who works effectively within all levels of an organization. The CMA is a professional accountant trained to high standards and whose actions are subject to rigorous rules of professional conduct and recognized in law in most provinces on exactly the same basis as CAs.

Dilution is a reasonable concern and the CSE expects it to be addressed to the majority's satisfaction as the information flow makes its way to the membership. Its greatest concern is that these issues not deflect the membership from focusing on the future strategic good of the profession. The past cannot be changed. The CA profession can only move forward and ensure that it maintains its dominant status in the future.

Standards Digest