Ontario licensing rules at issue

By Brian Banks

Two government reports — one from a panel constituted under the provisions of the national Agreement on Internal Trade (AIT), the other from the Ontario Government's Red Tape Commission (RTC) — are stirring the pot for changes to Ontario's public accounting licensing rules.

The AIT panel's ruling is notable, but not binding. It calls for harmonization of the provincial licensing and standards governing who can and who cannot perform public audits. But it declined to rule against Ontario's CA single standard, as the case's original complainant - the CGAs of Manitoba - had hoped.

Brian Hunt, president and CEO of the Institute for Chartered Accountants of Ontario (ICAO), says this ruling presents no problem for Ontario CAs.

"We believe in a uniform standard, but a high one," said Hunt, in an interview with CAmagazine. "The Ontario government we would hope would not lower standards, therefore it's up to others to raise theirs."

End to CA exclusivity?
Toss in the recommendations of Ontario's Red Tape Commission, however, and the scene changes - overhauling the standards to eliminate CA exclusivity is exactly what the RTC suggests.

Last week, it called upon the province's Attorney-General to put an end to the CA single standard and to abolish the Institute of Chartered Accountants of Ontario's (ICAO) right to regulate licensing.

"The system unfairly restricts competition," said the commission in its recommendations to Attorney-General David Young.

Sweeping overhaul
If enacted, the recommendations (printed in full, along with other documentation, on the RTC Web site) would amount to a sweeping overhaul of the province's 39-year-old public accounting legislation.

Chief among the proposals:

creation of a new public accounting regulatory body
creation of a new licensing and designation system that would put CAs, CGAs and SMAs under one umbrella
introduction of mandatory continuing education activities

"The Red Tape Commission believes a more open market would better serve the public," the report said. "It would drive down prices and increase competitiveness, improve service, and expand access where there is now legislated restraint of trade."

40-year setback
The recommendations now sit with the Attorney-General Young. But he'll soon have another set of recommendations to deal with - from ICAO's Hunt.

While the RTC says it's time to update the province's 39-year-old public accounting legislation, Hunt says they've got it all wrong.

Enacting the RTC proposals "would set Ontario's public accounting regulation back 40 years," Hunt said.

"Instead of getting rid of red tape, this will add more of it," he said. "Instead of having a single standard and a single regulatory body, you'll wind up with multiple standards and multiple bodies. What they are currently proposing is utterly unworkable."

Hunt takes exception to the commission's claim that the overriding issue is "competition." Instead, he said, "the discussion should be about standards - this is a public-policy issue."

In a December 18 press release, Hunt said the RTC proposals "would result in regulation in name only. They will lower standards and add to public confusion."

Public "well-served"
According to information on the RTC Web site, more than 1,000 individuals (including some 600 CAs), business organizations, educational institutions, nonprofit organizations and accounting associations have written to the RTC during its six-month review. Many of the association and group submissions are posted at the same Web address.

For its part, rather than seeking to establish another regulatory body, the ICAO's submission included a recommendation to fold the current Public Accounts Council (a CA-dominated body that regulates public accounting) into the ICAO, giving the ICAO the same regulatory status as the College of Physicians and Surgeons of Ontario or the Law Society of Upper Canada. (A copy of the ICAO's submission, along with other material posted for CAs as part of an MPP contact campaign, is also available on the ICAO's website: www.icao.ca/mpp/mpp.html.

Elsewhere in its submission, the ICAO stressed that "the public accounting needs of businesses, individuals and other organizations of every kind and size are well-served by the rigorous competition that takes place under the CA single standard."

But in a sign of the possible struggles ahead for the ICAO, Conservative MPP and RTC co-chair Steve Gilchrist, challenged that claim in the press release issued with the RTC review. "Small business owners across the province asked us to look into the regulation of public accounting," said Gilchrist. "Our proposed changes would reduce a source of red tape for small business and organizations across the province, increase competition within the public accounting sector, and ensure that the public interest is protected."

ICAO's Hunt counters that such "broad sweeping statements about competition" are "totally misleading."

The only real issue here, he concludes, is the "organizational aspirations" of CGAs. "That's at the root of the problem."