Accountant vs. Accountant:

 Accountant vs. Accountant: What CA monopoly?

By Peter Varley



I’ll concede one point to Terence Corcoran’s July 23rd column, “Ontario to protect CA monopoly” — this subject can be dry as toast. That’s unless you can make a case that what’s really at stake is consumer protection and the value of rigorous professional standards in a corner-cutting, globalized economy. And that the “monopoly” charge so blithely tossed around in Ontario accounting circles these days is a load of hooey. So here goes.

The “monopoly” charge first: Accountants in Ontario are not like doctors, and they’re not like lawyers. In contrast to these other august professions, there is more than one accounting designation and governing body in this province, and across Canada. There are Chartered Accountants (CAs), Certified General Accountants (CGAs) and Certified Management Accountants (CMAs). All three train their members to different standards to do different kinds of work.

It’s true that CMAs and CGAs can conduct audit and assurance engagements, or “public accounting,” in other provinces but not, historically, in Ontario or Quebec (where the great bulk of it is done, incidentally). Yet what Mr. Corcoran seems not to know is that this provincial landscape has changed, and with our full support.

Legislation enacted in both provinces over the past few years enables all three professional accounting bodies to license their members to perform public accounting, and then to compete vigorously with one another to provide those services. But it can’t be an unregulated free-for-all. That would trigger downward pressure on qualification requirements in pursuit of purely commercial advantage, a caution sounded by University of Toronto Law School Dean Ron Daniels in his authoritative 2003 study of the field. Daniels called it “regulatory arbitrage.” I quote: “Regulatory arbitrage arises when regulatory organizations will opt for less costly, more lenient and socially undesirable forms of regulation solely as a means of capturing increased market share for their members at the expense of members of competing, higher-standard professional self-regulatory bodies.” 

So the law requires each body to demonstrate, to independent agencies of both governments, that its qualification and programs meet predetermined, legislated standards designed to protect consumers and investors and match those of the leading accounting bodies of our major trading partners. In Ontario that agency is called the Public Accountants Council, and is comprised of a majority of eminent, independent non-accountants. The Council created the standards required by law, and then passed them to the province’s Attorney General, who approved them. Ontario CAs meet these standards. Ontario CGAs are diligently working their way through that process, having been found not to meet them late last year. Ontario CMAs are at an earlier point in the process.

Regardless, the outcome will be a competitive environment in Ontario for public accounting, regulated to standards that investors and the public have every right to expect will ensure Ontario’s competitiveness internationally. So where’s the monopoly?

Still, it seems some people can’t take “yes” for an answer. This is where the Agreement on Internal Trade (AIT) comes in. The CGAs’ national body has seized on the AIT as a kind of back-door route to overruling Ontario’s public accounting qualification standards. Here’s how: New labour mobility terms in the agreement would allow for the “automatic certification” of workers and professionals when they move from one province to another. That’s unless an individual province can make a case that the way it regulates a profession should be exempted from this rule for reasons of, say, consumer protection. Given this is what Ontario’s public accounting legislation is all about, and that most other provinces do not specify these qualification standards in law, the government has filed for an exemption from this automatic certification system for public accountants. Otherwise, under-qualified public accountants from other provinces would have a free pass in defiance of provincial law: AsOntario CGAs have been found not to meet the required qualification standards, and as their program is the same all across Canada, it follows that CGAs from other provinces wouldn’t meet Ontario’s standards either. They are therefore fighting Ontario’s exemption tooth-and-nail.

Nor is it even relevant to claim, as Mr. Corcoran approvingly quotes a CGA official as saying, that “all accountants, regardless of designation, abide by the same accounting principles and auditing standards.” That’s like the fellow who comes to rewire your house saying he will follow the how-to book on wiring — when he may never have learned to be an electrician in the first place. The real issue is the competency of the individuals doing the work, not the rule book that they follow.

Is anyone prepared to open up law or medicine to competing legal or medical bodies that hold their members to differing qualification standards, and simply “let the buyer beware”? Probably not. So anyone who has a problem with rigorous qualification standards in Ontario for sensitive audit and assurance work in today’s uncertain economy should take it up with all three parties in the legislature who passed the law demanding them, with the accomplished non-accountants who created them, with the Attorney General who approved them, with the CGAs and CMAs of Ontario who are committed to meeting them, and with the consumers, investors, businesses and international trading partners who expect them.

Financial Post

•  Peter Varley is vice-president, Public Affairs, The Institute of Chartered Accountants of Ontario.