Submitted by: The Institute of Chartered Accountants of Manitoba and The Society of Management Accountants of Manitoba

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1 Submitted by: The Institute of Chartered Accountants of Manitoba and The Society of Management Accountants of Manitoba Submitted to: The Minister of Finance Hon. Stan Struthers Date: May 31, 2012 The Minister of Entrepreneurship, Training and Trade Hon. Peter Bjornson

2 Table of Contents Recommendations to Government... 1 Background... 2 Regulatory and Economic Benefits of Unification... 3 Framework for Uniting the Canadian Accounting Profession... 4 National Unification Framework... 4 Manitoba Merger Proposal... 5 Consultation Process... 5 Common Stakeholder Feedback... 5 Consumers... 5 Regulators... 6 Canadian Securities Administrators... 6 Manitoba Securities Commission... 7 Academics... 7 CA Stakeholder Feedback... 7 Members... 7 Public Accounting Firms Public Representatives CMA Stakeholder Feedback Members Public Representatives National Overview: Progress of Unification to Date Next Steps Appendix A - National Unification Framework... A-1 Appendix B - Canadian CPA Certification Program... B-1 Appendix C - Manitoba Merger Proposal...C-1 Appendix D - Consultation with Leading Stakeholders.D-1 Appendix E - Canadian Securities Administrators Letter.. E-1 Appendix F - Self-Regulation and Unification Discussions in Canada's Accounting Profession... F-1 Appendix G - CA Town Hall Feedback...G-1 Appendix H - CA Member Survey Results......H-1 Appendix I - CA Advisory Vote Results I-1 Appendix J CMA Town Hall Feedback...J-1 Appendix K CMA AdvisoryVote Results...K-1

3 Recommendations to Government Manitoba and its professional accountants are best served by being part of a national profession. While accounting is provincially regulated, we see the following recommendations as being part of a broader, national initiative. Subject to unification developments in other jurisdictions in Canada, the Institute of Chartered Accountants of Manitoba (CA MB) and the Society of Management Accountants of Manitoba (CMA MB) recommend to the Manitoba Government that current provincial accounting legislation be modernized and streamlined. Specifically, it is recommended that the existing Chartered Accountants Act and Certified Management Accountants Act be replaced with a new Chartered Professional Accountants Act and that, effectively, the two governing bodies merge into one. The benefit of this change would be the establishment of a governing body that would continue to fulfill the existing mandate of self-regulation and education of the majority of professional accountants in Manitoba, while protecting the public interest through a variety of means. This new body would: Create and implement a new common regulatory framework reflecting the best practices of the existing organizations, including codes of conduct, practice inspection, disciplinary processes, and an effective and consistent public accounting regime. This regulation would be developed in concert with other Canadian jurisdictions. The benefit of this change would be regulations that are nationally harmonized and facilitate labour mobility and inter-jurisdictional business. Grant a new common designation, Chartered Professional Accountant (CPA). In order to ensure consumers recognize the training received by professional accountants during the transition to the new designation it would be required that the CPA designation be used in conjunction with the legacy designations for a period of 10 years. The benefit of this change would be the evolution to a single designation, CPA, which would align Manitoba and the rest of Canada with the globally dominant designation that is recognized by our largest trading partners. Create a new integrated rigorous certification program that is internationally recognized (Appendix B). The new program will meet the rigour and recognition of existing programs. In addition, an intermediate certificate program will be available for those who aspire to a career in accountancy but do not want to complete the full CPA program. The benefit of this change would be the development of a high-quality certification process for professional accountants in Manitoba. Should CGA MB join the unification, there would be a single certification program for all who aspire to become a professional accountant. In summary, with government s support, unification of two of the province s accounting Acts would result in a harmonized common regulatory structure affecting CPAs in Manitoba, as well as CPA firms that practice public accounting. These firms employ a large portion of the professional accountants in Manitoba as well as others. 1 P age

4 It is important to note that during consultations on the unification initiative, a consistent message was heard: There is general concern around undesignated and unregulated individuals providing public accounting services in Manitoba. In many jurisdictions in North America there are regulations in place regarding the practice of public accounting. The new CPA legislation in Quebec addresses this issue, and we anticipate that uniform regulatory proposals for CPA legislation will emerge as the national discussion evolves. A robust, consistent regulatory environment that applies to all individuals providing public accounting services would benefit Manitoba s economy attracting investment as well as adding protection for consumers and other users of accounting services. We hope to review this matter with Government over the coming months and keep them updated as the unification initiative progresses across the country. Background Manitoba s accounting profession is governed by three separate, but similar, pieces of legislation: The Chartered Accountants Act, The Certified Management Accountants Act, and The Certified General Accountants Act. Each accounting designation is regulated by a provincial body: CA MB governs over 2,900 CAs and 380 students; CMA MB governs over 1,700 CMAs and 200 students; and The Certified General Accountants Association of Manitoba (CGA MB) governs over 2,000 CGAs and 1,500 students. These three accounting bodies account for over 6,500 professional accountants, roughly 4% of professional accountants in Canada. All three organizations share the same legislative objectives, providing a dual mandate: the protection of the public through the education, training, and regulation of their members; and representing the interests of their members. These three accounting designations have co-existed in the marketplace for decades, but in the last five years there have been several significant developments within the accounting profession that have shaken the status quo. These developments include the financial crisis and changes in the international regulatory environment; the adoption of international financial reporting and auditing standards by Canada; and significant regulatory inconsistencies within Canada regarding public accounting that have caused issues under the Agreement on Internal Trade (AIT). In addition, in late 2010, the Office des professions du Québec invited the three accounting bodies to develop a plan to merge. In May 2012, the legislation to establish the Chartered Professional Accountant (CPA) designation was enacted in Quebec, creating a fourth accounting designation in Canada. One out of five professional accountants in Canada is now a CPA. The merger in Quebec was a catalyst for the unification discussions within the accounting profession that have been taking place across all provincial jurisdictions and nationally since early In May 2011, a national position paper was released that established the proposed guiding principles for the unification of the accounting profession in Canada. Between May and September 2011, preliminary consultations with key stakeholders were conducted both nationally and provincially. 2 P age

5 In January 2012, the Canadian Institute of Chartered Accountants (CICA), the Certified Management Accountants of Canada (CMA Canada) and the Certified General Accountants of Canada (CGA Canada) introduced a Unification Framework (Appendix A) to unify the Canadian accounting profession as well as an outline of a new CPA Certification Program (Appendix B). At that point, 38 of the 40 accounting bodies in Canada were discussing unification, including CA MB and CMA MB. Shortly after the release of the national Unification Framework, CA MB and CMA MB issued the Manitoba Merger Proposal (Appendix C) to unite the two bodies in this province. An extensive consultation process was undertaken to solicit feedback from all key stakeholders regarding a merger of the two professional associations. Members, the public, employers, the business community, and educators took part in the consultation. The consultations also included discussion of the implications of the possible unification of all three accounting bodies in Manitoba. The results of the consultation process suggest support for unification of the entire accounting profession in Manitoba. As such, CA MB and CMA MB would welcome CGA MB to join the unification discussions in this province. The Government of Manitoba is ultimately responsible for enacting legislation that regulates the accounting profession in Manitoba. To this end, the profession has begun a dialogue with the province through the Ministry of Finance to engage with the province on the broader national issues regarding the merging of accounting organizations across the country. As part of this engagement with the province, this paper outlines the recommendations of two of Manitoba s accounting bodies CA MB and CMA MB. It also discusses the rationale and process for unification, and the consultation process undertaken by CA MB and CMA MB. This report has been prepared for the Minister of Finance for his consideration as the Ministry of Finance would be responsible for drafting legislation for the new CPA organization. In addition, this report has been sent to the Minister of Entrepreneurship, Training and Trade as the recommendations in the report also address some of the current issues under the AIT. Regulatory and Economic Benefits of Unification There are a number of regulatory and economic drivers behind this initiative. 1. Having an accounting profession and financial regulatory system that is internationally recognized as being robust, competitive, and consistent will support Manitoba s economic objectives. Professional accountants play an invaluable role in Manitoba s economy major capital investments and financial transactions made in Manitoba involve professional accountants. 2. Unification of the accounting profession would create a modern and streamlined regulatory regime for Manitoba s professional accountants. It would also create consistent and rigorous standards that are common across all provincial jurisdictions. Canada s accounting profession is currently fragmented. There are three designations in every province and territory (with the recent exception of Quebec) and each is set up under its own legislation. Nationally, there were 40 separate pieces of legislation regulating Canada s professional accountants. Regulation of all individuals offering public accounting services, whether designated or not, will provide better protection for the public. The current structure only regulates CAs, CMAs, and CGAs, while non-designated accountants are able to conduct public accounting work in Manitoba without regulatory oversight of any kind. 3 P age

6 3. Unification would enhance labour mobility. Nationally: The legislation regulating public accounting varies widely from province to province, creating difficulties for those working in multiple jurisdictions and leading to challenges under the AIT. The report of the recent panel that dealt with the Manitoba government s challenge against the Ontario government recommended that all Parties (being the provinces) take steps to reinvigorate consultations with other Parties directly or through appropriate regulatory authorities to develop a consistent standard for public accountants across the country. Internationally: By having a common certification and entry point, there will be a clear and streamlined process for foreign designates looking to join the Canadian accounting profession. 4. Canada has adopted international standards for financial reporting for public companies and for audit engagements. Unification would allow the profession to speak with one voice and enhance our ability to influence proposed changes to international standards and ensure that these standards are appropriate for Canadian market needs. Many national and regional accounting bodies in other countries are entering into alliance agreements to increase their individual and collective strength, relevance, and influence at the international standard-setting table. The recent global financial crisis which is still unfolding brought the regulation of the accounting profession under close scrutiny. As a result, extensive regulatory changes are being proposed in Europe and the United States that would significantly impact financial regulations and, specifically, the role of auditors. Canada will need to respond. Framework for Uniting the Canadian Accounting Profession The proposed national Unification Framework and Manitoba Merger Proposal provide a blueprint for unification that is harmonized across Canada and in Manitoba. National Unification Framework In May 2011, a position paper was released that laid out the proposed guiding principles for the unification of the accounting profession. On January 17, 2012, the national leadership of the three accounting organizations released the national Unification Framework, which is supported by the CA MB Council and CMA MB Board. The national Unification Framework and principles were heavily influenced by the position paper introduced in May and provide a common framework for the development of provincial merger proposals. The framework for unification was based on four fundamental objectives: 1. To be better positioned to protect the public by ensuring all professional accounting and assurance services meet a uniformly high and consistent level of ethical and practice standards. 2. To govern the accounting profession in an effective and efficient manner. 3. To contribute to the sustainability and prosperity of the Canadian accounting profession. 4. To protect and enhance the value of the designation in an increasingly competitive environment. 4 P age

7 The framework also contains eight guiding principles to achieve these objectives: 1. Evolution to a single designation, Chartered Professional Accountant (CPA). 2. Continued use of existing designations in conjunction with CPA for 10 years. 3. Retention but no expansion of rights. 4. A rigorous certification program that draws on the strengths of all three programs. 5. A single designation with specialties, similar to other professions such as medicine or law. 6. Early in the transition, all branding efforts would focus on the CPA designation. 7. A common code of conduct, practice inspection, disciplinary processes, and a nationally consistent public accounting regime would be developed. 8. Merged operations and governance for each province and territory and the national bodies. Manitoba Merger Proposal With the accounting profession being provincially legislated, CA MB and CMA MB jointly developed the Manitoba Merger Proposal and released it to members on January 20, The Manitoba Merger Proposal is consistent with the national framework and includes details regarding governance, certification, member dues, regulatory processes, transition and integration of operations, and the role of government in unification. It also outlines the decision-making process regarding approval of a merger in Manitoba. The decision-making process recognizes the role of government in unification and has involved engaging members and other key stakeholders regarding the Unification Framework and Manitoba Merger Proposal in order to gauge their level of support. CA MB and CMA MB have collected and assessed the input received during the consultation, and have assessed the support for the merger in jurisdictions across Canada to date. Consultation Process Common Stakeholder Feedback Consumers Managers, Owners, Professionals and Executives (MOPES) were identified as one of the key consumers of accounting services. Accordingly, CICA and CMA Canada engaged an external consultant to conduct research gauging the MOPES reaction to the merger. Four hundred interviews were conducted with employers of all sizes across the country with regional distribution within each employer size category reflecting Statistics Canada data. Once provided with a brief summary of the merger proposal, 57% of respondents agreed that a merger would be positive for business (30% indicated that they neither agreed nor disagreed or did not know). Almost half (46%) of respondents answered that work experience is more important than accounting designation held when making a hiring decision; whereas, only 7% of respondents indicated that designation is most important. 5 P age

8 Two of the strongest perceived benefits of the unification of the accounting profession are: Common code of conduct. 85% of the respondents agreed that a consistent code of conduct would be beneficial to Canadian businesses. Single qualification process and designation. Nearly two-thirds of respondents indicated that a single qualification process and designation would provide benefits to Canadian businesses. Specifically, 64% agreed that it will make hiring easier in the future and 67% agreed that it will reduce confusion over which designation is best. In addition, the CICA, CMA Canada and CGA Canada commissioned an independent consulting firm to conduct a comprehensive survey with 28 influential Canadians representing the interests of business, industry, the financial sector, government, regulatory agencies, policy and research bodies, learning institutions, the media and peer professions, as well as representatives of a number of international accounting organizations, to determine their views on the proposed unification of the Canadian accounting profession. According to 26 out of 28 surveyed between March and April 2012, a united profession under the CPA designation is a strategically sound and practical long-term solution that is in the best interests of Canadians (see Appendix D for full results of the survey). Locally, CA MB and CMA MB met with the Executive of the Manitoba Chambers of Commerce. The Executive of the Manitoba Chambers of Commerce was generally quite supportive of the merger and noted the following benefits: Greater clarity to those who may not understand the difference between the various designations. Consistent standards for all professional accountants. Greater likelihood of Canada playing an influential role in standard setting that is now done primarily at the international level. The only concerns raised were the potential impact on fees charged to small businesses and salaries paid to accountants. Regulators Canadian Securities Administrators The Canadian Securities Administrators (CSA) communicated their feedback on the unification initiative to the CICA and CMA Canada in a letter dated September 9, 2011 (see Appendix E). The CSA provided the following comments that pertain to potential impacts on capital markets and, more specifically, the need to ensure that audit quality remains high: The CSA supports the goal of a single high quality code of conduct applicable to all audits of public companies in Canada. Tagging during the transition period is supported as this approach may provide useful information to stakeholders during this time. In the event of a merger, appropriate oversight over granting and maintaining practice licenses will need to be in place for accountants who sign audit opinions. 6 P age

9 Manitoba Securities Commission A meeting was held with the Chair and Chief Accountant of the Manitoba Securities Commission. They indicated that their focus is primarily on the impact that the merger would have on organizations that fall under their mandate and the audits of such organizations. They were supportive of the merger insofar as it would provide Canada with a stronger voice in the establishment of accounting and auditing standards that are set globally. They indicated that they were hopeful that the CGAs in Manitoba would join the merger discussions since it would be less confusing to the public if there was only one accounting body with consistent standards. Academics Academics were also identified as a key stakeholder group as they educate our students before entering professional accounting programs. To solicit their feedback, CA MB and CMA MB held consultation sessions with academics in Winnipeg and Brandon. Overall, academics were very supportive of the unification process. Discussion at the consultation sessions focused on the details of the proposed CPA certification program and the need for more clarity. They indicated that merging of the professional accounting bodies would allow them to streamline the curriculum they provide to students who wish to become professional accountants. As well, it would also avoid the confusion that currently exists for students who are unsure of the differences between the three bodies and deciding which career path to follow. The primary concern came from university faculty who indicated that if the prerequisite courses that students would be required to take change, it would be important to provide sufficient lead time so that the universities could adapt their courses appropriately. In addition, an academic analysis of self-regulation and unification discussions in Canada s accounting profession was conducted by William Lahey, Associate Professor, Schulich School of Law, Dalhousie University. The report, a summary of which is included in Appendix F, concludes that unification would strengthen and streamline the profession s self-regulatory function and enhance its capacity to fulfill its ultimate self-regulatory mandate: to protect and advance public interest. CA Stakeholder Feedback Members As a member-based organization, it is important that CA MB solicit the views of members and listen to their concerns. A comprehensive consultation process was undertaken with members to gauge their support for the unification initiative. Town Hall Meetings and Information Sessions Between May and December 2011, CA MB held 25 town hall meetings and sessions at employers that hire a large number of CAs to provide information to members, answer questions, and respond to concerns regarding unification. Approximately 460 CA members and students (19% of resident members and students) attended these sessions. 7 P age

10 Following the release of the Unification Framework on January 17 th, 2012 another 21 town hall meetings and information sessions were held. At the end of each session, CA MB requested that attendees complete a feedback form with a short series of questions. CA MB received 306 completed feedback forms which were compiled and are summarized in Appendix G. Following is a summary of the results: 96% of members and students who attended a presentation believed that CA MB and CMA MB conducted appropriate due diligence in developing the Manitoba Merger Proposal. 80% of participants felt the proposed certification program would have sufficient rigor to produce pre-eminent professional accountants. 80% of participants indicated that they would definitely or probably support a merger of CA MB and CMA MB (13% were undecided) 76% indicated that they would definitely or probably support unification of all three accounting bodies in Manitoba if the terms proposed in the Unification Framework and Manitoba Merger Proposal were followed (16% were undecided). For members who were not able to attend a town hall meeting or information session, CA MB developed an online presentation about the merger initiative and posted the presentation on the CA MB website for members and others to access. This presentation was downloaded almost 500 times throughout the consultation period. Member Survey CA MB conducted a member survey in early February 2012 to solicit views on the national Unification Framework and Manitoba Merger Proposal (see Appendix H). The survey generated a response rate of approximately 20% of the membership. As illustrated in Appendix H, responses were quite representative of the membership in terms of years of membership and employment sector. The survey found that 56% of respondents would support a merger of CA MB and CMA MB (13% of respondents were undecided). Approximately 74% of respondents indicated that creation of a consistent code of conduct for Canadian accountants is a good reason to pursue a merger of CA MB and CMA MB. Respondents also showed support for potential unification of all three accounting bodies in Manitoba with 51% of respondents indicating that they would support a merger of all three accounting bodies if the same terms of the national Unification Framework and Manitoba Merger Proposal were followed (12% were undecided on that point). Member Phone Calls and s CA MB received s and phone calls from approximately 43 members between May 2011 and the date of this report. Of the s and phone calls received, 19 were negative in tone, 11 were neutral, and 13 were positive. The majority of the negative feedback related to concerns regarding potential devaluation of the CA brand as a result of a merger. This concern is discussed in more detail later in this report. In addition, a few members expressed concern regarding the process CA MB followed in engaging members and informing them about the unification initiative. CA MB believes the process followed was fair and appropriate, which, as noted earlier, is supported by feedback received from members who attended town hall meetings and information sessions. 8 P age

11 Member Advisory Vote Between February 29 and March , CA MB conducted a member advisory vote to gauge member support for the unification of the accounting profession in Manitoba. It was decided that the vote would be advisory in nature as the ultimate decision regarding unification in Manitoba rests with the Manitoba Government and would depend on factors such as unification decisions in other provinces and other stakeholder feedback, along with indicators of member support which would include level of member participation in the voting process. CA MB s 2,904 members were invited to participate in the advisory vote and 1,414 ballots were cast, resulting in a 48.7% response rate. Typical participation in voting on bylaw changes or Council elections is in the 10-15% range. As illustrated in Appendix I, the response was representative of the membership with respect to length of membership. The results of the advisory vote show that 59.5% of respondents indicated support of a merger of CA MB and CMA MB as provided in the Manitoba Merger Proposal. As outlined in Appendix I, 55.5% voted in favour and 4% selected "Elected Council should decide". That 4% has been reflected as a positive response as the CA MB Council unanimously endorsed the merger proposal released on January 20, The vote results suggest that the main two reasons members showed support the unification of CA MB and CMA MB are: The merger would result in consistent standards for Canadian accountants. (noted by 78% of members in favour) The merger would result in the development of one high-quality certification process. (noted by 74% of members in favour) The most common reason for lack of support for a merger of CA MB and CMA MB noted in the member advisory vote is the belief that a merger would not protect the value of the existing designation. This concern was noted by 85% of members who are not in favour of the proposed merger; whereas, the other reasons for lack of support were mentioned by 51% or less of the members who voted against the merger. To better understand the concern regarding brand devaluation and to obtain insights on how the unification process can best protect the value that members see inherent in their designation, CA MB hired an independent consulting firm to conduct a member focus group. Participants included members who had informed CA MB that they were not in favour of unification and an equal sized sample of those who were vocal in their support. Participants acknowledged that marketing would be extremely important subsequent to a merger and recommended that advertising initiatives emphasize professional accounting and Chartered Professional Accountant as opposed to the acronym CPA as the public would more readily associate high standards and high quality service with these descriptions. As part of the member advisory vote, CA MB also asked members to indicate their level of support for a merger of all three accounting bodies in Manitoba should CGA MB wish to join merger discussions and agree to the principles of the Unification Framework and Manitoba Merger Proposal. At the moment, CGA MB has not asked to join the discussions; however, the question was included to give the CA MB Council a sense of member support of a three-way merger and to help determine if it was necessary to come back to the membership for another advisory vote should CGA MB join the unification discussions. 9 P age

12 The results of the advisory vote question relating to unification of all three accounting bodies in Manitoba indicate that slightly less than 50% of members who responded were in support of a three-way merger. Looking more closely at the results of the three-way merger question, 12.7% of those who responded indicated that they were undecided. Of the decided vote, 55% were somewhat or strongly in favour of a three-way merger while 45% were somewhat or strongly opposed. It is also noteworthy that there were fewer members who indicated they did not support a three-way merger (534) compared with the 572 who voted against a two-way merger. Finally, in responding to the question of why members voted against a possible two-way merger, 113 members indicated they did not support a two-way merger because they believed it should be a unification of all three bodies. Public Accounting Firms Public accounting firms employ approximately 32% of CA MB s membership and train the large majority of CA students. Therefore, it was critical to get their perspectives on unification and the proposed CPA certification program. The leadership of the seven national firms in Manitoba have all indicated strong support for the unification initiative. In addition, the big four firms (Deloitte, Ernst & Young, KPMG, and PwC) have also declared their support nationally. Public Representatives There are two public representatives appointed by the President of the University of Manitoba who sit on Council. Their perspectives on the unification initiative are important to ensure that the profession is adequately addressing public interest. To solicit their feedback, CA MB held a consultation session with current and past public representatives. The two past public representatives each served on CA MB s Council for six years. The public representatives are supportive of the unification initiative and believe that a merger would further help to protect public interest. There was some concern, however, that despite the benefits of unification, the merger will only be successful if it receives support across all jurisdictions. CMA Stakeholder Feedback Members In support of uniting the Canadian accounting profession, CMA Manitoba has sought to inform members on the principles and details of the merger both nationally and in Manitoba through town halls, employer presentations, surveys, online communications and social media. These activities have allowed us to gather valuable feedback. Town Hall Meetings and Employer Presentations In 2011, May through December, CMA MB held a total of 14 town hall meetings and employer presentations. The purpose of these events was to provide information to members and students on the proposed merger and address any related questions or concerns. In all more than 480 members and students were reached (approximately 26% of members and students). 10 P age

13 Following the release of the Unification Framework on January 17 th, 2012 another 8 town halls and employer sessions were held, reaching approximately 116 members and students. All participants were invited to take part in a survey to determine their position on the Unification Framework, Manitoba Merger Proposal, proposed CPA Certification Program and involvement of CGA Manitoba. Following is a summary of the results: 99% of members and students who attended a presentation believe that CA MB and CMA MB conducted appropriate due diligence in developing the Manitoba Merger Proposal. 96% of participants feel the proposed certification program will have sufficient rigor to produce pre-eminent professional accountants. 99% of participants indicated that they would definitely or probably support a merger of CA MB and CMA MB. 94% indicated that they would definitely or probably support unification of all three accounting bodies in Manitoba if the terms proposed in the Unification Framework and Manitoba Merger Proposal were followed (7% were undecided). Complete details can be found in Appendix J. Member Advisory Vote The CMA Manitoba Advisory Vote was open to members in good standing from February 29 th through March 14 th. Of 1510 members eligible for the Advisory Vote, 49.2% of the membership voted on the proposed unification of the CA and CMA bodies in Manitoba as outlined in the Manitoba Merger Proposal. The overall results indicated a significant majority in favour of unification. Detailed findings are included in Appendix K. Following are a few highlights of the Advisory Vote: 93% support the Board s proposal to merge CA Manitoba and CMA Manitoba Primary reasons for supporting the Board s proposal to merge CA Manitoba and CMA Manitoba were: o Would result in consistent standards for Canadian Accountants (83%) o Would result in the development of one, high-quality certification process (81%) o Would create a designation that offers members international brand recognition (75%) o Would ensure Canada has an influential voice with global standard-setting (67%) o Would provide better value to members through economies of scale (59%) 5% of members voted against the merger with the top three reasons being: o The merger would not protect the value of my designation (54%) o The merger would not better position the profession to protect the public (34%) o The merger as proposed would not include all three professional accounting bodies (31%) In the conclusion of the Advisory Vote, CMA members were asked to specify their level of support for uniting the three accounting bodies in Manitoba should CGA MB wish to join merger discussions and agree to the principles of the Unification Framework and Manitoba Merger Proposal. The results were favourably in support of a three-way merger. 81% are strongly or somewhat in favour 11% are undecided 8% are strongly or somewhat against 11 P age

14 Public Representatives The CMA Manitoba By-Laws require that at least 30% of the persons elected or appointed to the Board of Directors must be Public Representatives. Currently the CMA Manitoba Board includes four public representatives that have been appointed to represent the business community within Manitoba. The areas of representation include academia, the legal profession, the engineering profession and human resources. This group has participated in strategic planning sessions, provided feedback from a business community perspective and has voiced their strong support that the merger is in the best interest of the public. National Overview: Progress of Unification to Date Since the decision to unify the accounting profession belongs to each provincial government, work in each province is progressing at different rates. Recently, we have been informed that the CGA organizations in most provinces and at the national level have withdrawn from unification discussions. It should be noted, however, that serious discussions on the unification of the CA and CMA bodies are underway in most provinces and at the national level. Most of our provincial counterparts are either at the stage of developing the provincial merger proposal, completing consultations with members and other stakeholders, or submitting a recommendation to their respective governments. As noted previously, in Quebec the Chartered Professional Accountants Act came into force in May Next Steps Our next steps include: Establish a joint task force to identify differences between the legislation of the CA, CMA and CGA bodies in Manitoba and develop recommendations to the Ministry of Finance. Continue to monitor and respond to national developments respecting unification. Continue to apprise the Ministry of Finance on developments relating to unification. Begin working with the Ministry of Finance in drafting new legislation for a CPA body in Manitoba. 12 P age

15 NOW IS THE TIME to secure our future

16 A FRAMEWORK FOR UNITING THE CANADIAN ACCOUNTING PROFESSION VISION FOR THE PROFESSION To be the pre-eminent, internationally recognized Canadian accounting designation and business credential that best protects and serves the public interest. GUIDING PRINCIPLES FOR UNIFICATION The guiding principles provide the framework to unify the profession and achieve the vision. 1 Evolution to a single designation The new profession would adopt the Canadian designation Chartered Professional Accountant (CPA). All current members in good standing would be granted this designation from their new CPA provincial body as CPA legislation is approved. For a period of 10 years, all members using the new CPA designation would be required to use it in conjunction with their existing designations. No current member could use the CPA without identifying his or her legacy designation as follows: First and Last Name, CPA, CA First and Last Name, CPA, CMA First and Last Name, CPA, CGA After 10 years, a member could choose to use the CPA designation on its own. 2 Continued use of existing designations Existing members would retain their current professional designations. No member would be automatically granted an existing professional designation of another body. The national and provincial CPA bodies would be promoting the new CPA designation. Use of legacy designations on their own post-unification would be subject to provincial merger agreements and legislation

17 3 Retention but no expansion of rights Unification would protect all existing rights of members, such as public accounting rights and rights under any existing Mutual Recognition Agreement, without granting new rights. The new CPA organization would negotiate on behalf of all members when entering into new Mutual Recognition Agreements. Any member not authorized to practice in a restricted area, such as audit, prior to the merger would be required to complete any necessary provincial programs to qualify post-merger. 4 Certification The new CPA organization would establish a certification program that draws on the strengths of the existing programs and would be recognized by members, regulators, global accounting organizations and the business community as being at least as rigorous as all existing programs. Detailed information on the developing certification program is available at and on the websites of the national bodies. The new CPA organization would establish a certification program that draws on the strengths of the existing programs and would be at least as rigorous as existing programs. HIGHLIGHTS OF THE CANADIAN CPA CERTIFICATION PROCESS A CPA Competency Map would be designed to meet the needs of industry, government and public practice. An undergraduate degree and specific prerequisite courses in business and accountancy would be required for admission to the professional education program. A post-graduate professional education program would be developed nationally and delivered provincially/regionally. Key components would include: Individual examinations and team-based evaluations throughout the program. A comprehensive, multi-day final examination. Rigorous practical experience that builds the relevant CPA competencies and is subject to quality control by the profession. Meet or exceed all standards for education, assessment and practical experience set by the International Federation of Accountants. Meet or exceed requirements for existing and future Mutual Recognition Agreements. Bridging programs to meet required degree or course prerequisites for the professional education program so that entry into the program would be accessible to entrants coming from the work force and abroad and those with non-business degrees. To meet the diverse needs of both employers and clients, a separate program would be developed for those who aspire to a career in accountancy, but not as a qualified CPA. This program would have distinct entrance, education and assessment requirements. A bridging program to the appropriate stage of the CPA certification program would be developed. 4 5

18 5 A single designation with specialties As in other professions like medicine and law, post-designation specialty programs would be developed to offer CPAs the opportunity to enhance their expertise and advance their careers. A number of post-designation specialties would be considered, such as tax, forensic accounting, strategic management, and public sector accounting. 6 Branding the CPA designation Early in the transition process, all branding efforts would focus on the CPA designation and there would no longer be any branding of the legacy designations. The new profession would adopt the Canadian designation, Chartered Professional Accountant (CPA). Post-designation specialty programs would be developed to offer Chartered Professional Accountants the opportunity to enhance their expertise and advance their careers. 7 Common code of conduct, regulations, and the practice of public accountancy A new, common regulatory framework reflecting the best practices of the existing organizations, including codes of conduct, practice inspection, disciplinary processes and an effective, nationally consistent public accounting regime would be developed. The new national CPA organization would be responsible for supporting standard setting in the profession. 8 Merged operations and governance The operations of the participating bodies would be combined at the provincial and national levels. The new combined provincial and national bodies would be overseen by new Boards of Directors that would include representation from each of the participating bodies. Mechanisms to protect existing members rights (such as those under Mutual Recognition Agreements) would be included. The organizations in each jurisdiction would be responsible for securing any legislation required to combine the operations and move to a new CPA designation. These bodies would work collaboratively to obtain any required change. 6 7

19 CONTROLLING OUR DESTINY IN A RAPIDLY EVOLVING PROFESSIONAL ENVIRONMENT Unifying the profession is a strategic response to the rapidly evolving environment and the resulting opportunities and risks facing the Canadian accounting profession. The Canadian Environment Increasingly, accountants are working in the same practice areas but remain subject to different qualification processes, codes of conduct, inspection and disciplinary regimes operated under 40 different governing bodies. The three bodies in Quebec, at the invitation of their government, have agreed to merge under the Chartered Professional Accountant designation. The Association of Chartered Certified Accountants (ACCA) in the U.K., which is aggressively advancing a global expansion strategy that targets Canada, is legally challenging the CA profession s legislated rights to the exclusive use of the name Chartered Accountant in Canada. 8 9

20 Global Alliances and Other International Developments The global financial crisis has brought the regulation of the accounting profession under close scrutiny. The U.K. House of Lords is publicly calling for the amalgamation of the six U.K. accounting bodies, saying the fragmentation of the accounting profession there is inefficient. The CPA designation is emerging as the largest accounting designation around the world. The CPA designation is used by more accountants than any other designation, with the current ratio of CPAs to CAs globally being 2:1. The Institute of Chartered Accountants in England and Wales and the ACCA have both filed European trademark applications to control the Chartered Professional Accountant (CPA) designation. The American Institute of Certified Public Accountants (AICPA) is aggressively seeking to expand its global footprint and is opening examination centres for the U.S. CPA exam outside of the U.S. In addition, the AICPA and the U.K. based Chartered Institute of Management Accountants (CIMA) have announced a new jointly developed global management accountant designation. Increasingly, other national and regional accounting bodies also are entering into alliance agreements to increase their individual and collective strength, relevance and influence. Examples include the Global Accounting Alliance and the Edinburgh Group. The CPA designation is emerging as the largest accounting designation around the world. A larger, more cohesive voice would ensure the Canadian accounting profession continues to effectively influence international standard setting bodies. The Risks of Continuing as a Fragmented Profession Government mandating that we reform, and possibly dictating the terms of that reform. Inability to respond efficiently and effectively to challenges from foreign accounting bodies or alliances operating in Canada. If the profession does not unify it is possible that two of the existing bodies may merge, thereby potentially strengthening their position in the marketplace at the expense of the third body. The CPA designation becoming controlled by one or more of the existing Canadian bodies to the exclusion of the others. Losing influence domestically and internationally if we do not speak with a single, strong voice

21 Achieving our four unification objectives would result in benefits for members. WHAT UNIFICATION MEANS FOR ACCOUNTING PROFESSIONALS Best positions the profession to protect the public through the provision of a common certification program and a single set of high ethical and practice standards. Enhances and protects the value of your designation in an increasingly competitive and global environment. Contributes to the sustainability and prosperity of the Canadian accounting profession. Governs the accounting profession in an effective and efficient manner. A New Designation with Broad Expertise Members would retain their current designation and add the Canadian Chartered Professional Accountant (CPA) designation, which would become the pre-eminent designation and business credential for professional accountants who work in every sector of the economy. The Canadian CPA designation would represent a unique combination of expertise in all areas of accounting, including financial and management accounting, assurance and taxation. It would evolve into a globally recognized business credential in the areas of financial and strategic management, business leadership, and auditing and assurance competencies. Steps would be taken so that members would have access to post-designation specialty programs. Securing Rights to the Global Designation of Choice Securing alignment with the most recognized global accounting designation would best protect the value of the Canadian profession s designation in the long run. Coming together under the Chartered Professional Accountant banner would align us with both CA and CPA, if either, or both, designations emerge as globally dominant. Mutual Recognition Agreements would be maintained and expanded with the world s most prominent CA, CPA and other significant bodies, facilitating members mobility globally

22 Common Regulatory Processes A new common certification program and a single set of high ethical and practice standards, common code of conduct and practice inspection and discipline processes would create a strong foundation on which to build the unified profession, and would be more efficient and effective. Greater harmonization would enhance trust and confidence in the profession amongst employers and the public at large. A common regulatory framework would enhance inter-jurisdictional mobility for all members. NEXT STEPS As the Canadian accounting profession is provincially regulated, any decisions regarding subsequent merger proposals would be made provincially. Please contact your governing body for information regarding next steps in your province or region. Efficiencies and Economies of Scale A fully unified Canadian profession would reduce the number of governing bodies, from 40 to 14, significantly simplifying operations and governance, and reducing confusion in the marketplace. Marketing dollars would be more efficiently used to support the interests of all CPA members. Gains from increased efficiencies could be re-invested in: Enhancing member services, such as post-designation specialty programs and professional development. Creating new products that enhance members practices and career goals. Developing communities of interest and networking in the members many areas of activity. A Powerful Organization with a Unified Voice A single voice representing as many as 170,000 Canadian members would more effectively represent member interests with respect to domestic policy, legislation and regulatory issues affecting the accounting profession. A larger, more cohesive voice would ensure the Canadian accounting profession continues to effectively influence international standard setting bodies and other global organizations. A united force would be stronger and more effective in dealing with global alliances and other designations that are becoming increasingly international in scope The Canadian Institute of Chartered Accountants, the Society of Management Accountants of Canada and the Certified General Accountants Association of Canada. All rights reserved