Merv Hillier, president and CEO, Certified Management Accountants of Ontario

Canada’s accounting profession faces an irrevocably changed landscape after a year of merger talks and a newly minted CPA Quebec. Despite unification in Quebec, however, questions remain about the potential for mergers elsewhere. While some experts insist a unified profession across the country is achievable, others believe it could end up even more fragmented than before talks, with four designations instead of three.

What’s clear is that the merits, and even speculation about the motivations behind merging the profession, still stir up deep divisions.

A recently released newsletter by Merv Hillier, president and chief executive officer of the Certified Management Accountants of Ontario, reveals just how far apart the largest provincial CMA body is from its national leadership, which along with all other CMA organizations outside Ontario continues to favour unification.

In explaining to his membership why CMA Ontario pulled out of provincial discussions, Hillier also warned that CMAs risk losing their identity.

"The CA organization is twice the size of the CMA organization. In a two-way merger, with or without CMA Ontario, the CMA organization will be ‘absorbed’ into the CA organization, regardless of whether it is called CPA or any other name," Hillier wrote. "This means that CMA members may have little if no influence over their future and run the risk of being treated as second-class members in the new organization. The practice of ‘management accounting’ could almost certainly disappear."

Hillier was not available to elaborate, but CMA Canada president and chief executive officer Joy Thomas told The Bottom Line that "CMA Canada has gone to great lengths to make sure we have a very strong voice in the new organization [and that] management accounting and its representation in the new CPA model are entrenched in the agreements we are working on now.

"Management accounting is not going away by any stretch of the imagination."

Jim Barnett, a chartered accountant and faculty member in the School of Accounting and Finance at the University of Waterloo, Ont., thinks it’s too early to assess the latest merger developments in stark terms of success or failure.

"It’s still in process. I’m encouraged there are still discussions going on between CMAs and CAs pretty well across the country," he said. "I still see the overall direction as positive, even if it’s [just] the CAs and CMAs that could end up coming together and forming a new body."

One of the key reasons espoused by the pro-merger accounting leadership is that Canada needs to speak with a united voice on the world stage.

"I’m not sure that’s a major factor, but I don’t think it’s insignificant," said Barnett. "Maybe we aren’t one of the biggest players on the international stage, but if we are a small player with three voices, we’re probably almost non-existent. So I think it would be better to be a smaller player with one voice that would be heard internationally."

Al Rosen, principal of Rosen & Associates Ltd. in Toronto, a litigation and investigative accounting firm, dismissed the unified voice argument as "total rubbish." He believes demographics are playing a key role in CA support of the merger.

"CAs have been panicking for 10 years when they look at the death rates and new admission rates," said Rosen, who added that CA exam pass rates have increased and articling opportunities thrown wide open beyond the traditional audit path in order to attract more new students.

"I’m aware of [the demographics] argument, at least on the CA side," said Barnett. "[But] I’m not sure that demographics with the aging population is that big an issue, because even if [the bodies] merge, all they’re getting is economies of scale.

"One of the issues that we’ve had in the past is that to become a CA you had to get work experience at a public accounting firm, and in more recent years, those jobs have not been increasing because of changes in audit approach and technology. So expansion of the work experience [in articling] was to deal with some of that bottleneck."

Serge Gattesco, national managing partner in the audit and assurance group of PwC in Toronto, said demographics was not a motivation behind support for a merger.

"Support for unification — for us at least — has other reasons," said Gattesco. "It would eliminate some of the public confusion that exists in Canada about the differences between the accounting designations. And we believe having one unified profession [will] reduce future costs around education, accreditation, standards, duties of care, disciplinary proceedings, etc."

Rob Scullion, Canadian leader of public policy and regulatory affairs for Ernst & Young in Toronto, emphasized he thinks unification is the way to go for both national and international reasons.

"This isn’t about big versus small firms," he said. "It’s about uniting the profession so that Canada can speak with one clear voice when it comes to addressing global issues that affect us. We’re at a critical inflection point for the profession overall — and it makes sense for us to be able to address significant global and regulatory changes occurring in the profession — as a united front. What’s more, unification would help make for a much more efficient structure from province to province."

Kevin Dancey, president and chief executive officer of the Canadian Institute of Chartered Accountants in Toronto, pointed out there have been successful CA member votes in four provinces — most recently in Newfoundland and Labrador, and Prince Edward Island, to go along with previous supportive votes in British Columbia and Manitoba.

"Let me be clear — all the participating bodies firmly believe that unification will benefit Canadians, our members, businesses and our capital markets," said Dancey. "Progress is definitely being made."

CGA Alberta and CMA Alberta also recently released their member vote results, which revealed resounding support for unification. More than 70 per cent of the combined membership voted, with nearly identical results from each body — 78.7 per cent of CGAs and 79.2 per cent of CMAs said they support unification.

CGA Alberta is the only CGA body still in unification talks. The Institute of Chartered Accountants of Alberta dropped out in February 2012, and are the only CA body currently on the sidelines.

Dancey also reiterated his long-held contention that dealing with 40 accounting bodies from jurisdictions across Canada is a complex process that will take time to work out. Nevertheless, he said, Quebec is a model for proving that differences can be resolved.

Many, however, point to differences in Quebec, including the fact that the directive for the latest initiative for the three bodies to meet and draw up a unification framework came from the Office des professions du Québec, a provincial government agency, which also took an active part in the process as the three bodies consulted.

"My understanding is that Quebec is operating under a separate political system as it relates to the professions," Barnett said. "Could the same type of thing happen in other provinces across the country? I suppose so; I’m just not sure that any government in another province would really want to take that on unless they saw some compelling reason why the accounting bodies should get together from a capital markets point of view or otherwise."

Emilio Boulianne, associate professor of accounting and director of the CGA research centre at Concordia University’s John Molson School of Business in Montreal, foresees the day when market pressure helps spread the Quebec model of unification to other provinces.

"In Quebec, [merger was achieved] so rapidly, because in addition to market pressure, there was pressure from the government," he said. "But don’t be surprised if, in maybe one, two, three years, CPAs will be across Canada [from] coast to coast."

"It will not go at the same speed, [but] it’s just a matter of time," Boulianne predicted.

Barnett also sees merger momentum pulling in other bodies that are currently outliers. "My guess is that if a merger of the CAs and CMAs were to take place nationally, that CMA Ontario and CA Alberta would probably come on board with it," he said. "It may not be a choice they would make now, but they may have to make a [pro] merger choice later just because everybody else did."