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The proposed CA-CMA merger: Some random musings

Before we proceed, the reader needs to know that the views expressed below are mine only and do not necessarily represent the views of all the accounting professionals in our firm.

For those of you who have not heard, the Canadian Institute of Chartered Accountants (“CA”) and the Society of Management Accountants of Canada (“CMA”) are currently exploring the environment to see whether merger talks should be held, with the ultimate goal being one designation for the merged body (currently proposed to be “Chartered Professional Accountant” or “CPA”).  Seven years ago, the same two bodies brought a proposed merger deal to the table of members, but the proposal was withdrawn before it was brought to a vote by members.  This time, however, there is no current proposal agreement but rather the two bodies are simply putting their toe in the water to see whether the current landscape is ripe for a merger.  To this end, both professions are engaging their members in a series of dialogues and discussions – both online and in person – to see if there is interest in moving forward with such merger talks.

I have been closely monitoring the online and in-person discussions.  For the people that are not interested in the merger, the reasons given tend to be something like this:

  1. “My designation is better than yours and a merged CPA designation will water down the ultimate accounting profession.”
  2. “I worked very hard to attain my designation and enabling a lesser designation to merge with my higher quality designation is offensive.”
  3. “CA’s and CMA’s do different things and the marketplace recognizes such differences. Why, then, the need for a merged designation when the marketplace clearly differentiates and demands such designations?”
  4. “CPA?  That will make us look like American CPA’s!”

As I stated, I have listened very closely to both sides of the debate and, try as I may, the persons who are negative to exploring a possible merger always seem to fall in one of the above categories.

However, good leadership often means taking on controversy for the betterment of all.  Instead of resting on ones’ laurels and saying “I’m better than you,” self improvement often requires a good long hard look in the mirror.  In this case, the leaders of the CA’s and CMA’s deserve high praise for taking a good long hard look in the mirror to see whether change is necessary for the better good.  Perhaps it might not be.  But more importantly, perhaps it WILL be.  Seven years ago, the world was a different place.  The internet and emerging technologies have made the world a much smaller place with people and professions becoming irrelevant very quickly.

While I certainly understand the frustration and defensiveness of a practitioner who worked very hard in their studies to attain a professional status, one would hope that such a practitioner can put their personal interests aside and study both sides of the debate to see whether a merged body would help out the profession as a whole as opposed to them personally.  One might ask why should a person pursue such an exercise to set aside their personal interests in order to study the common good?  The answer to that is simple … while their personal interests at the moment may be well taken care of given their existing professional status, the profession cannot exist with members who think only of their personal interests as opposed to the common good.  It should be common sense that if the profession is improved both in the short term and the long term, the personal interests of the average member will also improve.  In my humble opinion, it is simply selfish to only worry about one’s personal interests as opposed to the greater interests of the profession as a whole.

What are some of the arguments for a merged CA-CMA body?  Consider the following:

  1. A combined CA-CMA body will be a very large group and, in fact, one of the largest accounting bodies in the world.
  2. The merged body will have the opportunity to take a serious look at new education requirements for new entrants into the CPA profession.  Assuming that the entrance levels are as high or higher than the highest current standard for either the CA or CMA then presumably such arguments for a weaker long term designation will disappear.
  3. The merged body may have a greater voice at the relevant tables (such as accounting standards,  tax legislators and administrators),  in order to influence change.  Let’s be serious.  Canada is a small player in the world scene, but with a merged body we may be able to influence greater change.
  4. Efficiencies will likely improve.  Currently, each province in Canada has its own provincial office in order to administer the accounting profession.  Is this really necessary?  Under current law it likely is, but perhaps with a merged body and government involvement efficiencies may ultimately arise.
  5. Let’s be honest.  Does the average consumer of accounting services know the difference between the designations?  Truthfully! I would respectfully suggest that the answer is no.  While there are always exceptions to this rule, on the whole I would suggest that no one really knows the detailed differences between a CA and a CMA unless research is done in order to investigate such. This leads to significant brand confusion amongst consumers of accounting professionals’ services.  Any elimination of brand confusion should be welcome both for the short and the long term.

In addition, to the extent that merger discussions are ultimately entered into, I am hopeful that the merged body takes a sober second look at the need for specializations within the profession.  Currently, both CA’s and CMA’s are guilty of publicly stating to the world that they can do many things (such as audit, tax, general accounting, information technology and business valuation).  The truth is, the average member cannot do all those services and any statement to the contrary is simply false.  While the CA’s have recognized the need to specialize in certain areas such as business valuation (which has a recognized sub-designation of CA.CBV), information technology (with a recognized sub-designation of CA.IT) and others, the obvious missing sub-designations are audit and tax.  To suggest that the average CA or CMA knows audit and/or tax at a level appropriate to practice professionally is again incorrect.  Quite simply, both audit and tax are specialties on their own that require rigorous training and experience.  Any dabbling by a practitioner in these areas is a recipe for disaster.  Wouldn’t it be better, to serve the public, to allow users of professional services to know which sub-specialty the particular CPA possesses?  Of course it is.  Unfortunately the introduction of sub-designations for tax and audit has been very controversial.  Witness, for example, a proposal to introduce CA.Tax as a sub-designation earlier in the 2000’s.  At the last moment, the CA.Tax proposal was dismissed for reasons that were never publicly made available but, reading between the lines, it is pretty obvious that a certain influential sector of the CA membership would not support it.   It is my hope, for the betterment of the profession as a whole and in the interests of serving the public better, that the tax sub-specialty idea be revisited with the idea of being re-introduced.

While we are on the topic of a “wish list”, wouldn’t it also be a great idea if the merged body had some ability to influence the government regulators who have the power to introduce legislation that would restrict the use of the label “accountant”?  Currently, anyone can call themselves an accountant whether or not they are professionally designated.  However, other professions are not similar.  For example, in both medicine and law people cannot call themselves “doctors” or “lawyers” unless it is true.  If they do so without the proper authorization, enforcement action can be taken.

Many more arguments exist on both sides of the merger equation.  However, this brief overview is not intended to be an exhaustive treatise on the case for or against a merger.  Instead, this overview is intended to provoke thought and, hopefully, some controversy on the discussion that the leaders of the CA’s and CMA’s have raised with members.

From the tone of this blog, it should be no secret on which side of the fence I am excited about.  Having said that, the current discussions are simply that… discussions only.  As the old saying goes, “the devil is in the details” and I look forward to reviewing details of a proposed merger and making my mind up about such a proposal at that time.  However, perhaps the leaders and the profession will decide that further discussions on this matter should not be done.  From my point of view, that would be a huge disappointment.  Any time that one has to make progress, it is my opinion, that one should grasp that opportunity and run with it.