30 June 2014

A history of Canadian accounting - the CA version

When anyone watches The Agenda weeknights on TV Ontario, it's nice to know that CPA Ontario is one of its main supporters. However, when they state that they've been leaders since 1879, the claim needs some explaining. In reality, accountants in Canada started to organize themselves only in November 1879, with the ones in Montreal beating those in Toronto by two weeks! The Montreal group then proceeded to procure an Act of the Quebec Legislature to form themselves into a professional body and to be conferred with the designation of "Chartered Accountant."



The Toronto group got off to a rockier start. Their original name was the Institute of Accountants and Adjusters of Ontario, and their campaign to receive similar sanction was rebuffed by the Ontario Legislature, which did not want to confer any type of exclusive professional status. They decided to deal with this in a political fashion by recruiting Samuel Bickerton Harman, a former Mayor of Toronto, to become its President, and it reorganized itself to become the Institute of Accountants of Ontario. Their inaugural meeting in May 1882 was a superb example of publicity. The Dictionary of Canadian Biography summarizes what happened next:

"In the space of a year he revamped the council to make it politically important, enlarged and to some extent inflated the membership, stage-managed a public meeting of Toronto’s business élite that demanded incorporation, lobbied Toronto’s MPPs and the appropriate cabinet ministers, and retained the best legal talent."

The Institute of Chartered Accountants of Ontario was officially recognized by statute in 1883.



The history becomes somewhat colourful for the rest of the 19th Century.In 1902, the Parliament of Canada passed a private Act incorporating the Dominion Association of Chartered Accountants, the predecessor of today's Canadian Institute of Chartered Accountants. It appears that a fair number of Ontario CAs jumped over from the ICAO to join in with what was originally an AAM initiative, as noted in a letter from 1905:

 "The Institute of Accountants in Ontario headquarters at Toronto has made the mistake in allowing bookkeepers and in fact clerks of almost any description enter their association. The consequence is the standing of their association is not what it should be. Their president, I believe is a secretary of a brewing company, and it was for these reasons that their best accountants left their association and were instrumental in the organization of the Dominion Association of Chartered Accountants, which like our Montreal association is composed solely of bona fide practicing accountants." 
 The ICAO did not take this lying down. It attempted to stack DACA elections through a proxy fight, but that was overruled. In 1908, it pushed through legislation in Ontario to reserve the CA title for its own members, but that was disallowed—twice—by Ottawa as being contrary to DACA's Federal Act. The showdown was called off after mediation had taken place, and the CA designation was reserved in 1911, with effect from December 1909.



That, in a nutshell, is how it began. I have not mentioned what happened in the other provinces, but the whole history is much more colourful than what has been admitted in the recent past!

27 June 2014

Road to the CPA: the CMA route

Now that Ontario has secured three-way agreement for the Chartered Professional Accountant designation to go ahead, maybe it's time to reflect on the history of the various legacy designations that led to it. I'm afraid the story is rather incomplete: the history of the Canadian accounting profession is rather opaque, with few scholars having investigated it, the few published histories that do exist are of the corporate variety, and many source materials are still relatively unavailable on the Web.

Let's start with the designation of which I am most familiar: mine. The Society of Management Accountants of Canada (touting itself these days as CMA Canada), has actually been around since 1920:


It's interesting to see that it started out being sponsored by the CICA's predecessor, the Dominion Association of Chartered Accountants, and the first mention of its existence appeared in the Canadian Chartered Accountant in 1920:



Of special importance is who was qualified to join the Society, as expressed in By-Law 1:
 "Any person resident in Canada, being a member in good standing of any public body of accountants incorporated under the authority of the Legislature of any Province of Canada, and any other person, resident in Canada, being of the full age of twenty-one years, and certified by his employer or two other reputable persons to be occupied in an accounting capacity, may, upon application to the Board, be admitted a member of the Society."
Now that is something I never knew: chartered accountants were our first members, and they occupied all the positions of the first Board. It has been mentioned elsewhere that, in reality, this was a move by the CAs to occupy the field of cost accounting before the CGAs had a chance to step in.

Although incorporated in May 1920, the inaugural meeting did not occur until mid-September that year:



The Society started holding examinations for those studying cost accounting in 1927, but it was not until 1941 that it started to confer the designation "Registered Industrial and Cost Accountant" (or "RIA"), and that only after provincial societies were formed in Ontario and Quebec:



The designation was not consistently applied across the country. In Alberta, for example, it was "Registered Industrial Accountant" as early as 1944. Ontario would not follow until 1967:



The designation later became "Certified Management Accountant" (or "CMA") , to reflect our broader role. In Ontario, approval was received in 1981 for this, but implementation was withheld until all other provinces came on board, which was not until July 1985.



Fast forward to today: consolidation occurred in Quebec in May 2012, New Brunswick will see it happen at the beginning of September, and Saskatchewan has enabling legislation ready to be proclaimed once the organizational bylaws are ready to be brought into effect. It appears that consolidation of the various professional accounting bodies in  the rest of the provinces will come about this fall. However, from our point of view, CMAs are returning to the fold.

13 June 2014

A first look at the Ontario 2014 results

It will be a while before the detailed votes by riding are published, but here is how the province-wide vote turned out:




It's plain to see that it turned out to be a Conservative rout. Theirs was the only party to lose in percentage of support, with all the others rising in turn.

This is only a first view. There were some strong regional differences going on, and the NDP was the only party to both gain and lose seats. In addition, the Liberals have now become the "hole in the doughnut", holding almost all their seats in the GTA, with the only significant outliers being Thunder Bay, the lower Ottawa Valley and the Kitchener/Brantford/Dundas triangle. The NDP are strong in Windsor, London, Hamilton/Niagara and the North, but they lost seats in Toronto. Now that requires some explanation!

A more detail regional breakdown is required to make sense of what is going on. Elections Ontario is relatively slow in releasing results, but they will be worth further examination.

12 June 2014

Some thoughts on improving human capital



It's good to see that organizations of all sizes are having problems coping with tight budgets, skills shortages, morale issues and the like. This report from the US Government Accountability Office discusses these, plus others, and makes some very astute recommendations. Although many might point out that the large sizes of the organizations involved would make a difference, I would say the issues are the same, and arise in organizations of all sizes:

  • the fragmented way in which personnel policies and initiatives are informed and executed in ways that are not aligned with overall strategy;
  • the inadequate use of enterprise solutions to address shared challenges; and
  • the need for more agile talent management.
There are some great ideas that can be taken from what is discussed here.

11 June 2014

The Ontario election - what happened in 2011

The big day is tomorrow. Let's consider what went down the last time around. Being of an analytical frame of mind, I am naturally interested  in how the numbers played out.

I came across a rather interesting spreadsheet a while back from a British source, which allocates vote splits in a multi-party setting from one election to the next. When applied to the 2011 election, this is basically what happened:


The big winner then was the NDP, gaining by six points with about equal shares of the swing coming from the Liberals and the Greens.The Tories also gained as well with a gain of almost four points, with a similar pickup from Greens and Grits. That is what created the Liberal minority we have been going through these last three years.

How will the current situation translate into votes and seats? I will publish a similar analysis for Thursday's result, once all the votes are in.

03 June 2014

Everything you know is wrong

April was a good month for the accounting profession here in Ontario, from my point of view. Us CMAs became entitled to be called Chartered Professional Accountants together with our fellow CAs. If the vote with our fellow CGAs goes according to plan, our CGA colleagues will be on board next month as well. We will all be entitled to call ourselves CPAs. Or will we?

The structure is certainly intricate. CMAs have, and CGAs will, become associate members of the Institute of Chartered Accountants of Ontario, which has also adopted the business name "Chartered Professional Accountants of Ontario". The ICAO has jealously guarded the CPA designation since their great merger with the Certified Public Accountants Association of Ontario back in 1962. The CPAAO had its own separate governing Act:



They chose to keep that enabling legislation separate, instead of amalgamating the two organizations, by declaring the members of each body to also become members of the other. The Institute still continues to issue regulations specifying the circumstances in which such initials may be displayed, including CPA designations obtained in other jurisdictions.

However, they forgot to get their lawyers to keep tab as to what had been happening over the years. Back in 1990, when the Province issued the Revised Statutes of Ontario, 1990, the final volume contained various schedules detailing repeals, disposition, and the status of various unconsolidated provisions. The last one, Schedule C, is unique, in that it had never been attempted before. Within that Schedule, The Certified Public Accountants Act, R.S.O. 1937, c. 236, was noted as still being in force:




That would have important consequences in 2006. In that year, the Legislation Act, 2006, was enacted by the Legislative Assembly as Schedule F to the Access to Justice Act, 2006:

The crucial provision to note in that schedule was s. 98(3), which declared:

"Every Act listed in Schedule C (Table of Unconsolidated and Unrepealed Acts) to the Revised Statutes of Ontario, 1990, as set out in volume 12 of the Revised Statutes of Ontario, 1990, other than the Acts listed in Column 1 of the Table to this section, is repealed if it has not previously been repealed."

The attached Table did not include the 1937 Act. It was deemed to be repealed on on 25 July 2007. The Province used to have a table online to show that, but it has since been removed

This effectively means that "Certified Public Accountant", and, more importantly, "CPA", were no longer protected professional designations under Ontario law.

 In 2010, when the legislation relating to all three professional accounting bodies in Ontario was updated, the Chartered Accountants Act, 2010 came into force, including s. 27, which specified the prohibitions on what designations or related abbreviations were not allowed to non-members of the ICAO.

But does this reinstate the prohibition on using "CPA", or more importantly, "Chartered Professional Accountant"? I think not, as our CGA brethren found out last year when going to the Ontario Superior Court of Justice to attempt to prohibit "CGMA" from being used:



The key paragraphs from this judgment:
[40] The letter “M” in CGMA would, in my view, qualify as an abbreviation. This is because M is the short form for the word Management. The definition of “combination” suggests each of the objects of the prohibition and “other words and abbreviations” are unified, unbreakable elements. Consequently, CGA is an element and the abbreviation “M” is an element. Thus, the following combinations of these two elements are, in my view, prohibited: “MCGA”, “CGAM”, “C.G.A.M.”, and “M.C.G.A.”.

 [41] CGMA is not clearly prohibited because the meaning of “combination” does not imply the “M” element can be inserted into the middle of the “CGA” element.
That makes ICAO's position for "CPA" somewhat awkward, to say the least. Could it be argued that inserting "Professional" in the middle of "Chartered Accountant" is of nil effect as well?

I note that "CPA" and "Chartered Professional Accountant" have been registered as official marks under federal trademark legislation, so the Institute is not without some protection. However, the whole issue will need to be addressed, once the consolidating legislation makes its way through the Legislature after next week's election.