Wherein Lies the Truth?

It is unfortunate that the members of CMA Ontario are being bombarded with so many confusing messages regarding unification of the accounting profession from sources including our CMA partner organizations, other accounting bodies, the media, various websites, blogs and social media channels. I’ve also received a number of comments and questions directly. As I read all the messages, I wonder how anyone can discern "wherein lies the truth"?  So, rather than continue with my regular articles about life experiences, it is important that I, as President and CEO of CMA Ontario, briefly outline for you as I understand it, the current situation regarding "unification."

Approximately two years ago, the CMA and CGA organizations began talks to merge our two organizations. We believed that given the similarity of our cultures, business models, organizational structure and market focus, the combination of our organizations made business sense in order to compete effectively against the Chartered Accountants. These discussions progressed very well. However, in the midst of those discussions, the Chartered Accountants approached the CMA organization with an interest in merging with the CMAs. The CMAs discontinued their discussions with the CGAs, and CMA then began negotiations with the CAs regarding a potential merger. This CA-CMA initiative developed into a noble plan to achieve unification of the accounting profession in Canada under a new designation, the Chartered Professional Accountant (CPA).  The framework for discussion was formalized by a Memorandum of Understanding ("MOU") between the CMA and CA bodies at the provincial and national levels. The MOU contained specific rules regarding the procedure by which any party could terminate its participation, and was written in a manner that could include the CGAs, should they choose to become a part of the discussions.  Both the CMA and CA organizations recognized that to truly unite the accounting profession, a three-way merger was the best solution.  After several months, the CGAs joined the discussions, first in Ontario and then nationally. 

CMA Ontario believed in unification of the Canadian accounting profession under the right circumstances, provided that our members’ rights and ability to practise were not compromised in any area, that CMAs would not be regarded as different or lesser than any other accountant in Ontario or Canada, and that the profession of management accounting was protected in the new organization.

In Ontario (as in many other provinces), the CAs, CGAs and CMAs entered into serious discussions to merge our three organizations. We hired an experienced merger and acquisition consulting firm to facilitate and manage our discussions.  While we made progress in many areas, there were several significant issues that presented a challenge. 

The first was the process required to legally merge the three organizations in Ontario – and particularly, the obligation to obtain approval from the membership.  Based on research and a subsequent opinion provided by our legal counsel, it became very clear that to effect a legal merger in Ontario, an affirmative vote would be required from the members of each of the accounting bodies. Two-thirds of votes cast by the members in favour would have to be achieved. The Office of the Attorney General of Ontario informed the leadership of the three accounting bodies that while the Attorney General would support the "unification initiative," each body must do what is required under the law.  

Some discussion was held between the organizations regarding alternative structures including the possibility of a joint venture to merge organizational operations followed by a request to the Attorney General to mandate a merger on the members via legislation. In light of the clear legal requirements, any mechanism that attempts to circumvent the obligation to hold a membership vote was and is unacceptable to the Board of Directors of CMA Ontario.

While the leadership and staff of the CAs in Ontario worked diligently to explain to their members the benefits of unification and gain support, it became clear that the required support of the CA membership was not going to be achieved any time soon. We believe that the majority of CA members in Ontario were not and are not interested in merging with the CGAs and CMAs.

Even if the issue of member ratification was satisfactorily resolved, another key hurdle to an acceptable unification is the issue of "minority rights." That is, establishing the key rights of members of the merging bodies, and enshrining those rights with enforceable language. Unfortunately, agreement was not achieved in this critical area. While CMA Ontario demanded robust protection for minority rights, what was proposed was a series of statements suggesting "best efforts" would be made to look after our members, but with no guarantee that the current and future rights of our members would survive. This was not acceptable to the CMA Ontario Board. 

In addition, confusing and conflicting remarks were being made by the CAs with respect to their intent or objective in protecting both the CA and CPA designations for its members, in case the CPA did not become the global designation in the future. And how CMAs (and CGAs) were being characterized and described in certain publications and in public was not helpful (e.g. Please refer to page 5 of the Winter 2011-2012 issue of The Institute of Chartered Accountants of OntarioCheckMark member magazine).

These critical issues, in combination with a number of other considerations, caused the CMA Ontario Board great concern that the "unification initiative" had evolved or could conclude by benefitting the CA profession to the detriment of the CMA profession and its members.  It became obvious that a three-way merger in Ontario would not be achievable any time soon, and that the three-way discussions were no longer productive. After serious debate and discussion, the CMA Ontario Board believed that it would be best to exit the discussions in order to explore all possible strategic options.  The notification of termination was delivered as per the terms of the MOU on May 15, 2012, and we advised you, the membership, immediately afterward providing as much information as we were permitted to at the time in accordance with the restrictions in the MOU.

The CGA Ontario Board of Directors decided to also exit the three-way discussions in Ontario, we understand based in part on the reasons above.  As a result of the situation in Ontario, and given the importance of the inclusion of Ontario members in any "unification initiative," many of the CGA affiliates, including the CGA national body, decided to exit the discussions as well.  Currently, negotiations are at different stages, and involve different participants in the various provinces across the country.  The only CGA body remaining in the discussions is CGA Alberta, however in that province, the CAs are not part of discussions as their members (like those in Ontario) have no interest in merging with the CGAs and CMAs. The three bodies in Quebec though did merge, creating CPA Quebec. This was accomplished, however, simply due to the fact that no member vote was conducted. The accounting profession in Quebec is under the jurisdiction of a government agency, and the legislation to effect a merger was fast-tracked by the government. The situation in Ontario or for that matter in any other Canadian province is not comparable to that in Quebec.  

The CAs in Ontario have announced their intent to join, provided CPA Canada is created. But if CMA Ontario (and CGA Ontario) is not able to merge with the CAs in Ontario, for the reasons cited above, how could we then also join CPA Canada? Having two or three accounting bodies in Ontario under the same national umbrella and offering the same identical programs, products and services but competing with each other, is just not practical or feasible and does not make good business sense. 

So what remains of the "unification" discussions is essentially a potential merger between the CAs and the CMAs. This could hardly be called "unification of the profession," particularly since almost 50 percent of the membership of the three accounting bodies is not involved. Also, it must be noted that 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. 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. 

Given this reality, the CMA Ontario Board decided it must consider all possible strategic options, to ensure that the right option is presented to its members for consideration.  This can be undertaken once the termination requirements of the CA-CMA MOU are complied with or cancelled, which includes a 60-day notice period.

What are possible options for CMA Ontario? There are a few. These include:

  • being taken over by the CAs under the guise of the CPA Canada "unification" initiative;
  • merging with the CGAs in Ontario, thereby restructuring our organizations and business models and refocusing on management accounting in Canada under an existing or new designation; and/or
  • becoming part of a global management accounting organization and profession such as CIMA.

The CMA Ontario Board will be taking all of these strategic options, and possibly others, under serious consideration and will in due course present to the membership a recommendation for the future of CMA Ontario and its members, which will be decided upon through a proper and legal ratification voting process.