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FROM: MAY-JUN 2009 ISSUE
UPDATE
Securities Regulator Should Oversee Standards and Auditors
CGA-Canada is encouraged by recent movement toward the creation of a pan-Canadian securities regulator, but believes that the regulator should also have oversight of financial reporting and auditors.
In its 2009 budget, the federal government indicated that it would introduce legislation to transition towards a Canadian Securities Regulator. This followed on the release of the final report of the Expert Panel on Securities Regulation, which recommended establishing a single securities regulator and a single federal securities act for Canada.
CGA-Canada believes that making such a body responsible for setting accounting and auditing standards and for auditor oversight would bring Canada in line with most other advanced economies, including the UK, the United States, and Australia. Regulatory reform should be guided by six principles: legislative oversight, regulatory efficiency, regulatory cohesiveness, transparency, independent funding, and professional self-regulation.
“The current structure for setting accounting, auditing, and assurance standards is complex, inefficient, requires significant amounts of coordination, lacks transparency and accountability, and is not arms-length from the profession,” says Anthony Ariganello, president and CEO of CGA-Canada. “With movement toward a common securities regulator and the adoption of International Financial Reporting Standards in 2011, Canada has a good opportunity to adopt a simplified regulatory structure with governmental oversight that would be as robust as those of our major trading partners.”
CGA-Canada outlined its proposal in a presentation to the Expert Panel on Securities Regulation, and commissioned a paper on the subject by Professor Poonam Puri of Osgoode Hall Law School. Both are available at cga.org/canada.
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Research Paper Examines Decline in RRSP Popularity
Although they remain a widely used retirement savings vehicle, registered retirement savings plans (RRSPs) have been declining in popularity over the past decade. This, suggests the latest CGA-Canada Issue in Focus paper, is reason to consider developing an improved or alternative public policy approach to stimulate private pension saving.
The RRSP program was introduced in 1957 to influence peoples’ retirement saving behaviour through tax incentives. However, after 40 years of continuous growth, the RRSP contribution rate peaked in 1997 and has been declining since then. The participation rate has also been declining over the same period. In addition, the paper finds the propensity to capitalize on RRSP tax incentives has decreased over the past decade, and RRSP tax incentives are not strong enough to motivate households to use the RRSP savings vehicle more extensively than non-pension financial assets.
One idea proposed in the paper is making initial enrolment into a private pension plan compulsory with an option to opt out, such as has recently been introduced in New Zealand. 51 and Counting – Is It Time to Remodel RRSPs? is available at cga.org/canada.
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CGA-Canada Develops IFAC Quality Control Guide
The International Federation of Accountants (IFAC) has published a quality control guide for small and medium accounting practices (SMPs) developed by CGA-Canada. Practitioners can download the guide at no charge from the IFAC website (www.ifac.org). A link to the guide is also available to subscribers to the CGA-Canada Public Practice Manual, PPM Online.
CGA-Canada was awarded the contract by IFAC’s Small and Medium Practices Committee last year to develop the quality control guide in order to assist practitioners around the world providing services to small and medium-sized entities. The guide will promote consistent application of the International Standard on Quality Control (ISQC) 1 (Redrafted), Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.
In addition to SMPs, the guide will be of interest to IFAC member bodies, students, policy makers, researchers, international development agencies, and the academic community. CGA-Canada is also providing financial support to another SMP Committee project, a Guide to Practice Management for Use by Small- and Medium-sized Practices which is being developed by CPA Australia.
“CGA-Canada is pleased to support the global adoption and convergence of international standards by contributing in this way,” says Anthony Ariganello, president and CEO of CGA-Canada.
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Legal Action Against CPAB Withdrawn
CGA-Canada has withdrawn its application for a judicial review of the Canadian Public Accountability Board (CPAB) and, as a result, CPAB has also dropped its appeal of an earlier court decision that ruled in CGA-Canada’s favour.
“CGA-Canada believes that in this time of economic uncertainty it is important to focus on stability and enable CPAB to fulfill its mandate,” says Anthony Ariganello, president and CEO of CGA-Canada.
CGA-Canada initiated the legal action to address concerns around the failure of CPAB to accept the CGA independence standard, as well as concerns about CPAB’s structure and processes which lacked independence, inclusiveness, and transparency. Since filing the application, CPAB has accepted the CGA independence standard and has proposed some tangible changes to CPAB’s governance structure, such as the removal of ex-officio members from the Board and Council of Governors, and the establishment of an advisory committee structure.
“We are gratified to see that, following the filing of our application, CPAB approved the CGA independence standard and has proposed positive changes to its governance structure,” says Ariganello. “By taking legal action, CGA-Canada demonstrated that it takes seriously the issues of accountability, independence, and transparency of public bodies such as CPAB. While CGA-Canada intends to continue to press for change to ensure the fair and impartial governance of CPAB, we prefer to achieve those changes through positive and constructive dialogue.”
In this litigation, CGA-Canada was able to demonstrate that CPAB, although not a government agency, exercised a public policy function and its actions should, as a result, be subject to oversight of the courts. This conclusion will assist companies, individuals, and professional associations who wish to challenge the actions of private organizations that are performing public policy functions.
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INTERNATIONAL
Agreement Opens CGA Designation to French Students
A new partnership between CGA-Canada, the Institut National des Techniques Economiques et Comptables (INTEC) in Paris, France, and Quebec’s Sherbrooke University provides a convenient route for French accountants and accounting students to earn the CGA designation.
To be eligible for this program, students must have earned a qualifying French accounting degree equivalent to a Canadian master’s degree. Students then complete an online course through Sherbrooke University prior to enrolling in the CGA program and completing the Professional Applications requirements, also online. INTEC has qualified as an approved examination centre, permitting students to write examinations for both the Sherbrooke University course and the Professional Applications requirements in France. Students must also meet the 36-month national CGA practical experience requirement to qualify for certification.
More information is available at cga.org/canada in the International section, under Strategic Alliances.
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CGA-Canada Assists with Development of Latin American Accounting Programs
The second phase of a World Bank-sponsored project to improve the quality of university accounting programs in five Latin American countries wrapped up over the winter with one-week seminars conducted for accounting teachers.
CGA-Canada was contracted by the bank to assist in developing and delivering the seminars, which explored professional ethics, corporate governance, the conceptual framework for accounting and auditing standards, as well as the latest changes and trends in rules and professional practice. Beyond the technical content, the seminars addressed the pedagogical changes needed as principles-based international standards replace rules-based accounting. The need to develop judgment skills and to keep up with ever-changing standards was also emphasized. Throughout the seminars, the CGA Program of Professional Studies was frequently used as a model.
Phase three will involve sharing the project’s key findings and resources with a broad range of universities and other stakeholders throughout Latin America and the Caribbean. CGA-Canada participates in international development projects of this type to help grow the international accounting profession, strengthen relations with international organizations, and provide an additional stream of revenue for the association.
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New Framework Promotes Sustainable Business Practices
The IFAC Professional Accountants in Business Committee has introduced a new web-based tool to support accountants and their organizations in integrating sustainable practices into their business processes.
The Sustainability Framework is designed from four different perspectives – business strategy, internal management, financial investors, and other stakeholders. It also promotes the injection of sustainability leadership into the full management cycle. The Sustainability Framework can be accessed free-of-charge at www.ifac.org/PAIB.
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