Submitted by: The Institute of Chartered Accountants of Manitoba and The Society of Management Accountants of Manitoba

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Submitted by: The Institute of Chartered Accountants of Manitoba

and

The Society of Management Accountants of Manitoba

Submitted to: The Minister of Finance

Hon. Stan Struthers

The Minister of Entrepreneurship, Training and Trade

Hon. Peter Bjornson

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Next Steps ... 12 Appendix A - National Unification Framework………..……….………A-1 Appendix B - Canadian CPA Certification Program………...……B-1 Appendix C - Manitoba Merger Proposal………....C-1 Appendix D - Consultation with Leading Stakeholders ……….D-1 Appendix E - Canadian Securities Administrators Letter………..………E-1 Appendix F - Self-Regulation and Unification Discussions in Canada's Accounting Profession ……...…F-1 Appendix G - CA Town Hall Feedback .………….……….G-1 Appendix H - CA Member Survey Results………..……….……...H-1 Appendix I - CA Advisory Vote Results………...………...…..I-1 Appendix J – CMA Town Hall Feedback ...J-1 Appendix K – CMA AdvisoryVote Results...K-1

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Recommendations to Government

Manitoba and its professional accountants are best served by being part of a national profession. While accounting is provincially regulated, we see the following recommendations as being part of a broader, national initiative.

Subject to unification developments in other jurisdictions in Canada, the Institute of Chartered

Accountants of Manitoba (CA MB) and the Society of Management Accountants of Manitoba (CMA MB) recommend to the Manitoba Government that current provincial accounting legislation be modernized and streamlined. Specifically, it is recommended that the existing CharteredAccountants Act and Certified Management Accountants Act be replaced with a new Chartered Professional Accountants Act and that, effectively, the two governing bodies merge into one.

The benefit of this change would be the establishment of a governing body that would continue to fulfill the existing mandate of self-regulation and education of the majority of professional accountants in Manitoba, while protecting the public interest through a variety of means.

This new body would:

• Create and implement a new common regulatory framework reflecting the best practices of the existing organizations, including codes of conduct, practice inspection, disciplinary processes, and an effective and consistent public accounting regime. This regulation would be developed in concert with other Canadian jurisdictions.

The benefit of this change would be regulations that are nationally harmonized and facilitate labour mobility and inter-jurisdictional business.

• Grant a new common designation, Chartered Professional Accountant (CPA). In order to ensure consumers recognize the training received by professional accountants during the transition to the new designation it would be required that the CPA designation be used in conjunction with the legacy designations for a period of 10 years.

The benefit of this change would be the evolution to a single designation, CPA, which would align Manitoba and the rest of Canada with the globally dominant designation that is recognized by our largest trading partners.

• Create a new integrated rigorous certification program that is internationally recognized (Appendix B). The new program will meet the rigour and recognition of existing programs. In addition, an intermediate certificate program will be available for those who aspire to a career in accountancy but do not want to complete the full CPA program.

The benefit of this change would be the development of a high-quality certification process for professional accountants in Manitoba. Should CGA MB join the unification, there would be a single certification program for all who aspire to become a professional accountant.

In summary, with government’s support, unification of two of the province’s accounting Acts would result in a harmonized common regulatory structure affecting CPAs in Manitoba, as well as CPA firms that practice public accounting. These firms employ a large portion of the professional accountants in Manitoba as well as others.

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It is important to note that during consultations on the unification initiative, a consistent message was heard: There is general concern around undesignated and unregulated individuals providing public accounting services in Manitoba. In many jurisdictions in North America there are regulations in place regarding the practice of public accounting.

The new CPA legislation in Quebec addresses this issue, and we anticipate that uniform regulatory proposals for CPA legislation will emerge as the national discussion evolves. A robust, consistent regulatory environment that applies to all individuals providing public accounting services would benefit Manitoba’s economy — attracting investment as well as adding protection for consumers and other users of accounting services. We hope to review this matter with Government over the coming months and keep them updated as the unification initiative progresses across the country.

Background

Manitoba’s accounting profession is governed by three separate, but similar, pieces of legislation: The CharteredAccountants Act, The Certified Management Accountants Act, and The Certified General Accountants Act. Each accounting designation is regulated by a provincial body:

• CA MB governs over 2,900 CAs and 380 students;

• CMA MB governs over 1,700 CMAs and 200 students; and

• The Certified General Accountants Association of Manitoba (CGA MB) governs over 2,000 CGAs and 1,500 students.

These three accounting bodies account for over 6,500 professional accountants, roughly 4% of professional accountants in Canada. All three organizations share the same legislative objectives, providing a dual mandate: the protection of the public through the education, training, and regulation of their members; and representing the interests of their members.

These three accounting designations have co-existed in the marketplace for decades, but in the last five years there have been several significant developments within the accounting profession that have shaken the status quo. These developments include the financial crisis and changes in the international regulatory environment; the adoption of international financial reporting and auditing standards by Canada; and significant regulatory inconsistencies within Canada regarding public accounting that have caused issues under the Agreement on Internal Trade (AIT).

In addition, in late 2010, the Office des professions du Québec invited the three accounting bodies to develop a plan to merge. In May 2012, the legislation to establish the Chartered Professional Accountant (CPA) designation was enacted in Quebec, creating a fourth accounting designation in Canada. One out of five professional accountants in Canada is now a CPA. The merger in Quebec was a catalyst for the unification discussions within the accounting profession that have been taking place across all provincial jurisdictions and nationally since early 2011.

In May 2011, a national position paper was released that established the proposed guiding principles for the unification of the accounting profession in Canada. Between May and September 2011, preliminary consultations with key stakeholders were conducted both nationally and provincially.

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In January 2012, the Canadian Institute of Chartered Accountants (CICA), the Certified Management Accountants of Canada (CMA Canada) and the Certified General Accountants of Canada (CGA Canada) introduced a Unification Framework (Appendix A) to unify the Canadian accounting profession as well as an outline of a new CPA Certification Program (Appendix B). At that point, 38 of the 40 accounting bodies in Canada were discussing unification, including CA MB and CMA MB.

Shortly after the release of the national Unification Framework, CA MB and CMA MB issued the Manitoba Merger Proposal (Appendix C) to unite the two bodies in this province. An extensive consultation process was undertaken to solicit feedback from all key stakeholders regarding a merger of the two professional associations. Members, the public, employers, the business community, and educators took part in the consultation.

The consultations also included discussion of the implications of the possible unification of all three accounting bodies in Manitoba. The results of the consultation process suggest support for unification of the entire accounting profession in Manitoba. As such, CA MB and CMA MB would welcome CGA MB to join the unification discussions in this province.

The Government of Manitoba is ultimately responsible for enacting legislation that regulates the accounting profession in Manitoba. To this end, the profession has begun a dialogue with the province through the Ministry of Finance to engage with the province on the broader national issues regarding the merging of accounting organizations across the country. As part of this engagement with the province, this paper outlines the recommendations of two of Manitoba’s accounting bodies — CA MB and CMA MB. It also discusses the rationale and process for unification, and the consultation process undertaken by CA MB and CMA MB.

This report has been prepared for the Minister of Finance for his consideration as the Ministry of Finance would be responsible for drafting legislation for the new CPA organization. In addition, this report has been sent to the Minister of Entrepreneurship, Training and Trade as the recommendations in the report also address some of the current issues under the AIT.

Regulatory and Economic Benefits of Unification

There are a number of regulatory and economic drivers behind this initiative.

1. Having an accounting profession and financial regulatory system that is internationally recognized as being robust, competitive, and consistent will support Manitoba’s economic objectives.

• Professional accountants play an invaluable role in Manitoba’s economy — major capital investments and financial transactions made in Manitoba involve professional

accountants.

2. Unification of the accounting profession would create a modern and streamlined regulatory regime for Manitoba’s professional accountants. It would also create consistent and rigorous standards that are common across all provincial jurisdictions.

• Canada’s accounting profession is currently fragmented. There are three designations in every province and territory (with the recent exception of Quebec) and each is set up under its own legislation. Nationally, there were 40 separate pieces of legislation regulating Canada’s professional accountants.

• Regulation of all individuals offering public accounting services, whether designated or not, will provide better protection for the public. The current structure only regulates CAs, CMAs, and CGAs, while non-designated accountants are able to conduct public

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3. Unification would enhance labour mobility.

• Nationally: The legislation regulating public accounting varies widely from province to province, creating difficulties for those working in multiple jurisdictions and leading to challenges under the AIT. The report of the recent panel that dealt with the Manitoba government’s challenge against the Ontario government recommended that all Parties (being the provinces) take steps to reinvigorate consultations with other Parties directly or through appropriate regulatory authorities to develop a consistent standard for public accountants across the country.

• Internationally: By having a common certification and entry point, there will be a clear and streamlined process for foreign designates looking to join the Canadian accounting profession.

4. Canada has adopted international standards for financial reporting for public companies and for audit engagements. Unification would allow the profession to speak with one voice and enhance our ability to influence proposed changes to international standards and ensure that these standards are appropriate for Canadian market needs.

• Many national and regional accounting bodies in other countries are entering into alliance agreements to increase their individual and collective strength, relevance, and influence at the international standard-setting table.

• The recent global financial crisis — which is still unfolding — brought the regulation of the accounting profession under close scrutiny. As a result, extensive regulatory changes are being proposed in Europe and the United States that would significantly impact financial regulations and, specifically, the role of auditors. Canada will need to respond.

Framework for Uniting the Canadian Accounting Profession

The proposed national Unification Framework and Manitoba Merger Proposal provide a blueprint for unification that is harmonized across Canada and in Manitoba.

National Unification Framework

In May 2011, a position paper was released that laid out the proposed guiding principles for the unification of the accounting profession. On January 17, 2012, the national leadership of the three accounting organizations released the national Unification Framework, which is supported by the CA MB Council and CMA MB Board. The national Unification Framework and principles were heavily influenced by the position paper introduced in May and provide a common framework for the development of provincial merger proposals.

The framework for unification was based on four fundamental objectives:

1. To be better positioned to protect the public by ensuring all professional accounting and

assurance services meet a uniformly high and consistent level of ethical and practice standards. 2. To govern the accounting profession in an effective and efficient manner.

3. To contribute to the sustainability and prosperity of the Canadian accounting profession.

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The framework also contains eight guiding principles to achieve these objectives: 1. Evolution to a single designation, Chartered Professional Accountant (CPA). 2. Continued use of existing designations in conjunction with CPA for 10 years. 3. Retention but no expansion of rights.

4. A rigorous certification program that draws on the strengths of all three programs.

5. A single designation with specialties, similar to other professions such as medicine or law. 6. Early in the transition, all branding efforts would focus on the CPA designation.

7. A common code of conduct, practice inspection, disciplinary processes, and a nationally consistent public accounting regime would be developed.

8. Merged operations and governance for each province and territory and the national bodies.

Manitoba Merger Proposal

With the accounting profession being provincially legislated, CA MB and CMA MB jointly developed the Manitoba Merger Proposal and released it to members on January 20, 2012. The Manitoba Merger Proposal is consistent with the national framework and includes details regarding governance,

certification, member dues, regulatory processes, transition and integration of operations, and the role of government in unification. It also outlines the decision-making process regarding approval of a merger in Manitoba.

The decision-making process recognizes the role of government in unification and has involved engaging members and other key stakeholders regarding the Unification Framework and Manitoba Merger

Proposal in order to gauge their level of support. CA MB and CMA MB have collected and assessed the input received during the consultation, and have assessed the support for the merger in jurisdictions across Canada to date.

Consultation Process

Common Stakeholder Feedback

Consumers

Managers, Owners, Professionals and Executives (MOPES) were identified as one of the key consumers of accounting services. Accordingly, CICA and CMA Canada engaged an external consultant to conduct research gauging the MOPES’ reaction to the merger. Four hundred interviews were conducted with employers of all sizes across the country with regional distribution within each employer size category reflecting Statistics Canada data.

Once provided with a brief summary of the merger proposal, 57% of respondents agreed that a merger would be positive for business (30% indicated that they neither agreed nor disagreed or did not know). Almost half (46%) of respondents answered that work experience is more important than accounting designation held when making a hiring decision; whereas, only 7% of respondents indicated that designation is most important.

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Two of the strongest perceived benefits of the unification of the accounting profession are:

• Common code of conduct.

85% of the respondents agreed that a consistent code of conduct would be beneficial to Canadian businesses.

• Single qualification process and designation.

Nearly two-thirds of respondents indicated that a single qualification process and designation would provide benefits to Canadian businesses. Specifically, 64% agreed that it will make hiring easier in the future and 67% agreed that it will reduce confusion over which designation is best. In addition, the CICA, CMA Canada and CGA Canada commissioned an independent consulting firm to conduct a comprehensive survey with 28 influential Canadians representing the interests of business, industry, the financial sector, government, regulatory agencies, policy and research bodies, learning institutions, the media and peer professions, as well as representatives of a number of international accounting organizations, to determine their views on the proposed unification of the Canadian accounting profession. According to 26 out of 28 surveyed between March and April 2012, a united profession under the CPA designation is a strategically sound and practical long-term solution that is in the best interests of Canadians (see Appendix D for full results of the survey).

Locally, CA MB and CMA MB met with the Executive of the Manitoba Chambers of Commerce. The Executive of the Manitoba Chambers of Commerce was generally quite supportive of the merger and noted the following benefits:

• Greater clarity to those who may not understand the difference between the various designations.

• Consistent standards for all professional accountants.

• Greater likelihood of Canada playing an influential role in standard setting that is now done primarily at the international level.

The only concerns raised were the potential impact on fees charged to small businesses and salaries paid to accountants.

Regulators

Canadian Securities Administrators

The Canadian Securities Administrators (CSA) communicated their feedback on the unification initiative to the CICA and CMA Canada in a letter dated September 9, 2011 (see Appendix E).

The CSA provided the following comments that pertain to potential impacts on capital markets and, more specifically, the need to ensure that audit quality remains high:

• The CSA supports the goal of a single high quality code of conduct applicable to all audits of public companies in Canada.

• Tagging during the transition period is supported as this approach may provide useful information to stakeholders during this time.

• In the event of a merger, appropriate oversight over granting and maintaining practice licenses will need to be in place for accountants who sign audit opinions.

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Manitoba Securities Commission

A meeting was held with the Chair and Chief Accountant of the Manitoba Securities Commission. They indicated that their focus is primarily on the impact that the merger would have on organizations that fall under their mandate and the audits of such organizations. They were supportive of the merger insofar as it would provide Canada with a stronger voice in the establishment of accounting and auditing standards that are set globally. They indicated that they were hopeful that the CGAs in Manitoba would join the merger discussions since it would be less confusing to the public if there was only one accounting body with consistent standards.

Academics

Academics were also identified as a key stakeholder group as they educate our students before entering professional accounting programs. To solicit their feedback, CA MB and CMA MB held consultation sessions with academics in Winnipeg and Brandon.

Overall, academics were very supportive of the unification process. Discussion at the consultation sessions focused on the details of the proposed CPA certification program and the need for more clarity. They indicated that merging of the professional accounting bodies would allow them to streamline the curriculum they provide to students who wish to become professional accountants. As well, it would also avoid the confusion that currently exists for students who are unsure of the differences between the three bodies and deciding which career path to follow.

The primary concern came from university faculty who indicated that if the prerequisite courses that students would be required to take change, it would be important to provide sufficient lead time so that the universities could adapt their courses appropriately.

In addition, an academic analysis of self-regulation and unification discussions in Canada’s accounting profession was conducted by William Lahey, Associate Professor, Schulich School of Law, Dalhousie University. The report, a summary of which is included in Appendix F, concludes that unification would strengthen and streamline the profession’s self-regulatory function and enhance its capacity to fulfill its ultimate self-regulatory mandate: to protect and advance public interest.

CA Stakeholder Feedback

Members

As a member-based organization, it is important that CA MB solicit the views of members and listen to their concerns. A comprehensive consultation process was undertaken with members to gauge their support for the unification initiative.

Town Hall Meetings and Information Sessions

Between May and December 2011, CA MB held 25 town hall meetings and sessions at employers that hire a large number of CAs to provide information to members, answer questions, and respond to concerns regarding unification. Approximately 460 CA members and students (19% of resident members and students) attended these sessions.

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Following the release of the Unification Framework on January 17th_{, 2012 another 21 town hall meetings} and information sessions were held. At the end of each session, CA MB requested that attendees complete a feedback form with a short series of questions. CA MB received 306 completed feedback forms which were compiled and are summarized in Appendix G. Following is a summary of the results:

• 96% of members and students who attended a presentation believed that CA MB and CMA MB conducted appropriate due diligence in developing the Manitoba Merger Proposal.

• 80% of participants felt the proposed certification program would have sufficient rigor to produce pre-eminent professional accountants.

• 80% of participants indicated that they would definitely or probably support a merger of CA MB and CMA MB (13% were undecided)

• 76% indicated that they would definitely or probably support unification of all three accounting bodies in Manitoba if the terms proposed in the Unification Framework and Manitoba Merger Proposal were followed (16% were undecided).

For members who were not able to attend a town hall meeting or information session, CA MB developed an online presentation about the merger initiative and posted the presentation on the CA MB website for members and others to access. This presentation was downloaded almost 500 times throughout the consultation period.

Member Survey

CA MB conducted a member survey in early February 2012 to solicit views on the national Unification Framework and Manitoba Merger Proposal (see Appendix H). The survey generated a response rate of approximately 20% of the membership. As illustrated in Appendix H, responses were quite representative of the membership in terms of years of membership and employment sector.

The survey found that 56% of respondents would support a merger of CA MB and CMA MB (13% of respondents were undecided). Approximately 74% of respondents indicated that creation of a consistent code of conduct for Canadian accountants is a good reason to pursue a merger of CA MB and CMA MB. Respondents also showed support for potential unification of all three accounting bodies in Manitoba with 51% of respondents indicating that they would support a merger of all three accounting bodies if the same terms of the national Unification Framework and Manitoba Merger Proposal were followed (12% were undecided on that point).

Member Phone Calls and Emails

CA MB received emails and phone calls from approximately 43 members between May 2011 and the date of this report. Of the emails and phone calls received, 19 were negative in tone, 11 were neutral, and 13 were positive. The majority of the negative feedback related to concerns regarding potential

devaluation of the CA brand as a result of a merger. This concern is discussed in more detail later in this report.

In addition, a few members expressed concern regarding the process CA MB followed in engaging members and informing them about the unification initiative. CA MB believes the process followed was fair and appropriate, which, as noted earlier, is supported by feedback received from members who attended town hall meetings and information sessions.

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Member Advisory Vote

Between February 29 and March 14 2012, CA MB conducted a member advisory vote to gauge member support for the unification of the accounting profession in Manitoba. It was decided that the vote would be advisory in nature as the ultimate decision regarding unification in Manitoba rests with the Manitoba Government and would depend on factors such as unification decisions in other provinces and other stakeholder feedback, along with indicators of member support which would include level of member participation in the voting process.

CA MB’s 2,904 members were invited to participate in the advisory vote and 1,414 ballots were cast, resulting in a 48.7% response rate. Typical participation in voting on bylaw changes or Council elections is in the 10-15% range. As illustrated in Appendix I, the response was representative of the membership with respect to length of membership.

The results of the advisory vote show that 59.5% of respondents indicated support of a merger of CA MB and CMA MB as provided in the Manitoba Merger Proposal. As outlined in Appendix I, 55.5% voted in favour and 4% selected "Elected Council should decide". That 4% has been reflected as a positive response as the CA MB Council unanimously endorsed the merger proposal released on January 20, 2012.

The vote results suggest that the main two reasons members showed support the unification of CA MB and CMA MB are:

• The merger would result in consistent standards for Canadian accountants. (noted by 78% of members in favour)

• The merger would result in the development of one high-quality certification process. (noted by 74% of members in favour)

The most common reason for lack of support for a merger of CA MB and CMA MB noted in the member advisory vote is the belief that a merger would not protect the value of the existing designation. This concern was noted by 85% of members who are not in favour of the proposed merger; whereas, the other reasons for lack of support were mentioned by 51% or less of the members who voted against the

merger.

To better understand the concern regarding brand devaluation and to obtain insights on how the unification process can best protect the value that members see inherent in their designation, CA MB hired an independent consulting firm to conduct a member focus group. Participants included members who had informed CA MB that they were not in favour of unification and an equal sized sample of those who were vocal in their support. Participants acknowledged that marketing would be extremely important subsequent to a merger and recommended that advertising initiatives emphasize “professional

accounting” and “Chartered Professional Accountant” as opposed to the acronym CPA as the public would more readily associate high standards and high quality service with these descriptions.

As part of the member advisory vote, CA MB also asked members to indicate their level of support for a merger of all three accounting bodies in Manitoba should CGA MB wish to join merger discussions and agree to the principles of the Unification Framework and Manitoba Merger Proposal. At the moment, CGA MB has not asked to join the discussions; however, the question was included to give the CA MB Council a sense of member support of a three-way merger and to help determine if it was necessary to come back to the membership for another advisory vote should CGA MB join the unification discussions.

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The results of the advisory vote question relating to unification of all three accounting bodies in Manitoba indicate that slightly less than 50% of members who responded were in support of a three-way merger. Looking more closely at the results of the three-way merger question, 12.7% of those who responded indicated that they were undecided. Of the decided vote, 55% were somewhat or strongly in favour of a three-way merger while 45% were somewhat or strongly opposed. It is also noteworthy that there were fewer members who indicated they did not support a three-way merger (534) compared with the 572 who voted against a two-way merger. Finally, in responding to the question of why members voted against a possible two-way merger, 113 members indicated they did not support a two-way merger because they believed it should be a unification of all three bodies.

Public Accounting Firms

Public accounting firms employ approximately 32% of CA MB’s membership and train the large majority of CA students. Therefore, it was critical to get their perspectives on unification and the proposed CPA certification program.

The leadership of the seven national firms in Manitoba have all indicated strong support for the unification initiative. In addition, the “big four firms” (Deloitte, Ernst & Young, KPMG, and PwC) have also declared their support nationally.

Public Representatives

There are two public representatives appointed by the President of the University of Manitoba who sit on Council. Their perspectives on the unification initiative are important to ensure that the profession is adequately addressing public interest. To solicit their feedback, CA MB held a consultation session with current and past public representatives. The two past public representatives each served on CA MB’s Council for six years.

The public representatives are supportive of the unification initiative and believe that a merger would further help to protect public interest. There was some concern, however, that despite the benefits of unification, the merger will only be successful if it receives support across all jurisdictions.

CMA Stakeholder Feedback

Members

In support of uniting the Canadian accounting profession, CMA Manitoba has sought to inform members on the principles and details of the merger both nationally and in Manitoba through town halls, employer presentations, surveys, online communications and social media. These activities have allowed us to gather valuable feedback.

Town Hall Meetings and Employer Presentations

In 2011, May through December, CMA MB held a total of 14 town hall meetings and employer

presentations. The purpose of these events was to provide information to members and students on the proposed merger and address any related questions or concerns. In all more than 480 members and students were reached (approximately 26% of members and students).

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Following the release of the Unification Framework on January 17th_{, 2012 another 8 town halls and} employer sessions were held, reaching approximately 116 members and students. All participants were invited to take part in a survey to determine their position on the Unification Framework, Manitoba Merger Proposal, proposed CPA Certification Program and involvement of CGA Manitoba. Following is a

summary of the results:

• 99% of members and students who attended a presentation believe that CA MB and CMA MB conducted appropriate due diligence in developing the Manitoba Merger Proposal.

• 96% of participants feel the proposed certification program will have sufficient rigor to produce pre-eminent professional accountants.

• 99% of participants indicated that they would definitely or probably support a merger of CA MB and CMA MB.

• 94% indicated that they would definitely or probably support unification of all three accounting bodies in Manitoba if the terms proposed in the Unification Framework and Manitoba Merger Proposal were followed (7% were undecided).

Complete details can be found in Appendix J. Member Advisory Vote

The CMA Manitoba Advisory Vote was open to members in good standing from February 29th_through March 14th_{. Of 1510 members eligible for the Advisory Vote, 49.2% of the membership voted on the} proposed unification of the CA and CMA bodies in Manitoba as outlined in the Manitoba Merger Proposal. The overall results indicated a significant majority in favour of unification. Detailed findings are included in Appendix K. Following are a few highlights of the Advisory Vote:

• 93% support the Board’s proposal to merge CA Manitoba and CMA Manitoba

• Primary reasons for supporting the Board’s proposal to merge CA Manitoba and CMA Manitoba were:

o Would result in consistent standards for Canadian Accountants (83%)

o Would result in the development of one, high-quality certification process (81%) o Would create a designation that offers members international brand recognition (75%) o Would ensure Canada has an influential voice with global standard-setting (67%) o Would provide better value to members through economies of scale (59%)

• 5% of members voted against the merger with the top three reasons being: o The merger would not protect the value of my designation (54%)

o The merger would not better position the profession to protect the public (34%) o The merger as proposed would not include all three professional accounting bodies

(31%)

In the conclusion of the Advisory Vote, CMA members were asked to specify their level of support for uniting the three accounting bodies in Manitoba should CGA MB wish to join merger discussions and agree to the principles of the Unification Framework and Manitoba Merger Proposal. The results were favourably in support of a three-way merger.

• 81% are strongly or somewhat in favour

• 11% are undecided

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Public Representatives

The CMA Manitoba By-Laws require that at least 30% of the persons elected or appointed to the Board of Directors must be Public Representatives. Currently the CMA Manitoba Board includes four public representatives that have been appointed to represent the business community within Manitoba. The areas of representation include academia, the legal profession, the engineering profession and human resources. This group has participated in strategic planning sessions, provided feedback from a business community perspective and has voiced their strong support that the merger is in the best interest of the public.

National Overview: Progress of Unification to Date

Since the decision to unify the accounting profession belongs to each provincial government, work in each province is progressing at different rates. Recently, we have been informed that the CGA

organizations in most provinces and at the national level have withdrawn from unification discussions. It should be noted, however, that serious discussions on the unification of the CA and CMA bodies are underway in most provinces and at the national level. Most of our provincial counterparts are either at the stage of developing the provincial merger proposal, completing consultations with members and other stakeholders, or submitting a recommendation to their respective governments. As noted previously, in Quebec the Chartered Professional Accountants Act came into force in May 2012.

Next Steps

Our next steps include:

• Establish a joint task force to identify differences between the legislation of the CA, CMA and CGA bodies in Manitoba and develop recommendations to the Ministry of Finance.

• Continue to monitor and respond to national developments respecting unification.

• Continue to apprise the Ministry of Finance on developments relating to unification.

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NOW IS THE TIME

to secure our future

Appendix A

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VISION FOR THE PROFESSION

To be the pre-eminent, internationally recognized

Canadian accounting designation and business credential

that best protects and serves the public interest.

GUIDING PRINCIPLES FOR UNIFICATION

The guiding principles provide the framework to unify

the profession and achieve the vision.

1 Evolution to a single designation

• The new profession would adopt the Canadian designation Chartered Professional Accountant (CPA).

• All current members in good standing would be granted this designation from their new CPA provincial body as CPA legislation is approved.

• For a period of 10 years, all members using the new CPA designation would be required to use it in conjunction with their existing designations. No current member could use the CPA without identifying his or her legacy designation as follows:

• First and Last Name, CPA, CA • First and Last Name, CPA, CMA • First and Last Name, CPA, CGA

• After 10 years, a member could choose to use the CPA designation on its own.

2 Continued use of existing designations

• Existing members would retain their current professional designations.

• No member would be automatically granted an existing professional designation of another body.

• The national and provincial CPA bodies would be promoting the new CPA designation. Use of legacy designations on their own post-unification would be subject to provincial merger agreements and legislation.

3 A FRAMEWORK FOR

UNITING THE CANADIAN

ACCOUNTING PROFESSION

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3 Retention but no expansion of rights

• Unification would protect all existing rights of members, such as public accounting rights and rights under any existing Mutual Recognition Agreement, without granting new rights.

• The new CPA organization would negotiate on behalf of all members when entering into new Mutual Recognition Agreements.

• Any member not authorized to practice in a restricted area, such as audit, prior to the merger would be required to complete any necessary provincial programs to qualify post-merger.

4 Certification

The new CPA organization would establish a certification program that draws on the strengths of the existing programs and would be recognized by members, regulators, global accounting organizations and the business community as being at least as rigorous as all existing programs. Detailed information on the developing certification program is available at www.CPACanada.ca and on the websites of the national bodies.

HIGHLIGHTS OF THE CANADIAN CPA CERTIFICATION PROCESS

• A CPA Competency Map would be designed to meet the needs of industry, government and public practice.

• An undergraduate degree and specific prerequisite courses in business and accountancy would be required for admission to the professional education program.

• A post-graduate professional education program would be developed nationally and delivered provincially/regionally. Key components would include:

• Individual examinations and team-based evaluations throughout the program.

• A comprehensive, multi-day final examination.

• Rigorous practical experience that builds the relevant CPA competencies and is subject to quality control by the profession.

• Meet or exceed all standards for education, assessment and practical experience set by the International Federation of Accountants.

• Meet or exceed requirements for existing and future Mutual Recognition Agreements.

• Bridging programs to meet required degree or course prerequisites for the professional education program so that entry into the program would be accessible to entrants coming from the work force and abroad and those with non-business degrees.

To meet the diverse needs of both employers and clients, a separate program would be developed for those who aspire to a career in accountancy, but not as a qualified CPA. This program would have distinct entrance, education and assessment requirements. A bridging program to the appropriate stage of the CPA certification program would be developed.

The new CPA

organization

would establish

a certification

program that

draws on the

strengths of

the existing

programs and

would be at

least as rigorous

as existing

programs.

A-3

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Post-designation specialty programs would

be developed to offer Chartered Professional

Accountants the opportunity to enhance

their expertise and advance their careers.

5 A single designation with specialties

• As in other professions like medicine and law, post-designation specialty programs would be developed to offer CPAs the opportunity to enhance their expertise and advance their careers.

• A number of post-designation specialties would be considered, such as tax, forensic accounting, strategic management, and public sector accounting.

6 Branding the CPA designation

• Early in the transition process, all branding efforts would focus on the CPA designation and there would no longer be any branding of the legacy designations.

7 Common code of conduct, regulations,

and the practice of public accountancy

• A new, common regulatory framework reflecting the best practices of the existing organizations, including codes of conduct, practice inspection, disciplinary processes and an effective, nationally consistent public accounting regime would be developed.

• The new national CPA organization would be responsible for supporting standard setting in the profession.

8 Merged operations and governance

• The operations of the participating bodies would be combined at the provincial and national levels.

• The new combined provincial and national bodies would be overseen by new Boards of Directors that would include representation from each of the participating bodies.

• Mechanisms to protect existing members’ rights (such as those under Mutual Recognition Agreements) would be included.

• The organizations in each jurisdiction would be responsible for securing any legislation required to combine the operations and move to a new CPA designation. These bodies would work collaboratively to obtain any required change.

The new profession would adopt

the Canadian designation, Chartered

Professional Accountant (CPA).

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9 8

Unifying the profession is a strategic response to the rapidly evolving

environment and the resulting opportunities and risks facing the

Canadian accounting profession.

The Canadian Environment

• Increasingly, accountants are working in the same practice areas but remain subject to different qualification processes, codes of conduct, inspection and disciplinary regimes operated under 40 different governing bodies.

• The three bodies in Quebec, at the invitation of their government, have agreed to merge under the Chartered Professional

Accountant designation.

• The Association of Chartered Certified Accountants (ACCA) in the U.K., which is aggressively advancing a global expansion strategy that targets Canada, is legally challenging the CA profession’s legislated rights to the exclusive use of the name “Chartered Accountant” in Canada.

8

CONTROLLING OUR DESTINY

IN A RAPIDLY EVOLVING

PROFESSIONAL ENVIRONMENT

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Global Alliances and Other International

Developments

• The global financial crisis has brought the regulation of the accounting profession under close scrutiny.

• The U.K. House of Lords is publicly calling for the amalgamation of the six U.K. accounting bodies, saying the fragmentation of the accounting profession there is inefficient.

• The CPA designation is emerging as the largest accounting designation around the world. The CPA designation is used by more accountants than any other designation, with the current ratio of CPAs to CAs globally being 2:1.

• The Institute of Chartered Accountants in England and Wales and the ACCA have both filed European trademark applications to control the Chartered Professional Accountant (CPA) designation.

• The American Institute of Certified Public Accountants (AICPA) is aggressively seeking to expand its global footprint and is opening examination centres for the U.S. CPA exam outside of the U.S. In addition, the AICPA and the U.K.–based Chartered Institute of Management Accountants (CIMA) have announced a new jointly developed global management accountant designation.

• Increasingly, other national and regional accounting bodies also are entering into alliance agreements to increase their individual and collective strength, relevance and influence. Examples include the Global Accounting Alliance and the Edinburgh Group.

The Risks of Continuing as a

Fragmented Profession

• Government mandating that we reform, and possibly dictating the terms of that reform.

• Inability to respond efficiently and effectively to challenges from foreign accounting bodies or alliances operating in Canada.

• If the profession does not unify it is possible that two of the existing bodies may merge, thereby potentially strengthening their position in the marketplace at the expense of the third body.

• The CPA designation becoming controlled by one or more of the existing Canadian bodies — to the exclusion of the others.

• Losing influence domestically and internationally if we do not speak with a single, strong voice.

The CPA

designation is

emerging as

the largest

accounting

designation

around the

world.

A larger, more cohesive voice would ensure

the Canadian accounting profession continues

to effectively influence international standard

setting bodies.

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13 12

A New Designation with Broad Expertise

• Members would retain their current designation and add the Canadian Chartered Professional Accountant (CPA) designation, which would become the pre-eminent designation and business credential for professional accountants who work in every sector of the economy.

• The Canadian CPA designation would represent a unique combination of expertise in all areas of accounting, including financial and management accounting, assurance and taxation. It would evolve into a globally recognized business credential in the areas of financial and strategic management, business leadership, and auditing and assurance competencies.

• Steps would be taken so that members would have access to post-designation specialty programs.

Securing Rights to the Global Designation

of Choice

• Securing alignment with the most recognized global accounting designation would best protect the value of the Canadian profession’s designation in the long run.

• Coming together under the Chartered Professional Accountant banner would align us with both CA and CPA, if either, or both, designations emerge as globally dominant.

• Mutual Recognition Agreements would be maintained and expanded with the world’s most prominent CA, CPA and other significant bodies, facilitating members’ mobility globally.

WHAT UNIFICATION

MEANS FOR ACCOUNTING

PROFESSIONALS

12

Achieving our four unification objectives would result in benefits

for members.

• Best positions the profession to protect the public through the provision of a common certification program and a single set of high ethical and practice standards.

• Enhances and protects the value of your designation in an increasingly competitive and global environment.

• Contributes to the sustainability and prosperity of the Canadian accounting profession.

• Governs the accounting profession in an effective and efficient manner.

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NEXT STEPS

Common Regulatory Processes

• A new common certification program and a single set of high ethical and practice standards, common code of conduct and practice inspection and discipline processes would create a strong foundation on which to build the unified profession, and would be more efficient and effective.

• Greater harmonization would enhance trust and confidence in the profession amongst employers and the public at large.

• A common regulatory framework would enhance inter-jurisdictional mobility for all members.

Efficiencies and Economies of Scale

• A fully unified Canadian profession would reduce the number of governing bodies, from 40 to 14, significantly simplifying operations and governance, and reducing confusion in the marketplace.

• Marketing dollars would be more efficiently used to support the interests of all CPA members.

• Gains from increased efficiencies could be re-invested in:

• Enhancing member services, such as post-designation specialty programs and professional development.

• Creating new products that enhance members’ practices and career goals.

• Developing communities of interest and networking in the members’ many areas of activity.

A Powerful Organization with a Unified Voice

• A single voice representing as many as 170,000 Canadian members would more effectively represent member interests with respect to domestic policy, legislation and regulatory issues affecting the accounting profession.

• A larger, more cohesive voice would ensure the Canadian accounting profession continues to effectively influence international standard setting bodies and other global organizations.

• A united force would be stronger and more effective in dealing with global alliances and other designations that are becoming increasingly international in scope.

As the Canadian accounting profession is provincially regulated, any decisions regarding subsequent merger proposals would be made provincially. Please contact your governing body for information regarding next steps in your province or region.

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To learn more visit our website at

www.CPACanada.ca

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The Canadian CPA Certification Program 1

Developing the Canadian CPA certification program would be an

immediate priority of the merged organization. By drawing on the

best of existing programs, we would create the certification

program needed to produce Canada’s pre-eminent professional

accountants.

The new program would:

• Be — and be recognized as — at least as rigorous as all current programs.

• Require an undergraduate degree and specific prerequisite business and accountancy courses for admission to the professional education program.

• Include a post-graduate professional education program developed nationally and delivered provincially/regionally.

• Culminate in a comprehensive multi-day final examination.

• Appeal to the broadest possible group of potential candidates, including university graduates with non-business degrees, immigrants and career changers. The program would be attractive to all those individuals interested in developing and enhancing their business and accountancy skills.

• Appeal to employers for its development of accountancy and business skills in a high quality, cost effective professional program.

• Meet or exceed all International Federation of Accountants (IFAC) standards for education, assessment and practical experience.

• Meet or exceed the requirements of the leading global accounting bodies, ensuring the new profession can maintain existing and establish new Mutual Recognition Agreements (MRAs).

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The competencies of the newly qualified Canadian CPA

At qualification, new Canadian CPAs would demonstrate the competencies expected of leading professional accountants. Specifically they would be required to demonstrate:

• TECHNICAL COMPETENCIESin advanced financial accounting and reporting; management accounting, planning and control, as well as in assurance, taxation, finance and performance management, including governance, strategy and risk management.

• ENABLING COMPETENCIES including professionalism, ethical behavior, written and oral communication, leadership, problem-solving and decision-making.

The specific competency expectations would be defined in a new CPA Competency Map. A Competency Map is a document that describes the knowledge, skills and proficiency levels expected of candidates and members. The technical competencies of the new CPA certification program would be categorized into six competency areas core to the vision of the new CPA:

• Financial accounting and reporting.

• Management accounting, planning and control.

• Assurance.

• Taxation.

• Finance.

• Performance management.

Financial accounting and management accounting, planning and control would be central to the program, but the CPA certification program would require the demonstration of competence in all six competency areas.

The design of the new Canadian CPA certification program would not simply add together the requirements of the existing programs. This would create an unwieldy and unattractive qualification process. Rather the new Canadian CPA program would be designed to meet the needs of industry, government and public practice by ensuring that all CPAs have the strong foundation of knowledge and skill as a professional accountant to succeed in whatever role or position they take on. It would recognize that not all CPAs will be trained to be auditors at the point of qualification, though it would provide that option.

Details of the Canadian CPA Certification Program

The CPA certification program would consist of:

• Academic prerequisites for admission to the CPA professional education program.

• A post-graduate CPA professional education program.

• Examinations, including a common comprehensive final evaluation.

• Relevant practical experience.

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The Canadian CPA Certification Program 3 ACADEMIC PREREQUISITES FOR ADMISSION TO THE CPA PROFESSIONAL

EDUCATION PROGRAM

An undergraduate degree would be required for admission to the new CPA professional education program. The CPA profession would also partner with Canadian colleges and universities to offer non-degree holders the opportunity to obtain an undergraduate degree while obtaining the required prerequisite courses.

In addition to an undergraduate degree, there would be specific prerequisite course requirements which all candidates would be required to complete. Those

candidates/students who did not acquire the prerequisites as part of their undergraduate degree (for example, non-Bachelor of Commerce (Accounting) graduates) would be required to successfully complete these courses before registering in the CPA certification program. In combination, the prerequisite course requirements and the undergraduate degree requirement must add to at least 120 credit-hours of education. Prerequisite courses would be provided through universities, colleges, and/or profession developed and delivered bridging programs. The existing organizations have developed or are developing a number of programs to enable graduates from all disciplines to pursue their designations. These initiatives would continue, modified to fit the requirements of the new CPA certification program.

CPA PROFESSIONAL EDUCATION PROGRAM

The CPA professional education program would comprise a series of modules that would focus primarily on enhancing CPA candidates’ ability to apply professional knowledge, and professional values, ethics and attitudes in a professional context. The modules would also include some knowledge acquisition beyond the academic prerequisite level. The program is expected to take two years to complete on a part-time basis by candidates as they work at relevant employment. University delivery on a full time basis over one year may be considered as an option where relationships exist with universities. These university programs would be based on learning outcomes substantially equivalent to those of the profession-delivered program.

The Canadian CPA professional education program structure and content would be developed nationally and delivered provincially/regionally.

EXAMINATION

The CPA certification process would include individual examinations and team-based assessments throughout the professional education program, culminating in a common final examination in which candidates would be expected to demonstrate a depth and breadth of competency development in accordance with the CPA Competency Map. All areas of the Competency Map would be subject to examination.

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An example of the potential implementation of this program is presented below. The exact design of the program would be determined by the new CPA profession’s experts in education.

W hile the program’s structure would be modular, it should be viewed as a continuous build of knowledge and skill over a two-year time frame. Moving from module to module would allow for a change in the context or emphasis, as well as for checkpoints at which progress can be evaluated; each module would end in an evaluation.

Note that the program would include both common and elective modules. The common modules would ensure all candidates develop and demonstrate the ‘must have’ competencies of the new CPA. They would include financial accounting and reporting; management accounting, planning and control, and certain elements of assurance, taxation, finance and performance management. The elective modules would allow candidates to focus on additional elements of two of the areas of assurance, taxation, finance and performance management. Consider, for example, a candidate interested in practicing public accounting upon certification. The candidate would develop the ‘must have’ competencies required of all CPAs in the common modules, and would then build on that knowledge and skill by completing elective modules in assurance and taxation. The program’s final learning module, which would focus on professional leadership and the application and integration of all of the competency development to that point, would also be common. Candidates would work on cases in small groups, sharing the various competencies learned in the previous common and elective modules, and developing additional critical professional skills such as team management and communication in a professional environment. Assessment for this module would include presentations and team-based assignments.

Upon successful completion of all required modules, all candidates would be required to pass a common final examination. An exam-preparation program would be offered by the profession. Candidates would be required to demonstrate breadth across all six

competency areas but must also demonstrate depth in management or financial accounting and in at least one elective area. Candidates who want to practice public accounting would be required to demonstrate depth in financial accounting and assurance.

► ► Prerequisites Common Required Modules Elective Modules Common Capstone Module Common

Final Exam CPA

► ► ►

POTENTIAL IMPLEMENTATION OF CPA PROFESSIONAL EDUCATION PROGRAM

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The Canadian CPA Certification Program 5 PRACTICAL EXPERIENCE

Practical experience must be of sufficient duration and intensity to enable candidates to demonstrate that they have gained the professional knowledge, skills, and values, ethics, and attitudes required for entry to the profession. The new CPA profession would consider a standard of three years of practical experience, consisting of a post-graduate

professional education program with strong elements of practical application and 24 months of field experience. This would offer the added benefit of enabling those candidates taking the professional education program on a part-time basis over 24 months concurrent with their field experience, to be certified as CPAs on the

successful completion of the common final examination. This standard would comply with IFAC standards for professional accounting bodies.

This proposed standard for practical experience would apply to certification or admission to the profession only. Practical experience requirements for public accounting are set, in some provinces, by a regulator and include specific month and engagement hour

requirements, and may take longer than the proposed term required for certification. Eligible practical experience (for certification) would be based on the

following principles:

1. Candidates must be provided with the opportunity to develop ethical behavior and professionalism.

2. Candidates must have opportunities for development in accordance with the CPA Competency Map.

3. Candidates must demonstrate professional development in accordance with the CPA Competency Map.

4. Candidates must be appropriately supervised and monitored. 5. Practical experience must be subject to oversight by the profession.

These principles would be applied differently in different work environments and training structures, depending upon the needs of the profession and of employers.

Two training models are proposed:

• Approved Path Model: Training positions offered by offices/organizations in training paths that are approved by the profession.

• Experience Verification Model: Training positions supervised/mentored by a CPA who may or may not be employed by the candidate’s employer.

Under the Approved Path Model, offices/organizations would apply for approval for defined paths, identifying how the required competencies would be developed. The profession would work closely with the organization upfront to ensure the appropriateness of the paths; significantly less work would then be required to assess the experience of the individual candidate. It is expected that the Approved Path Model would be

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The Experience Verification Model would rely less on the employer and more on the supervisor/mentor to ensure the candidate developed the necessary competencies. These candidates would be required to complete detailed practical experience reports which the profession would review in detail throughout the period of practical experience. It is expected that the Experience Verification Model would be appropriate for many small and medium-sized businesses.

A SEPARATE PROGRAM FOR INDIVIDUALS ASPIRING TO A CAREER IN ACCOUNTANCY OTHER THAN THE CANADIAN CPA

The new CPA certification program is designed to develop Canada’s pre-eminent professional accountants. However, not all individuals interested in accounting will become CPAs. The CPA profession would include a separate program for individuals who aspire to a career in accountancy but not as a qualified CPA. This program would have relevant entrance, education and assessment requirements to meet the market need and the goals of the profession. Education/examination bridges to the appropriate stage of the CPA certification program would also be developed.

TRANSITION TIMING

One principle of the merger is that the combined accounting body would evolve towards a new single core designation with a new CPA certification program. The existing

qualification programs would accept no new entrants once the CPA certification program becomes available.

W e believe it would take at least 18 months to create the new CPA certification program. This would mean at the earliest, transition timing would be:

• September 2013: The new CPA certification program would be launched. All new candidates would start in this program.

• Fall 2015: The first CPA final examination would be offered.

Transition for those in current programs would need to be well defined and clearly communicated to candidates and other stakeholders on a timely basis. The magnitude of the change-over and the uncertainty caused by a merger would be considerable, but it can be managed. Implementing the transition over as short a time period as is reasonably possible would be less unsettling than an extended period of transition. Success would be built on a well communicated transition based on fairness and transparency.

Our goal would be to make the transition to the CPA final examination without having to offer concurrent legacy exams, which would be expensive. The profession would need to commit to the development of all necessary bridging programs and communications to make the transition to the new common final examination as fair, flexible and seamless as possible.

As the profession is provincially regulated, this transition timing may be affected by the timing of legislative change across the country.

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To learn more visit our website at

www.CPACanada.ca

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VISION

To be the pre-eminent, internationally recognized, Canadian accounting designation and business credential that best protects and serves the public interest.

OVERVIEW

The leadership of the Chartered Accountants and Certified Management Accountants in Manitoba have developed this proposal to outline information specific to the Manitoba Merger Proposal. While the fundamental elements of a merger are the same across Canada, the profession is governed under provincial/territorial statutes and certain matters must be agreed upon at that level.

The Manitoba Merger Proposal is supported by the CA Manitoba Council and CMA Manitoba Board and is consistent with the unification framework adopted in other jurisdictions.

At the national level, and in most provinces, merger proposals are being developed that would include merging all three professional accounting bodies. In Manitoba, the Certified General Accountants have decided not to participate in the discussions at this time. Therefore, this proposal deals with the merger of the CA and CMA professions.

In Manitoba, any decision to unify the profession requires consultation and engagement with many stakeholders.

As a member-based profession, the views of

members are extremely important and will be a key factor to consider moving forward.

1 CA MANITOBA & CMA MANITOBA MERGER PROPOSAL

JANUARY 2012

As a provincial regulator, charged with protecting and serving the public interest, we need to understand and respect the views of the employers and clients our members serve and the views of the provincial government. Since any unification of the profession requires the enactment of legislation, the ultimate decision lies with the Manitoba government.

KEY STAKEHOLDERS

The key stakeholders are:

• Members of the accounting bodies; • The public; and

• Employers, business community and educators.

CA Manitoba and CMA Manitoba will present the Unification Frameworkand Manitoba Merger Proposalto members and other key stakeholders and solicit input in three phases:

• Dialogue and consultation to establish a basis for input from each key stakeholder group. This will include town halls and employer meetings;

• Determining member views through an advisory vote; and

• Reporting on the outcome to government.

The leadership of CA Manitoba and CMA Manitoba look forward to a continued dialogue with our members, who are invited to provide feedback regarding this merger proposal.

Submitted by: The Institute of Chartered Accountants of Manitoba and The Society of Management Accountants of Manitoba