- FEATURE ARTICLE

Not just one type of accountant – not yet

To most members of the general public in developed nations an accountant is an accountant and all accountants are pretty similar. Like physicians, some will have their specialties, but accountants and their professional associations are generally perceived to be fairly homogeneous.

The world’s first recognized accounting qualification was that of the Chartered Accountant (CA), originating in Scotland and chartered by the British Crown. It’s the most popular type of accounting designation throughout counties in the British Commonwealth.

Outside Commonwealth countries the most popular designation for accountants is the Certified Practicing Accountant, or CPA. CAs and CPAs coexist in many countries, along with members of numerous smaller accounting bodies.

In the U.K. an accountant will have been trained by a recognized qualifying body (RQB) such as the Association of International Accountants (AIA), Institute of Chartered Accountants of Scotland (ICAS),the Institute of Chartered Accountants in England & Wales (ICAEW), the Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants in Ireland or Institute of Chartered Certified Accountants.

In the Republic of Ireland itself, there are two additional accounting bodies: the Institute of Certified Public Accountants in Ireland, and the Institute of Incorporated Public Accountants.

In Canada, there are three recognized accounting bodies. Canadian Institute of Chartered Accountants (CA) is the oldest and the largest, followed by Certified General Accountants Association of Canada (CGA), and Society of Management Accountants of Canada (CMA). In Manitoba, CGA is the largest accounting body, while in British Columbia, CA and CGA are about the same size.

Consumers and business owners can be forgiven for being confused by the standards of the various types of accountants in different countries, or even individual states and provinces. Although attempts have been made to merge the professional accounting bodies in several countries, to date these attempts have usually met with failure.

The most recent attempt was in the U.K. where a proposed merger between the Institute of Chartered Accountants in England & Wales (ICAEW) and the Chartered Institute of Public Finance and Accountancy (CIPFA) failed by the narrowest of margins in October, 2005.

65.7% of ICAEW members backed merger, meaning that it fell just short of the 66.7% majority needed. Another 540 votes would have swung the outcome in favor of the merger of the two associations. Members of the much smaller CIPFA strongly supported the merger, with 86.6% voting in favor of the proposal.

Each of the U.K.’s six RQBs sees itself and its members as being at the top of their field and promotes its offerings accordingly. A merger, particularly with a larger association, removes this uniqueness and, it is feared, may affect a firm’s ability to compete in a tightening marketplace.

Although the proposed merger found unexpected levels of support within the membership of the ICAEW, its failure was a case of history repeating itself. Previous attempts to merge various professional accounting bodies in the U.K. failed in the mid-1960s, the early 1970s, and again as recently as 1989.

A theory for these failed merger attempts says that the younger members of the profession tend to vote against them, feeling that this is the best way to protect the status of their professional qualifications. The same theory holds that older members don’t feel as threatened and that their practices are more developed and therefore secure.

There was a similar merger attempt in Australia in 1998 when a merger between the institute of Chartered Accountants in Australia (ICAA) and the Certified Practicing Accountants in Australia (CPAA) was proposed. It even had the blessing of the powerful Australian Competition and Consumer Commission.

The two professional bodies are the largest professional accounting bodies in Australia and represent the great majority of accountants working in public practice with a total membership of over 130,000 accountants. CPA Australia’s membership of 90,000 makes it the third largest accountancy body in the world, outside of the U.S.A. and the U.K.

The Commission’s then chairman, Professor Alan Fels, said at the time: “Presently there is no restriction on the use of the term 'accountant' in the selling of accounting services and indeed members of the two bodies face increasing competition from a range of other service providers including lawyers, book keepers, management consultants and from the sale and use of accounting software packages.

“Moreover, it appears that the unification of the two accounting bodies to form the Institute of Chartered Professional Accountants in Australia should enable the new body to better represent the interests of the Australian accounting profession both in Australia and internationally.”

Nevertheless, just as happened in 2005 in the U.K. the merger failed when the members of the Institute of Chartered Accountants in Australia (ICAA) rejected the proposal in August, 1998.

Proposals for mergers between accounting bodies aren’t about to disappear. In May, 2004, a proposed merger between Canada’s Chartered Accountants and Certified Management Accountants in all provinces and territories was canvassed that would have created one of the largest and most influential accounting bodies in the world with more than 100,000 members.

A letter from the Chartered Accountants was sent to all members of both associations outlining the benefits to be realized from such a merger. These included:

• generate growth for the new profession and provide members with broader career choices and enhanced opportunities;
• strengthen the new profession's brand;
• make the profession more attractive to the best and the brightest;
• provide employers and the public with a broad variety of competencies and experience, offered by individuals who are accountable to a profession that requires its members to adhere to one, high transparent standard of certification, continuing education, integrity and discipline, enforced by a strong, well-resourced professional body;
• improve services to members and the public, resulting from economies of scale and increased co-ordination;
• strengthen and streamline relationships with regulators and educators; and
• strengthen Canada's voice in an increasingly globalized accounting profession.

Despite many reasons for going ahead, the merger talks finally broke down in April, 2005. Yet, just as in other countries the pressures for a merger remain. David W. Smith, FCA, President & CEO of the Chartered Accountants, said: “Clearly, I am disappointed that a merger agreement could not be reached. The prospect of a stronger, united accounting profession was the catalyst for this initiative, and the underlying short-term threats and challenges to the profession remain in place.”

Overarching local issues, the globalization of the accounting industry is accelerating, driven by such factors as the IASB’s push for uniform accounting standards and the wish of governments to have more regulatory capacity over the Big Four firms – factors that are impossible to ignore.

There can be little doubt that the closer we get to uniformity of accounting standards and uniformity of corporate legislation, the closer we will also be to uniformity of accounting qualifications. Many accountants will support it and many will oppose it, but it is very likely that sometime in the future accountancy will become a global profession with all accountants sharing the same high standard of qualifications.