Thank you.
As Elly has noted, our comments today focus on clause 181 of Bill C-4, which deals with the qualifications of a public accountant. By way of background, in addition to requiring that a public accountant be a member in good standing of an institute or association of accountants incorporated by or under an act of the legislature of a province, clause 181 requires that a public accountant “meet any qualifications under an enactment of a province for performing any duty that the person is required to perform under sections 189 to 192”. That is for audit or review engagements undertaken for federal not-for-profit corporations.
Paragraph 181(1)(b) ensures that the provisions of federal legislation governing not-for-profit corporations are consistent with and do not override the provisions of provincial public accounting legislation. It also ensures that the standards for providing public accounting to federal not-for-profit corporations are not lower or different from those for provincially incorporated not-for-profits.
The committee has heard the recommendations of the Certified General Accountants Association of Canada, CGA-Canada, regarding the replacement of the term “public accountant” with “auditor” in the preamble to subclause 181(1) and the removal of paragraph 181(1)(b).
We believe the proposed amendments, if adopted, would not be in the public interest. In the case of Ontario and a number of other provinces, they would create standards for audit and review engagements performed for federally incorporated not-for-profit corporations that are significantly lower than those that must be met in order to be licensed to provide public accounting services to provincially incorporated not-for-profit corporations.
Public accounting services are regulated by legislation in Canada's largest provinces, such as Ontario and Quebec, to include audit engagements, review engagements, and compilation services. In part, this is out of the recognition that these two provinces are home to the great majority of the country's capital markets and therefore require the most stringent regulation of financial services providers.
Under Ontario's Public Accounting Act, each of the three designated accounting bodies in the province may be granted authorization to license and govern their members in the practice of public accounting, provided they meet the standards of qualification and regulation adopted by the Public Accountants Council, the PAC. The PAC is an independent, government-appointed, standards-setting and oversight body for public accounting, comprised of a majority of public representatives.
The Ontario legislation requires the standards set by the PAC adopt, maintain, and increase as required standards for public accounting licensing that are internationally recognized and respected.
Let me spend a moment on the meaning of the term “internationally recognized standards” as it relates to CA qualifications. By these, we mean those standards that have been determined to be of equivalent rigour to those of the leading accounting bodies of Canada's major trading partners, for example, the CPA designation in the United States. It means we're not talking of CA standards per se, but rather a set of standards that are internationally driven, consistent with our obligations to our major trading partners.
While the PAC has granted the Institute of Chartered Accountants of Ontario authorization to license members and govern the practice of public accounting by its members, the Certified General Accountants Association of Ontario and the Society of Management Accountants of Ontario currently are not authorized to do so. Indeed the qualification requirements and regulatory programs of the Certified General Accountants Association of Ontario were recently assessed by the PAC as inadequate for this purpose.
We believe this strongly shows there is a significant public policy issue regarding the amendments that CGA-Canada has proposed to clause 181. They would allow individuals who do not possess the necessary competencies under provincial enactments to be public accountants for federally incorporated not-for-profits. It also serves to illustrate that the removal of paragraph 181(1)(b) from Bill C-4 would do nothing to establish uniform or consistent standards for qualification of public accountants between federal and provincial jurisdictions.
Legislation specifically governing licensing or certification of public accountants has been adopted in some jurisdictions but not in others. The nature of public accounting services that are regulated varies among the provinces and territories. In our written submission to the committee, we have provided an overview of the disparities in these public accounting standards.
I'll now ask my colleague, Christiane Brizard, to provide you with an overview of how public accounting services are regulated in Quebec.