(c) Chartered Professional Accountants of Canada. Contact CPA Canada for permission to reproduce this article., (c) Hong Kong Institute of Certified Public Accountants. Contact HKICPA for permission to reproduce this article.

An Interview with Kevin Dancey: President and Chief Executive Officer of CPA Canada

After decades of disunity and years of debate, Canada’s accounting bodies have formed a single umbrella group. George W. Russell asks CPA Canada President and Chief Executive Officer Kevin Dancey about the road to union, the future of the profession and coping with demanding downstairs neighbours.

Canada is not a nation forged out of fire and blood. Instead, the country was created in 1867 through discussion, negotiation and procedure among the British North American colonies. The idea was that unity would bring strength. Nearly 150 years later, many Canadian accountants had a similar notion.

“The accounting landscape in Canada is changing,” says Kevin Dancey, President and Chief Executive Officer of the recently formed umbrella organization, CPA Canada. “A unified profession will best serve the public interest by establishing common codes of professional conduct, disciplinary systems and licensing regimes.”

His organization, formally known as Chartered Professional Accountants of Canada, came into being on 1 January 2013 from a merger of the Canadian Institute of Chartered Accountants and Society of Management Accountants of Canada (known as CMA Canada). The operations of the third national body, Certified General Accountants Association of Canada, will be integrated with CPA Canada later this year.

“With unification will come a nationally consistent regulatory framework that will facilitate labour mobility, the integration of foreign-trained professionals, and business across provincial borders,” says Dancey, a former CEO and senior partner of PricewaterhouseCoopers Canada.

The motivation for the merger was a desire to create a distinctively Canadian profession in accounting that is being increasingly globalized by converging standards and the international reach of designations. “In this environment,” says Dancey, “there was a need for a strengthened Canadian profession, one that could be achieved with a unified Canadian designation and one that is regulated in Canada.”

However, unification is a work in progress. Only CPA Quebec and CPA Ontario were members of CPA Canada when it was founded. (Provinces regulate the profession in Canada and accountants receive designations from provincial bodies.) Tiny CPA Bermuda joined the fold last month – although a British Overseas Territory, the archipelago looks to Canada for accounting oversight.

To be sure, the three institutes in the remainder of Canada’s 10 provinces have all pledged to merge. CPA New Brunswick and CPA Saskatchewan will be inaugurated later this year as the respective provincial assemblies passed necessary legislation in April. The others are still in process. “That takes time as each province has its own legislative schedule,” says Dancey. “However, we are pleased with the progress.”

When unification is complete, CPA Canada will represent more than 185,000 professional accountants. “What unification does create is a single, recognizable designation that brings a high standard of education, competency and ethical conduct,” says Dancey. “This consistency will result in a high degree of confidence and trust in the new designation.”

China connections

Dancey expects that confidence and trust to extend internationally. As the successor body to CICA, CPA Canada is, like the Hong Kong Institute of CPAs, a member of the Global Accounting Alliance.

The Canadian and Hong Kong professions have a long and close joint history. Many Institute members were educated or employed in Canada and many Canadian accountants are members of the Institute through the reciprocal membership agreement.

“We work regularly with the Hong Kong Institute of CPAs through the GAA Education Directors project to make sure we continue to have alignment on programme development for the purposes of supporting the reciprocal membership agreement,” Dancey points out.

The Canadian organization is open to having Institute members to explore opportunities in Canada, says Dancey. “The Institute has a strong and well recognized certification programme and the graduates of the Qualification Programme are particularly well trained.”

He adds that CPA Canada is working closely with the Institute to support a number of Mainland university students seeking access to an English-language accounting designation.

“These students will complete their university program, which will be supplemented by modules based on the CPA Canada Prerequisite Education Program and then have a choice to pursue the Institute’s QP in China or to come to Canada to pursue the Canadian CPA designation,” he says.

China is likely to be an increasingly large source of foreign investment for Canada. “Canada is more open for business than many other countries,” Dancey notes. “As a small country economically, we know our growth is dependent on free trade and being open.”

However, Chinese companies can expect tighter scrutiny of their financial reporting. The Sino-Forest debacle of 2011, in which the Toronto-listed timber company raised about C$3 billion from investors amid claims of overstated assets and fictitious customers, is still fresh in the memory of Canadian regulators.

“There is increased interest in Canadian entities with operations in emerging markets such as China,” Dancey acknowledges, citing several recent reviews, including a scathing Canadian Public Accountability Board special report from 2012, entitled Auditing in Foreign Jurisdictions, that focused on China.

Another CPAB report that year noted a 30 percent decline in domestic Canadian audit deficiencies found in inspections over 2011. Dancey believes the audit profession in Canada is generally lifting its game. “The results of the 2013 inspections have improved over the previous year,” Dancey points out, noting that there are some areas where the CPAB believes execution remains a concern.

One out of many

The CPA Canada brand, Dancey believes, will create a better environment than the country’s previous unwieldy accounting landscape, which reflected the complex federal structure of the country itself. In 2011, about 40 organizations were responsible for developing the profession in a nation of 30 million people.

That created difficulties for any unification effort, and several had been attempted in the past. “Previous efforts failed spectacularly,” Dancey says, citing a lack of transparency as one shortcoming. “In past attempts, discussions were often behind closed doors,” he recalls.

This time, the profession was open and upfront about the motivation and the planned execution. “We set out the rationale for the move very clearly,” says Dancey. “It was important that we made it clear the way this process would affect every member of the profession.”

Despite the openness, the unification process was no walk in the park. “When I was CEO of PwC’s Canadian operation, I said organizing 400-plus partners was like herding cats,” Dancey recalls. “That was nothing compared to the unification effort.”

Members of all three organizations were concerned about the disappearance or dilution of their designations. “It is important to recognize that this has been an emotional issue,” says Dancey. “Every member is proud of their designation and we recognized that.”

Canadian media reported that some members of the Certified General Accountants Association of Canada and Certified Management Accountants of Canada feared that CICA, as the largest of the three, would dominate. Indeed, Dancey was CICA’s last president and CEO and CPA Canada occupies the old CICA headquarters in downtown Toronto.

After negotiations, representatives from the three organizations issued a framework based on a set of “guiding principles” articulated in a Unification Framework issued in January 2012.

“The guiding principles had to cut through the agendas of various national and provincial bodies and allow everyone to work together,” Dancey says. “The framework was simple and established principles around how we would protect members’ legacy rights and establish governance and proportional representation.

“What was critical,” he adds, “was that nobody would have to give up his or her existing designation and none of the bodies would be obliged to give away its designation to individuals who had not qualified for it.”

Moving forward, Dancey sees his goal as developing a strategy for the profession. “That means adopting positions, or taking steps, that best hedge the profession’s strong position, regardless of the way the world could unfold,” he says. “Taking action to strengthen our profession will benefit Canadians, businesses and our economy over the long term.”

Unification under one professional body, he adds, ensures that can happen. “To remain influential, we need to make sure that Canada’s accounting profession has a strong and united voice.”

International agenda

Overall, Dancey believes, the Canadian profession is highly regarded worldwide. “Canada has long been known both for the quality of its auditing and accounting standards and for the independent, objective and transparent structures responsible for developing the standards and guidance used in this country,” he says.

However, Canada is in a tricky position internationally in terms of standards. While listed companies have used International Financial Reporting Standards since 2011, Canadian CPAs come under heavy influence from the United States. “IFRSs are clearly here to stay globally,” says Dancey. “They are the basis of public company reporting in most countries now.”

While the U.S. has no plans to convert to IFRSs, Dancey believes the International Accounting Standards Board and the U.S. Financial Accounting Standards Board standards could be better converged. “Convergence matters particularly to Canada because of the high degree of integration of our capital markets,” he says.

U.S. tax law also has an impact on Canadian accountants. “The U.S. is one of the few countries that taxes individuals based on citizenship rather than residency,” he says. “That has always been an issue for Canadian CPAs to grapple with since there are so many U.S. persons [a legal term with various definitions], including U.S. citizens, living in Canada.”

An already complex situation was further complicated with the enactment of the U.S. Foreign Account Tax Compliance Act, which requires foreign financial institutions to report to the U.S. Internal Revenue Service about their American clients. “FATCA raised yet another U.S. issue for us to deal with in Canada,” says Dancey.

One other measure has been the requirement for Canadian CPAs and other foreign tax preparers to register with the IRS if they prepare U.S. tax returns. “Will the U.S. introduce other more aggressive tax compliance and collection measures?” Dancey asks. “With the pressures on government budgets, this can’t be ruled out.”

Dancey stresses that the U.S. demands have not strained bilateral ties. “We do have a good relationship with the U.S. but a strong united Canadian profession is the best way to handle that relationship going forward,” he says.

While the unified professional organization adopted the initials CPA as its single brand, it decided against following the U.S. (as well as Hong Kong and Japan) to adopt the designation “Certified Public Accountants.” “We are using Chartered Professional Accountant and firmly believe maintaining a distinct Canadian brand is important.”

This article was originally published in the June 2014 issue of A Plus.