Institute Of Chartered Accountants Of Ontario

Institute Of Chartered Accountants Of Ontario

January 08, 2008 09:47 ET

Institute of Chartered Accountants of Ontario: Ontario's CAs Speak Out on Competition Policy Review

Urge federal panel to consider national accounting standards, legal liability reform

TORONTO, ONTARIO--(Marketwire - Jan. 8, 2008) - As part of its CA Competitiveness Agenda, the Institute of Chartered Accountants of Ontario today submitted a brief to the Competition Policy Review Panel emphasizing that our continued global competitiveness depends on addressing a wide range of issues. Top priorities, from the Ontario Institute's perspective, must include introducing nationally consistent and internationally respected standards of qualification and conduct for public accounting, as well as making progress on legal liability reform with respect to finance and accounting professionals.

The Panel, led by former BCE Inc. CEO Lynton (Red) Wilson, will report to the federal Minister of Industry in June. In October 2007, it issued a consultation paper offering stakeholders an opportunity for comment on issues related to investment and competitiveness. The deadline for submissions is Friday, January 20.

"When the Panel released its consultation paper - Sharpening Canada's Competitive Edge - we welcomed a chance to address issues related to financial services professionals that are hurting our ability to compete with the world," said Brian Hunt, FCA, President and CEO of the Institute. "The panel seeks ways to create domestic conditions that foster the development of Canadian-based global businesses while making our country a leading destination for talent, capital and innovation. As financial leaders in Canada's largest province, Ontario's CAs support those goals and believe national public accounting standards and legal liability reform will help achieve them."

National public accounting standards:

Public accounting is the business of expressing independent assurance on financial statements and other financial information of enterprises of every size, to ensure that the information truly reflects their financial condition. Large and small investors, financial institutions and other third parties then use that assurance to help them make informed investment and lending decisions.

While the CA profession has consistent, internationally recognized standards of qualification and conduct for public accounting, the actual legislated standards vary from province to province, ranging from internationally recognized standards in Ontario and Quebec to no standards at all in some jurisdictions where non-CAs are authorized to practice. No other major country has such wide inconsistencies between internal jurisdictions. The adoption of nationally consistent, internationally recognized public accounting standards will safeguard our competitive edge when raising capital to create jobs and finance innovation.

Legal liability reform:

Currently, Canada is saddled with an antiquated system known as joint and several legal liability. Under such a system, a party that is found to be just one per cent responsible for a financial loss can be held to account for fully 100 per cent of a claim. This has a potentially tremendous negative impact on doing business in a jurisdiction as it increases the threat to financial advisors of being held responsible for disproportionately heavy costs in a legal case. This is especially relevant to the audit profession and is increasingly threatening to shut off access to vital financial and accounting services for businesses of every size. The current regime also acts as a constraint on Canada's ability to attract and retain top professional talent, due to the fear of exposure to an unreasonable degree of legal liability.

Meanwhile, competing jurisdictions in the U.S., European Union and elsewhere are taking strides to introduce legal liability reform, including proportionate liability. Under a proportionate system, responsibility for a financial loss is apportioned according to the extent of an individual's responsibility for that loss. If the gap in legal liability systems continues to grow, Canada's ability to compete for head offices, talent and capital will be increasingly under pressure.

"Blessed with great talent and resources, we believe this country is well placed to become an even more prominent international business leader," said Hunt. "To assist with that evolution, however, Ontario's CA profession believes we must address legal liability reform for financial service professionals and introduce nationally consistent qualification and conduct standards for the practice of public accounting. By matching the best practices found in our international trading partners' jurisdictions, Canada can continue to attract investment and top professional talent, create jobs and successfully compete in an increasingly globalized economy."

The Institute of Chartered Accountants of Ontario's submission to the Competition Policy Review Panel is available on its website at: www.icao.on.ca.

About the Institute of Chartered Accountants of Ontario:

The Institute of Chartered Accountants of Ontario is the qualifying and regulatory body of Ontario's more than 32,000 CAs and 4,000 CA students. Since 1879, the Institute has protected the public interest through the CA profession's high standards of qualification and the enforcement of its rules of professional conduct. Recognized internationally, the CA designation denotes financial expertise, strategic thinking, business insight and leadership. The Institute website is: www.icao.on.ca and the student website is www.ca2b.biz.

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