Competition Bureau Report on Self-regulated professions

[harlequin]

The Competition Bureau of Canada came out with an interesting report last month. They were investigating several self-regulating professions, and were critical of certain practices of the profession's regulating bodies which were not in the public's best interest (restrict labour mobility, reduces efficiency, increased prices, etc.).

A summary of the report is at:

http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/02539e.html

The full report is at:

http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/02523e.html

I was naturally most interested in the section about accountants, I expect the same for several other members of RFD. The accountant's section is at:

http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/02529e.html#3

In the conclusion section, it says:

In Canada, although the market entry and conduct restrictions that provincial and territorial accounting organizations have put in place are similar in many regards, significant differences exist among them.

One of these discrepancies is the limit that certain provinces put on who may perform public accounting, which hinders the mobility of accountants and limits competition in this market. To facilitate competition in public accounting services, the regulators in each province and territory should consider establishing the minimum necessary competencies that public accountants should have and allowing the members of all domestic and foreign accounting designations that meet this standard to offer public accounting services.

Although provinces are not mentioned, I am sure the Bureau is referring to the fact that public accounting in Ontario and Quebec, for the most part, can only be performed by CAs. Several other provinces allow CGAs and CMAs to do audits and reviews. Currently, Ontario and Quebec are in the process of reforming their system of public accounting to allow non-CAs to perform this service - this has been discussed elsewhere on this board.

To me, the crux of this issue is the definition of "minimum necessary competencies that public accountants should have". On the one hand, the CAs want to keep the standards fairly restricted. In Ontario, the ICAO is promoting the current qualification process for CAs to be the standard for the province and possibly for the whole country (I personally think it will be a cold day in Hell before this happens). They argue with some justification that their standards are 'high quality' and help to protect the public. However, they obviously have a vested interest in keeping the status quo, which would bias their opinion on the matter.

On the other hand, if the more open public accounting standards that other provinces have are adopted, it will increase competition for public accounting services and lower prices. This certainly benefits the public because it lowers the cost of doing business and the savings can be passed on to the consumer. However if could lead to lower quality audits and reviews, which would have a negative effect on the business community.

So the question is, at what point do the disadvantages of more open standards outweigh the benefits? I am not sure the professional accounting associations can or should answer this question because of their self-interest. This may be something that government (federal or provincial?) may need to ultimately decide.

Well, on a more personal matter, if anyone is interested in going into one of the professions mentioned in this report, you may want to read the section that pretains to your profession. Restricting competition may not be in the public's best interest, but it will mean more money for the professionals themselves.

[pitz]

Its definitely a very serious problem in Engineering. First of all, there are 10 different regulators across Canada, one for each province. And then you have certain provincial regulators that are taking quite radical steps to allow people without engineering degrees into profession.

Basically put, the lack of a single, coherent regulator really puts the 'brand' at risk. P.Eng., across the entirety of Canada, used to mean someone with an accredited 4-year undergraduate degree, + 4 years of post graduation work experience under the supervision of a P.Eng. Now, the work experience requirements have been somewhat relaxed (a substantial amount of the experience can be gained prior to graduation), and no longer is an engineering degree even required to obtain the P.Eng in some provinces.

So...the problems aren't limited to the Accounting profession alone. I can see provincially based regulation being important for members of the bar, since they are charged with administering/working with both provincial and federal law -- but for accounting is just absurd.