Report on Specialization in the Canadian Chartered Accountancy Profession – December 1981

The 148-page Report of the Committee to Study Specialization in the Canadian Chartered Accountancy Profession was issued in December 1981. The Chairman’s Letter by W.D. Grace, FCA, states that: “The issue of specialization within the profession is not easily resolved. The Committee believes that the recommendations for a voluntary structured plan of specialization would prove to be of significant long term benefit to the Canadian public and to all members of the chartered accountancy profession. The Committee has addressed the issue of specialization through a lengthy process of research, discussion, and debate and by consideration of the present de facto situation and the specialty experiences of other accounting bodies and other professions.” The Committee recommended that four specific areas of practice be initially recognized as specialties: taxation, insolvency, business valuation and computer audit.

According to the booklet called Another Great Leap - CA•Designated Specialists, Chartered Accountants in Canada now have access to six profession-endorsed specialist designations, some offered directly by the Canadian Institute of Chartered Accountants (CICA) and others through organizations that have been accredited by the CICA. Currently, more than 1,000 have earned the advantage of a CA specialist designation. Regardless of the route to the specialist designation, candidates for specialist certification need to demonstrate experience in the field, in addition to completing an evaluation process. As well, specialists must comply with continuing experience and professional development standards to maintain the designation.

For more information, read the CAmagazine article, “Breaking new ground” (published in December 1997, page 2). This article discusses the first specialist designation for investigative and forensic accounting. Also, refer to the CICA website section on CA Specialization and the Institute of Chartered Accountants of Alberta (ICAA) website section on Specialty Designations.

50 years ago in the October 1962 CAmagazine

The October 1962 edition of CAmagazine discussed the “Need for reform in the Bankruptcy Act.” It stated that: “Bankruptcies and their attendant losses have become a most pressing problem…. A tremendous volume of business is presently conducted in Canada by ‘thin’ corporations — where the shareholders have very little of their own money in the company. [One] might well remark that such a corporation should not be given credit…. Our present Bankruptcy Act … displays no recognition, whatsoever, of the need of a separate set of ‘ground rules’ in dealing with corporations.”

Also, read about the “60th Annual Conference” (from the summary of the CICA annual meeting in Fredericton, New Brunswick) and “The new management theories make for poor performance” (a summary of “Executives who can’t manage,” from The Atlantic Monthly, July 1962).

Andersen, Auditing and Atonement

Ten years ago, Arthur Andersen was forced to surrender its licences in the United States after the Enron scandal, precipitating its global collapse. December 2011 marked 10 years since Enron, the Texas energy company, filed for bankruptcy after perpetrating one of the world's biggest business frauds. More significantly for the accounting profession, May 2012 marks a decade since the Enron indictment in the United States, and the beginning of the end for the well-respected Arthur Andersen, one of what was then the Big Five accounting firms.

The firm was convicted of obstructing justice by destroying thousands of documents related to its work for Enron. While the ruling was overturned in 2005 on technical grounds, it came too late to resuscitate the brand. For the profession, the scandal drew wide scrutiny on the supposed compromised position of large firms that audit the books of clients to whom they also provide consultancy services.

For a look back on the past decade of reactions, reforms and soul-searching in the accounting profession, read the article “ANDERSEN, AUDITING AND ATONEMENT: The accounting profession 10 years after Enron” by George W. Russell at GAA Accounting online.

The Official Duties of Chartered Accountants - 1891

A lecture called “The Official Duties of Chartered Accountants” was read before the Manchester Chartered Accountants' Students' Society on May 4, 1891. According to that lecture, the duties of a Chartered Accountant may be divided into three classes: Private, Public, and Official.

“By private duties I mean such as are due by a Chartered Accountant to his client when he is instructed to perform an audit or an investigation on behalf of a private association, a firm, or on behalf of individuals, either in their business or private capacity. His duty is then strictly confined to carrying out the instructions of his clients to the best of his professional skill and ability; when he has performed these his responsibilities are at an end.”

“The public duties of a Chartered Accountant have reference to those cases where he acts on behalf of persons who give him general but not definite instructions, and who leave him to carry them out according to his own ideas, in the full belief that he will do his duty in the interest of all concerned, and hold him responsible for so acting. These duties are such as are undertaken by accepting the appointment of Auditor of a public company, of voluntary Liquidator of a company, of Auditor of the accounts of a deceased person's estate on behalf of those interested, either in the division of the estate or in the income derived from investment of the same, and of an Arbitrator, while the official duties are those appertaining to offices or appointments held under the Courts of Justice, whether of the Chancery Division or the Queen's Bench Division of the High Court of Justice, or under the County Courts, and under the Board of Trade.”

“It is with the last class of duties that my lecture is concerned. The appointments under the Chancery Division of the High Court of Justice are those of Receiver, Receiver and Manager, Provisional Liquidator, Voluntary Liquidator under supervision of the Court, and Liquidator; the appointment under the control of the Queen's Bench Division of the High Court of Justice is that of Trustee in Bankruptcy. Under the Board of Trade, a Chartered Accountant may receive the special appointment as a skilled Accountant to assist a debtor against whom a Receiving Order under the Bankruptcy Act of 1883 has been made, in the preparation of his statement of affairs, and also to assist the directors or other officials of a company, after an order for winding it up has been made by the Court, in the preparation of a statement of affairs. He may also be appointed the Special Manager of the business of a debtor from the date of the Receiving Order until the appointment of, or rather certification of, a Trustee, or the approval of a scheme, and also the Special Manager of a company after a Winding-up Order has been made by the Court.”

(The full lecture about “The Official Duties of Chartered Accountants - 1891” is available online at Google Docs.)

ICAEW - Timeline of the Accountancy Profession in the United Kingdom

The comprehensive ICAEW Timeline explores events from ancient times through to the first half of the nineteenth century (for detailed events, click on the red titles – for example, 1853 - 1880 and 1968 - 2003. The Timeline shows when accountancy starts to take form as an organized profession, growing primarily as a result of the commercial and legal activity of bankruptcy, insolvency and the winding up of companies all the way to the current day.

Insolvency then and now

Bankruptcy figures have been climbing. At June 30, 2010, 145,233 Canadians had filed for bankruptcy or a consumer proposal in the previous 12 months. While last year’s figures represent an increase of 33.7%, bankruptcy numbers have grown from less than 1,000 in the 1960s to 2,700 in 1971 and 19,000 in 1980. This has raised the profile for insolvency practitioners in the accounting profession. Read "Insolvency then and now" in the January/February 2011 CAmagazine online.