Proposals submitted by CMA Canada on developing Canadian and international accounting standards appear to have been disregarded by the Canadian Institute of Chartered Accountants' Task Force on Standard Setting.
The task force is recommending that CICA retain sole responsibility for and corporate identification with standard setting, suggesting a mechanism that would see a minimal level of input and profile for other accounting and financial groups. At the same time, it wants to secure additional funds from CMA Canada and other groups to support expanded international standard setting and harmonization activity. The expanded revenue for this activity would also create the opportunity for the CICA to allocate more financial resources to management accounting endeavors within the Institute without raising member dues, in areas such as developing new performance measures for organizations and expanding the scope of assurance services. It's a win-win for CICA, and a shutout of other accounting and financial bodies.
In its submission to the CICA's Task Force on Standard Setting in 1997, CMA Canada called for an independent standard setting body that would establish priorities and approve accounting standards. This independent body would be made up of individuals representing a broader base of stakeholders than that currently proposed in the CICA task force report. Our proposal also recommended a separation of the development and approval functions for accounting standards, which is a continuing conflict in the CICA report.
CMA Canada's comments recognized the expertise the CICA has built up over the years in developing accounting standards. We proposed that the role of the CICA would be to act as an exclusive contractor to develop the standards on behalf of an independent body. The independent standard-setting body would be jointly funded by all participants and would identify the standards as Canadian accounting standards. They would not carry the CICA badge.
Instead, the CICA Task Force on Standard Setting has recommended that the participation of other accounting and finance groups in the standard setting process be limited to an Accounting Standards Oversight Council. As noted in the accompanying article, the CICA board of governors would select 15 members of this new group. The remaining five members of the Council would be from five external bodies, including CMA Canada. These external bodies would be expected to contribute an "appropriate" level of funding toward the accounting standard setting process. What constitutes "appropriate" is undefined.
The role of the Oversight Council would be restricted to establishing priorities for the development of standards. Approval of any standards would remain the sole responsibility of the CICA's Accounting Standards Board, and such standards would carry the CICA badge. The report suggests a minimal level of input and recognition for other groups on the Oversight Council, even though they would be expected to make a significant financial contribution to the standard setting effort.
Essentially, the recommendations in the task force report would see the CICA retaining exclusive responsibility for setting Canadian accounting standards, as well as maintaining its corporate profile by actively participating in the international accounting standard setting arena. Having one body solely identified as the accounting standard setter for a country is unique to Canada. Regrettably, the CICA report does not propose any change in this situation.
The proposals in Canada's submission have been ignored in the CICA's task force report, apparently because the Institute does not wish to lose control of and identification with the standard setting process.
As noted earlier, obtaining funding from other accounting and financial bodies to support the development of accounting standards would enable the CICA to allocate more of its financial resources to the expansion of management accounting activities. …