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Agreement on Internal Trade Labour Mobility Panel Rules Against Ontario’s Exception for Public Accounting 

The landscape for public accounting in Canada and Canada’s three accounting bodies are impacted by the recent decision of the labour mobility Panel that ruled on the most recent challenge of the Manitoba Government to Ontario’s public accounting licensing regime. The Panel ruling firmly establishes that labour mobility across Canada is the primary goal of the Agreement on Internal Trade (AIT) and that it is up to the regulatory authorities to reconcile issues related to standards and qualification.

Basis of the AIT Panel hearing

In November 2010, the Manitoba government took advantage of the newly amended AIT to launch a challenge against the Ontario government and the Standards and requirements established for public accounting licensing by the Public Accountants Council (PAC) under the Public Accounting Act, 2004. Manitoba disputed the legitimacy of Ontario’s claim (Notice of Measure) that an exception from the requirement to comply with the labour mobility provisions of the AIT was necessary to protect consumers in Ontario. Ontario claimed the exception in order to continue to require that individuals who are certified to practise public accounting in other provinces or territories must have fulfilled the same education, examination and experience requirements that Ontario’s CAs and CGAs must meet in order to be licensed.

In July 2011, with Manitoba and Ontario not being able to come to a resolution of the dispute, Manitoba exercised its rights under the AIT and requested a labour mobility panel to resolve the dispute.

The Panel Hearing

The Panel composed of James D. Horsman (Chair), R. Lorne Seitz and Barbara McDougall held a public hearing on the matter in Toronto on November 29, 2011. During the hearing the Manitoba government presented its case to challenge Ontario’s Notice of Measure supported by the Governments of British Columbia, Alberta and Saskatchewan. Representatives of the Ontario Government, supported by expert witnesses, mounted the defense of Ontario’s public accounting licensing regime and the requirement that anyone wishing to enter Ontario from another Canadian jurisdiction must first satisfy substantial equivalency to Ontario’s public accounting standards before being licensed to practice.

The Institute was not a direct party to the dispute or the Panel hearing. Disagreements settled under the AIT process are disputed and negotiated between governments; not individuals, regulatory authorities or non-governmental organizations.

The Panel issued its preliminary report of findings and recommendations to the Parties under a 30 day embargo on January 13th, 2012 for review and consideration of appeal by the Parties. The report was formally released to the public and became binding on the Parties on February 13th, 2012. 

The Panel Findings 

The Panel supported the Manitoba Government’s position and ruled that the Ontario Government’s Notice of Measure impaired labour mobility and that the exemption could not be justified as necessary to achieve a legitimate objective. The Panel stated that it is “mere conjecture” that consumer protection is at risk due to different academic credentials, education, training and work experience accepted for licensing of public accountants in other Canadian jurisdictions.

Specifically, the Panel ruled that CGAs who have been certified to practise public accounting in other Canadian jurisdictions must be permitted to be licensed as public accountants in Ontario without any requirement for “any material additional training, experience, examinations or assessments”.   The Panel stated that it is not relevant to labour mobility if those CGAs otherwise certified in another Canadian jurisdiction do not meet the same standards of qualification for licensing as public accountants that Ontario CGAs must meet.

The ruling compels Ontario to take all necessary steps to come into compliance with the AIT by April 15th, 2012.

Status of Public Accounting Standards in Ontario

The Panel ruling does not have an immediate impact on Ontario’s public accounting standards and licensing regime. The requirements for licensing in Ontario established by the Public Accountants Council remain the same for members of the ICAO, CGAO and CMAO. The Panel upheld the right of provinces and territories to set their own standards and licensing regimes for public accounting for individuals within their own jurisdiction. In fact, the Panel accepted that Ontario’s objective is to improve standards applied to the certification of public accountants. However, the labour mobility provisions of the AIT do not allow them to impose those standards on another jurisdiction.

The Panel did not make a statement on the equivalency of professional standards between provinces and territories or regulatory authorities. For the purposes of labour mobility, the Panel only needed to consider if another Canadian jurisdiction certified individuals for the practice of public accounting; standards and licensing regimes were not central to the consideration.

For the time being, there is no change in the standards or in the requirements that members of the Institute must meet in order to be licensed as public accountants or to renew public accounting licences. Nor is there any current change in the requirements of individuals from outside Ontario seeking an Ontario public accounting license. The Institute will advise members should there be any change made to the Standards or to the licensing requirements as a result of the implementation of the AIT Panel decision.

The longer term impact of the Panel’s ruling will have on Ontario’s standards and licensing for public accounting will not be known until Ontario and the PAC determine what steps it must take to bring them into compliance with the AIT.

A Call for Nationally Consistent Standards

In spite of the findings regarding labour mobility, the Panel did acknowledge the inconsistency of public accounting standards across the country and the problem that has caused for labour mobility. The Panel took the additional step of recommending that all Parties (provinces and territories) take steps to reinvigorate consultations directly with each other or through the appropriate regulatory authorities, to develop a consistent standard for public accountants across the country. This recommendation is consistent with the CA profession’s longstanding call for nationally consistent public accounting standards, which will be accepted by our international trading partners, and it is consistent with the objectives of the proposed merger of Canada’s three accounting bodies.

2011 AIT Panel Report on Public Accounting

Summary of Panel Findings and Recommendations