In Balance: An Account of Alberta’s CA Profession
(Complete text)
By Peter McKenzie-Brown and Stacey M. Phillips
“Accounting has one primary function – facilitating the administration of economic activity. This function has two closely related phases: (1) measuring and arraying economic data; (2) communicating the results of this activity to interested parties.” – W.A. Paton, 1949
Canadian Cataloguing in Publication Data
McKenzie-Brown, Peter
In balance: an account of Alberta’s CA profession
Includes bibliographical references and index.
ISBN 0-9691132-1-8
Accounting – Alberta – History. I. Phillips, Stacey, 1970- II. Institute of Chartered Accountants of Alberta. III. Title.
HF5616.C22A45 2000 657’.097123 C99-901666-0
Table of Contents
Chapter 1: The Early Years
Chapter 2: Peace and War: 1910 – 1919
Chapter 3: Ten Years that Roared: 1920 – 1929
Chapter 4: The Great Depression: 1930 – 1929
Chapter 5: The War Continues: 1929 - 1945
Chapter 6: From Leduc to Suez: 1946 - 1956
Chapter 7: Birth of the Modern Era: 1957 - 62
Chapter 8: Centennial Decade: 1963 – 1972
Chapter 9: Economic Turbulence: 1973 – 1986
Chapter 10: Turn of the Century: 1987 - 2000
Acknowledgements
The authors gratefully acknowledge the help of many people from the accounting community in the preparation of this book. First and foremost, these include an oversight committee comprised of Ross Denham, Bill Stephen and Karin Holmgren.
Other individuals also reviewed the penultimate draft (or portions thereof). These included Steve Glover, Ross Skinner, Bill Halford, Keith Adams, John Collins, Marie Iwanow and Jayda Rosenthal. Mary McGurran also provided material on the changing role of women in the profession, and Don Salmon, Bill Rogers, Peter Valentine and Andrew Wingate provided background on Alberta government audits. Also, Mike Williams, Ronald Baines and Henry Lawrie collected materials for the sections on oil and gas accounting. John Collins’ comments on the final draft suggested particularly valuable and extensive new ideas and information to include.
Lorne Baxter, David Bentley, Travis Bouck, Elvin Christenson, John Collins, John Ferguson, Eric Geddes, Steve Glover, Alex Hamilton, Dick Haskayne, Brandy Horn, Keith Huckvale, Jill Kleebaum, Allan McTavish, Jim Miller, Thomas Mundy, Ed Roberts, Carl Smith and Bob Waller all consented to be interviewed. In addition, the institute’s archives yielded valuable transcriptions of interviews from earlier years. The subjects of those sessions were Elvin Christenson, Bill Grace, Merv Graves, Doug Hagerman, Ray Harris, Keith Huckvale and Haughton Thomson.
The genealogy of Alberta’s large CA firms was a large project in itself, for which Bill Stephen deserves full credit.
In our quest for information from the Canadian Institute, we relied heavily on the efforts of Susan Gambles. And to confirm some details of petroleum economics and policy development, we solicited the assistance of Hans Maciej, retired vice-president of the Canadian Petroleum Association.
We have not footnoted material that came from interviews or the archives of an accounting institute, but have used standard citation procedures for other copyrighted material and from the Canadian Chartered Accountant and CAmagazine. In practice, this means the reader must assume we have correctly interpreted material found in the Alberta Institute’s archives – generally speaking, minutes, reports, letters, memos and annual reports – and correctly quoted those CAs interviewed. To a very small extent, we have used historically significant quotations from daily newspapers and from The Canadian Encyclopedia and the Encyclopedia Britannica (1943 and 1996 editions) without citation. The quotes from Winston Churchill are available from any authoritative collection of his wartime speeches. In addition, some background material came from the newsmagazine The Economist.
We also acknowledge the Institute of Chartered Accountants of Alberta for initiating and funding this project. Other major financial sponsors included Deloitte & Touche LLP, Ernst & Young LLP, PricewaterhouseCoopers LLP and KPMG LLP. Peter Kruczko Professional Corporation (Edmonton) and King & Company (Edmonton) also contributed financially to this history.
Foreword
This book is about the history of Alberta’s chartered accountants and their first ninety years. It is the story of accountants and those individuals, issues, events and environments that prevailed in Alberta for nine decades. Those years mark what we are today.
The question might be asked, of course: “Is it really necessary to look back?” Why should any of us want to read about this? A recent student, Thomas Wylie observed in a letter to CAmagazine that: "With all due respect, Luca Pacioli is not a topic of conversation around the water cooler."
This history offers benchmarks, context, relationships, knowledge and, one hopes, a little better understanding of the present. Observations about these things should help us. Perhaps, too, it might just be enjoyable to read about ourselves. We might also agree that an historical perspective gives us some background to confront criticism, influence complex events before us right now, make changes for the better, and confidently address the unknown.
From this history about Alberta’s CAs we may learn why we do some of the things the way we do. We might also develop a better understanding of which policies work and which do not. For sure we will find out that some, maybe all, of the issues are never resolved. They mutate. They evolve as environmental conditions change. This is good. The Alberta profession with its strong and interesting history has contributed provincially and nationally to a rich discipline. In the year 2000 it has resulted in a vibrant group, some 7,000 strong, of highly accomplished men and women.
Neither does this history forget the always present and desirable social interaction that has prevailed among the membership. It has been most important throughout the decades. In the first instance it may have existed because formal annual meetings were needed. More importantly, however, there was a desire by Alberta’s CAs to have fun with their colleagues. The idea of fun may have seemed improbable in the early annual meetings held at the Banff Springs Hotel. Later though, the get-togethers occasionally became more “exuberant,” as in The Great Train Ride of 1969, and as evidenced by the outrageous costumes worn by some in that era. Recently, however, there has been an evolution to more focused recognition dinners and events that formally highlight the accomplishments of members and others.
At least four key themes arch the decades of the Alberta profession and are ever-present in this history. Education, governance, advertising, and professionalism or standards recur, usually prominently but sometimes less so, throughout the past 90 years.
It was recognized, almost from the beginning, that education was a key ingredient of a strong profession. Our connection with the University of Alberta started very early in our history. The struggle to recruit students, the question of lessons and lectures — and the ”Queen’s Course,“ of course! — was constant into the 1950s. Establishing a foundation for education, the early trials and tribulations of the now-accepted regime of professional development, the pride and disappointments associated with the Uniform Final Exam process, the establishment of a Winspear Chair of Accountancy and many other noteworthy events spanned these decades and helped bond members.
The first ten years of our history salute the pioneers of the Alberta profession. They needed to carve out a niche for themselves in the business community. Their foresight benefits all of us to this day. They exuded both confidence and uncertainty. The act of petitioning the legislative assembly for legislation to give them their particular franchise in business evidenced confidence and foresight. Steps relating to reciprocity, standards of admission, governance, the role of women in the profession and advertising, needed strong resolve in the face of hesitancy or indifference. And, this was a time of forging initial relationships with other accounting bodies that, at least in one case, had an ironic twist in the following decade.
The underlying themes that formed the profession in Alberta continued. The 1920s once more revealed the difficulties of implementing a quality professional education experience. It was also a time when the recently passed Income War Tax Act and other legislation were instrumental to the future prosperity of the profession. We see, too, that the profession frowned on advertising and was officially indifferent to women becoming CAs.
The thirties challenged accountants just as they did others. Great developments in accounting technique and practice came out of the economic depression. Education, governance, discipline and advertising were still catching up. These old issues had a new context. The war years were notable for personnel shortages on the home front and the great sacrifices in the theatres of war made by many CAs. Again, problems relating to education and the other themes did not disappear. Returning CAs had to be accommodated at the University of Alberta and by the practicing offices.
The fifties and sixties were years of growth — in education, governance and standards. ”Public relations” began supplanting the narrower idea of advertising. Regulatory legislation was now under serious study. As the 1970s unfolded, the economic ravages of inflation and a federal oil policy once again brought big changes to Alberta’s CAs. GAAP was no longer the same. Many saw that these were indeed, dynamic and subject to change. A limited form of price-level accounting and current values were in the minds of many practitioners. Accounting practices for oil and gas were developing quickly. As this period flowed into the eighties, one saw acute financial concern, education (again) in the form of the Geddes Report, women in the profession, specialization and regulatory legislation in the forefront of the profession’s interest. Such matters were the drivers of many actions and policies during this period. It is instructive and, for many, interesting to watch these events and conditions unfold in the pages that follow.
Finally, the last ten years are, perhaps, too close yet to allow for much in-depth comment or analysis. It was, however, a most noteworthy period in which all of the themes of education, governance, public affairs and standards required the close attention of all members.
Enjoy the following pages. Those who wrote and have had input into this project wish you a pleasurable journey into the past — into a part of Alberta, the lives of individuals and the significant events that have made Alberta’s CAs proud participants and leaders in their profession. We hope that, after reading and browsing the material in this book, you will delight in engaging your colleagues at the water cooler on 90 years of good change.
Ross A. Denham
William G. Stephen
Preface
In any normal sense of the word, the ICAA’s first annual meeting was a modest affair. Only four members attended, and they duly elected themselves to serve as officers. In so doing, they replaced an interim council that had elected itself a few months earlier. They re-appointed the institute’s auditor, too. They also passed a motion to join the Dominion Association of Chartered Accountants (DACA), now the Canadian Institute of Chartered Accountants (CICA). After years of conflict, DACA had finally become the umbrella organization for Canada’s chartered accountants.
And they committed those deeds to paper. The neatly typed pages of minutes from the ICAA’s first annual meeting are rich with a sense of occasion. This was the beginning of a long tradition of keeping detailed records of the institute’s affairs.
As we rummaged through the seemingly endless volumes of minutes and other documents assembled over 90 years, we were often struck by what appears to have been a profound sense of history within the Alberta Institute. Perhaps because it was legislated into existence when the province was only five years removed from being part of the Northwest Territories, the institute’s founders seem to have understood that the new organization had a destiny to fulfill. Perhaps the institute’s later appreciation of its past derives from that early conviction.
The only major milestone the institute did not celebrate was its 25th anniversary – most likely because the dirty thirties provided little cause and fewer funds to celebrate. About a decade later – shortly after the Second World War – council began considering the preparation of an institute history for the first time: nothing happened.
However, when 1960 rolled around, the institute celebrated its 50th anniversary with alacrity. An even greater celebration took place ten years later. The guest of honour was Ernest Manning – Alberta’s longest-serving premier and a giant among Canadian politicians; he had recently been appointed to the Senate.
Manning told the assembled crowd that accountants should take more notice of public concern about the qualitative aspects of life. Reflecting the mood of the times, which called for sometimes-radical social change, he told the institute: “There must be a whole new alignment and restructuring of the private sector and the businesses which comprise it.” Manning added that CAs “have a unique opportunity to develop a system of social accounting.”
As this history suggests, almost every era of the twentieth century saw realignment and restructuring in the private sector. What we also attempt to show is that those periodic upheavals progressively turned Alberta’s CAs into central figures in the province’s business life.
But let’s continue with institute milestones. When the institute celebrated its 75th anniversary, it did so in part with a series of historical newsletters, titled Perspectives. To an extent, Perspectives relied on efforts from 1978, when Haughton Thomson – a senior member of the profession – took some important steps to preserve the institute’s oral history. He interviewed such prominent old-timers as Elvin Christenson, Merv Graves and Doug Hagerman, and had those interviews transcribed.
For the members who were keenest to retain the institute’s history – most of them older members whose greying heads contained vivid memories of continual, remarkable and sometimes convulsive change – this was not enough. Perspectives had barely rolled off the presses before the institute formed a sub-committee dedicated to the preservation of its history.
In the end, the institute seized another milestone, its 90th anniversary, as the occasion for commissioning a formal history. Coincidently with that milestone, the world’s Gregorian and Julian calendars would be celebrating a rollover to the year 2000. One millennium was passing, another being born. The institute decided to celebrate this milestone in an appropriate way. Finally, council decided, it was time to record the story.
Does this volume fully report the ICAA’s history? The answer, of course, is “No.” But to get a sense of how daunting this project was, consider the background.
The institute’s extensive minute books began with a slim volume from the second decade of the twentieth century. As the century wore on, there were exponential increases in the volume of archived material. For example, when the authors asked for Chapter 9 research materials, a truck delivered 30 volumes of minute books plus other materials in seven large boxes. Each of those volumes was replete with information that could have added depth or interest to this work. (Frustratingly, one of the minute books for 1984 and all of those for 1985 were missing. Those voids left gaps in our understanding of the story.)
Another reason this book could not possibly be complete is that the authors are writers rather than accountants. Our paths have rarely crossed those of the thousands of men and women whose lives have been affected by the institute, and who themselves have affected the institute’s life. As we learned during 15 months of research and writing, those people were students, teachers, committee volunteers, members of council and staff. Most are living; many are not.
Given those circumstances, no book could do justice to the institute’s story. Our hope, however, is that our writer’s instinct for detail, our passion for history and our gathering understanding of the CA profession have enabled us to illuminate two central themes.
The first is that narrative cannot live in isolation. The ICAA was constructed upon a foundation that reached thousands of years into the past. And since its creation, the institute has been profoundly affected by external events. For the first half of the institute’s life, these included three wars, the Great Depression, and the decline of the British Empire. Other factors have included inflation; taxation and economic policy; resource extraction and industrial growth; local and national politics; technology; the changing roles of men and women; immigration and economic globalization. This book can hardly do justice to any one of those developments, but it hints at their effects.
Our second theme is at the other end of the spectrum. Men and women make history. To the extent we could, we have given voice to individuals. We have quoted them and observed small incidents and particulars of their lives. Our hope is that we sometimes gave a sense of who they were, how they thought and even how they lived. We regret that we could not do more of this.
Not all of the people covered in this book were principled or competent. Scandal tainted the professional lives of two of the institute’s 11 founding members, for example. Most of the institute’s men and women have been upstanding and principled, and highly respected for it.
A noteworthy gesture related to professional ethics came with the death in 1938 of Frank Harvey, who had been a dedicated and tireless institute volunteer. On hearing of his passing, council convened a special meeting to pass a resolution of sympathy. That resolution resolves, “That the members of this Council desire to place upon the records the following tribute to the memory of their departed colleague and that the page in this book following the minutes of this meeting be forever left blank as a token of his unsullied reputation.” For us as researchers, that simple gesture was rich with humanity. It helped make his life a living part of the pages of history.
We found endless pleasure in discovering such vignettes. However, we rarely had the opportunity to forget that we were non-accountants who only brought writing skills and love of history to bear on this project. If we have done justice to the institute’s history at all, it is because of the support of Ross Denham and Bill Stephen. Those gentlemen patiently explained the mysteries of accounting to us, endlessly corrected our technical errors, cajoled other institute members into providing us with valuable background information, and stickhandled our final draft through a battery of expert reviewers.
The third invaluable member of our oversight committee was the ICAA’s Karin Holmgren. Karin tracked down obscure pieces of information for us with amazing resourcefulness and dexterity, and reviewed each of the many drafts with an expert editor’s eye.
Without the keen collaboration of these three, there would have been no book. Book or no book, of course, the institute would still have had a long, proud history. We feel honoured to have been chosen to record it.
-- Peter McKenzie-Brown and Stacey Phillips
"[By 1905] the West was bringing prosperity to the whole country, and the eyes of the world were fastened on Canada...The regional pride that Westerners felt was being transformed into a new nationalism. Since 1867, Canada had been an awkward entity, its Pacific province cut off from the East by two thousand miles of empty prairie. Now Canadians saw their Dominion with new eyes. The vacuum was filled; a new heartland had emerged, vibrant, confident, prosperous.” – Pierre Berton, 1984.
Chapter One — The Early Years
The incident that best symbolizes the introduction of accounting to Alberta did not even take place in the Canadian prairies. Rather, it occurred a thousand kilometres from the eastern border of today’s Alberta. The place was a remote corner of the Canadian Shield. The year was 1719. The event was an exchange of goods between a Hudson’s Bay Company trader and a Cree Indian.
To appreciate that incident, which we will return to shortly, it is first helpful to explore the origins of trade in Western Canada. That is because accountancy is a handmaiden of commerce. To understand accounting, you must also understand common commercial practices.
The extent of pre-Columbian Aboriginal trade is impressive. For example, the ancestors of today’s Inuit traded amber from the most northerly of the Arctic Islands, copper from deposits near the southern edge of the Arctic Ocean and meteoric iron from northern Greenland. That trade does not seem to have crossed the ethnic divide between Inuit and Amerindian peoples, however.
In the continent’s temperate zones, trading networks were far more complex. According to the archaeological record, the land we now know as Alberta has sustained commerce in one form or another for at least 8,500 years. The first Albertans traded for tools made from the volcanic glass obsidian, quarried and shaped by early artisans in today’s British Columbia and Wyoming. Other valued tools were manufactured from local copper mines along the western edge of Lake Superior. In addition, tools that have been excavated in Alberta are traceable to silica quarries in today’s Dakotas and Northwest Territories.
Archaeology has not identified quarries in early Alberta from which distinctive trade goods were manufactured. However, trading goods from the region might have included bitumen gathered at seeps along the Clearwater River, near its confluence with the Athabasca. Aboriginal peoples often used this dense, sticky tar to caulk their canoes. Regardless of the products exchanged, the region has long been connected to intricate commercial networks.
Although there was trade, there were no documented accounting systems among Canada’s Aboriginal peoples. Conditions on the prairies, which included long winters and vast herds of bison, were well suited to hunting and gathering. It was therefore unlikely that accounting would develop, since early accounting systems arose from the technologies of agrarian societies.
According to most accounts, four conditions must exist before sophisticated accounting practices (as we know them today) can develop. The first is a written language. The second is a system of numbers. Readily available writing materials are the third. But the most important is the accumulation of wealth, including the use of a common currency or coinage to facilitate exchange. Where it developed, agrarian society enabled wealth to be created in the form of herds, production and other property. It also created conditions in which such technologies as literacy, counting and coinage could develop.
It was not until the Aboriginal peoples of Western Canada started making regular contact with Europeans that a common currency — furs — enabled North American trade to really flourish. The creation of that common currency marks the introduction of accounting systems into Canada’s West.
Sidebar: Reading, Writing and Arithmetic
During preparation of this book, professor Daniel Thornton of Queen’s University brought to the authors’ attention a paper that disputes the common notion that you need to read, write and do simple math to create an accounting system. In their lengthy article, the four CAs note that the Sumerians “had developed a prehistoric form of accounting, complete with debits and credits, to track physical flows of goods and social obligations to pay for them. By 3500 BC, before people knew how to read, write or count, they were making kiln-fired tokens that represented resources such as cows, goats and wheat.”
Each token was an account representing an asset – a cow, for example. One cow-token equaled one cow. When five cow-tokens were deposited in a clay urn, the urn served as a crude balance sheet. Just before the tokens were dropped into the urn, they were pressed on their soft, clay surface. The visible impressions that were left identified the owner of the cows and thus were an early example of disclosure. According to Thornton and his colleagues, “This accounting system relied on a one-to-one correspondence between the accounting sign and the physical/social referent that it tracked. Such a correspondence was necessary because counting, as we now know it, had not been invented.” Neither had writing.
Some technology historians take this argument further. In effect, they suggest, accounting led to the creation of the literacy and numeracy that became foundation stones of later civilizations. According to one noted thinker, Jared Diamond, “The independent invention that we can trace in greatest detail is history’s oldest writing system, Sumerian cuneiform....In the last centuries before 3000 B.C., developments in accounting technology, format, and signs rapidly led to the first system of writing.” Thus, the creation of wealth (grain, livestock) in antiquity’s Fertile Crescent led to accounting, which in turn led to the development of writing and arithmetic. The earliest known texts are inventories – in this instance, lists of livestock and agricultural equipment. These come from the city of Uruk, Babylonia, and are dated about 3100 BC.
All of the alphabets that originated in western Eurasia descended from cuneiform. And even when literature began to develop more than two millennia after writing was invented, accounting remained a far more important use of the technology. Oddly, the notion that accountants taught us how to read and write is sometimes explained as an early accountant joke.
Hudson’s Bay Company
A landmark year was 1670. That is when King Charles II issued a “grant” (in effect, articles of incorporation) for the Company of Gentlemen Adventurers Trading into Hudson Bay. The grant went to his cousin, Prince Rupert, and a small group of Rupert’s business associates. Today known as the Hudson’s Bay Company or The Bay, that organization’s charter provided for a monopoly over trade in the lands fed by rivers flowing into Hudson Bay. The equivalent of 40 per cent of modern Canada that vast territory was known as Rupert’s Land until after Confederation. It was history’s largest private commercial empire.
To manage such a huge trading area required a well-capitalized organization (the Bay’s initial capital was £10,500) and permanent business operations. Before the creation of the Bay and a few other seventeenth century trading companies, British “venturers” had generally financed each business expedition (for example, the voyage of a trading vessel) separately. The Bay thus represented a new, continuous approach to enterprise, and reflected an important advance in the business entity.
Alberta’s most southerly river systems are part of the Hudson Bay watershed, although water from the northern two-thirds of the province flows into the Mackenzie River Basin. The Mackenzie drains into the Beaufort Sea. However, Aboriginals from all of present-day Alberta quickly developed trade routes to Hudson’s Bay Company “factories.” The Bay’s factories were trading posts at which Aboriginals and the British exchanged pelts for such manufactured goods as axes, beads, broadcloth, brandy, knives, guns, lead and gunpowder. This commerce usually required long, strenuous and frequently dangerous journeys by canoe through white-water rivers and the muskeg of the Canadian Shield.
The beaver pelt was the common currency in these transactions. Early factory books recorded transactions according to “Goods Expended p. Weight Value into Beavor [sic] Amounts” and “Goods Expended p. Number Value into Beavor amounts.” For a century and a half, the standard of currency was the “Made-beaver” — a prime quality skin from an adult animal.
It was to the Bay’s York Factory (in the northeast of today’s Manitoba, on the shores of Hudson Bay) that accounting in Alberta can trace its symbolic roots. In an entry to his log on June 12, 1719, the trading post’s “factor,” Henry Kelsey, wrote that a Cree Indian named Wa-Pa-Sun had brought him a sample “of that Gum or pitch that flows out of the Banks of the River.” Wa-Pa-Sun had delivered a sample of bitumen from a seep along one of northeastern Alberta’s rivers.
Why is this incident significant to Alberta’s accounting profession? First, the fact that Wa-Pa-Sun possessed a sample of bitumen leaves little doubt that he was trading goods from present-day Alberta. And the trading results of that expedition were dutifully noted in the accounts delivered to the Bay’s head office in London. For the first time, in other words, goods known to have originated in today’s Alberta formally entered a bookkeeper’s ledger.
This episode has a second level of historical significance. The delivery of that sample to a British explorer, diarist, trader and bookkeeper led to the first written record of Alberta’s Athabasca oil sand deposit — perhaps the world’s largest hydrocarbon resource, and today the source of 15 per cent of Canadian oil production. As we shall see, Alberta accountants would make substantial contributions to the practice and theory of oil and gas accounting.
For 100 years after Kelsey’s encounter with Wa-Pa-Sun, traders of European origin ventured progressively farther into Western Canada to increase the trade in pelts. They established trading posts throughout the northern portion of the continent. While these men were known collectively as coureurs de bois (“runners of the woods”) because so many came from Quebec, many also hailed from Scotland, Ireland, the United States and British colonies in North America. The most famous of them all was a Scot, Alexander Mackenzie.
The first European to cross North America from east to west and the first to travel the Mackenzie River to its terminus at the Beaufort Sea, Mackenzie was a key shareholder in the Montreal-based North West Company. At the beginning of the nineteenth century, that company engaged in a fierce trade war with the Bay. The sometimes-violent conflict was resolved in 1821, when the two companies combined.
The new entity kept the Bay’s name, but increasingly moved its trade to England through the Great Lakes and the St. Lawrence River, rather than through the drainage systems that flow into Hudson Bay. Some 65 years later, the St. Lawrence trading system would be extended by rail to the Pacific. And that trading system — it stretched from Quebec City to Vancouver — would become the backbone of Canada as a modern state. The implication, of course, is that Canada was constructed upon a trade route – a route that was extended by many thousands of miles in the 1880s by a visionary railroad. Commerce is at the core of the nation.
Double-Entry Bookkeeping
European fashions changed, and demand for beaver felt hats dropped. The market became glutted and the value of the beaver pelt collapsed. But during the years of trade in which beaver pelts were common currency, the methods by which accounts were kept did not change much. The Bay’s factories used a double-entry system of bookkeeping adapted to meet the company’s needs.
Simple bookkeeping at that time did not include the large body of theory that stands behind modern accounting. It could record debts, inventory and other assets, for example. However, it did not have ideas and formal procedures for dealing with debts that were uncollectable; inventory that had been stolen, damaged or spoiled; or assets that had worn out.
Double-entry bookkeeping has existed since at least the fourteenth century. A set of books from Genoa, dated 1340, still exists, and used an excellent double-entry form. The system was used by such Italian banking houses as the one established in Florence by Giovanni di Bicci de’ Medici in 1397. However, this system is most closely associated with Franciscan friar Luca Pacioli, an unsung hero of the Renaissance. His friend and associate, Leonardo da Vinci, illustrated one of Pacioli’s books. The book that created Pacioli’s lasting reputation was his Summa, which was published in 1494 – coincidentally, the year the once-powerful Medici bank failed.
The Summa provided a rigorous analysis of bookkeeping. This treatise, which includes the first printed text on algebra, dealt with a variety of mathematical subjects. It is known in accounting history, however, for its section on accounting which, among other achievements, articulated the mathematical formula behind double-entry bookkeeping: Assets = Liabilities + Owner’s Equity.
The money and date columns in Pacioli’s ledger were almost identical to those in modern ledgers. Entries consisted of brief paragraphs; debits were on the left side of a double page, credits on the right. The trial balance was the end of Pacioli's accounting cycle. If the credit and debit columns were not equal, said Pacioli, "that would indicate a mistake in your Ledger, which mistake you will have to look for diligently with the industry and intelligence God gave you."
The accounting portion of Pacioli’s Summa was a how-to document for the businessman of the day. “Accounts are nothing else than the expression in writing of the arrangement of his affairs,” Pacioli explained. “If he follow this system always he will know all about his business and will know exactly whether his business goes well or not.”
So good was the system that Pacioli codified that it quickly came to dominate European accounting. His Summa was soon translated into five languages, and numerous European writers described his system of accounts – often without giving Pacioli any credit. The first to do so in English was Hugh Oldcastle, in 1553.
Pacioli’s work was a response to the expanding commerce between Europe (especially present-day Italy) and the Middle East. Combined with Europe’s assimilation of Arabic advances in mathematics and science, that trade played a large role in fuelling the Renaissance. It was also a factor in the creation of the first known association of accountants – the Collegio des Raxonati, founded in Venice in 1581. The Renaissance illustrated profoundly how commerce and prosperity can give rise to innovation in art, philosophy, science and technology.
Sidebar: “Doomsday”
The idea of inventories reaches far back in history. The most famous is William the Conqueror’s Domesday Book (pronounced “Doomsday – delivered to King William I of England on Christmas Day, 1085. The greatest administrative achievement of the Middle Ages, these books (there were actually two) were prepared within the remarkably short time of seven months. Technically known as “The Description of England,” their nickname quickly developed. According to a twelfth century treasurer of England, people called it the Domesday Book because its “decisions, like those of the Last Judgment, are unalterable.”
The King had requested a list of every parish, castle, abbey, mill, fishery, house and cottage in his recently conquered domain. He also wanted a record of every family of whatever social rank; of every cow, ox, hog and horse. And he asked this in an era almost completely devoid of written property records.
The King’s assessors visited all but the north of England. They travelled through countryside without maps or mileposts, whose trails were winding, often-muddy tracks. They used forced inquest to ask millions of detailed questions of thousands of inhabitants. The people they visited spoke in thick local tongues and used local measures of value, volume, weight and area. And they frankly resented being a conquered people. Nonetheless, the assessors collated their answers into rough drafts, which they delivered to clerks for further refinement. And a single clerk penned the amazingly comprehensive final documents.
The Domesday Book introduced sophisticated records into medieval Europe, thereby contributing to institutions whose contemporary heirs include, for example, Alberta’s Land Titles office. Domesday was originally prepared for tax and war purposes, so the extensive files and systems of Revenue Canada are another heir.
England now had an inventory upon which to base taxes but did not have an auditor to examine the public accounts. Cash-strapped Edward II appointed an Auditor of the Exchequer in 1314, and England’s early rulers appointed special auditors and took other primitive steps to ensure accurate books. However, the systematization of the audit of public books began during the reign of Elizabeth I. In 1559, she appointed two Auditors of the Imprests – officers who were paid by fee but did their work by deputy. This less-than-satisfactory approach remained in place until 1785, when Britain appointed an Audit Board.
The audit reached a relatively modern state with Westminster’s Exchequer and Audit Act of 1866. This statute gave a lengthy description of the duties of the audit office. It also empowered the sovereign to appoint a “comptroller and auditor-general,” with staff enough to examine and verify the accounts prepared by the public service.
Workshop of the World
The cycle of prosperity and innovation has recurred many times during the five centuries since the Renaissance. During the glory days of the British Empire, for example, the gears of the Industrial Revolution made Britain the “workshop of the world.” Poet William Blake perhaps described the rapidly proliferating manufacturing plants in England and Scotland as “dark Satanic mills.” Those factories were the crucibles in which accounting began to stretch far beyond the simple practice of double-entry bookkeeping.
According to prominent accounting historian Phillip Creighton, accounting “is, surely, the Victorian profession. The beauty of the double entry system with everything in its place and all things predictable and certain, controlled and constrained, with a correct answer to every question, must have seemed to the Victorians almost the perfect form for life on this planet.” This may be, but Victorian Britain struggled bravely and sometimes fruitlessly to create accounting systems that could achieve such lofty ideals.
The Industrial Revolution and the expansion of Britain’s empire had such a huge impact on the structures of trade and commerce that both government and business had to respond. As the scale of enterprise grew, business employed larger work forces. And markets for new technologies (particularly those that applied steam power) created greater need for large-scale investment.
Between 1825 and 1856, Britain responded with parliamentary measures that effectively created the legal framework for the modern corporation. By the end of this period, a company could obtain legal status through registration. The investor had no liability beyond the amount invested in company shares; creditors had no recourse to a limited company’s investors. In addition, the public company could have any number of shareholders.
Legislation passed in 1844 required public companies to present regular financial reports (including a “full and fair” balance sheet), as well as a report from appointed auditors at each ordinary meeting of shareholders. Also in that year, banks incorporated under the Joint Stock Bank Act were required to provide an annual audited balance sheet and a profit and loss account.
Britain’s provisions for mandatory financial statements and audits were dropped in 1855-56, not to be revived until 1900. However, the 1855-56 legislation did encourage good financial reporting practices. According to accounting historian Ross Skinner, the legislation described “a model set of company articles, including enlightened provisions with respect to the accounts to be kept, the audit, and the forms of the balance sheet and the statement of income and expenditure to be laid before the annual general meeting. The model also provided that dividends should not be payable except out of profits.”
By creating the corporation as a legal entity through which to invest capital with limited risk to the investor, Britain’s Parliament spurred an already dynamic private sector. The British soon began using public companies to export investment capital throughout the world.
These far-reaching pieces of legislation effectively acknowledged that the public had an interest in good financial reporting. By doing so, they greatly extended the base upon which accounting could build itself as a profession.
To wrestle with the accounting issues presented by changing technology and new financial reporting requirements, local groups of accountants formed associations. Working ad hoc at first, the members began developing accounting theory that went far beyond double-entry bookkeeping.
Somewhat like the guilds of medieval times, they began to seek exclusivity for their members. The first officially sanctioned accounting body — the Society of Accountants in Edinburgh — received a Royal Charter in 1854. The next year the Institute of Accountants and Actuaries in Glasgow was formed and the Society of Accountants in Aberdeen received its charter in 1867. These three groups later became part of the Institute of Chartered Accountants of Scotland.
From the beginning, the Scottish societies began distinguishing members from non-members by calling themselves “Chartered Accountants” and using the CA designation. The letters CA quickly caught on. While the letters vary according to jurisdiction (CA, CPA and so on), the practice of using a professional designation is now standard.
There are a number of reasons why accounting developed more quickly in Scotland than elsewhere in Britain. One was the high degree of literacy among the Scots, an outcome of Presbyterianism’s belief in the authority of Scripture. A second was that much of the land and many of the businesses located in Scotland were owned in England. Resident Scots were hired to report on stewardship and on estates and trusts. A third was an important difference between early English and Scottish commercial law. Unlike the English, Scots did not greatly limit the number of investors that could participate in a single venture. This increased the need for audited books.
An early history of accounting gives an illuminating example of the ambitions and aspirations of early Scottish accountants. In 1905, Richard Brown wrote A History of Accounting and Accountants. Said he, “It may be of interest to quote here, as a very full compendium of the kind of work which a Glasgow accountant of the early part of the last century professed to undertake, the list of duties which Mr. James McClelland....attached to the circular, dated 12th March 1824, in which he announced that he had commenced business on his own account:
Factor and trustee on sequestered estates.
Trustee or factor for trustees of creditors acting under trust deeds.
Factor for trustees acting for the heirs of persons deceased.
For gentlemen residing in the country for the management of heritable or other property.
Agent for houses in England and Scotland connected with bankruptcies in Glasgow.
The winding up of dissolved partnership concerns and the adjusting of partners' accounts.
The keeping and balancing of all account-books belonging to merchants, manufacturers, shopkeepers, &c.
The examining and adjusting of all disputed accounts and account-books.
The making up of statements, reports, and memorials on account-books or disputed accounts and claims for the purpose of laying before arbiters, courts, or counsel.
The looking after and recovering old debts and dividends from bankrupt estates.
And all other departments of the accountant business.”
Whatever the reasons, by the middle of the nineteenth century Scottish accounting was far more sophisticated than its English counterpart. Accountants migrated from Scotland to London, where they headed many of the most successful accounting firms. They also migrated to New York, Montreal and other North American cities, where they had a huge impact on the profession’s development.
The initial impact of Scottish accounting outside Scotland was in England. Accounting societies developed in London, of course, and in Liverpool, Manchester, Birmingham and other prospering cities. In 1880, London and the provincial societies merged to create the Institute of Chartered Accountants in England and Wales. According to an official history of that body, “Among the great advantages of Charters were the fact that the tradition surrounding them dated back to the fourteenth century, the prestige attaching to them and the characteristics of monopoly they conferred.”
From the beginning, British associations struggled with financial reporting issues. These included, for example, how to account for depreciation in a company’s books, how to account for such fluctuating assets as investments and how to value inventory. The improvements they made to financial reporting helped investors determine whether their money was being invested and managed properly.
At the same time, the manufacturing sector began placing other demands on accounting professionals. Factories throughout Britain needed ways to prepare budgets and better control costs. Accountants and accounting groups responded with what later became known as cost accounting (and, later still, management accounting).
Cost accounting helped revolutionize manufacturing. By capturing the costs of production, it provided information with which the company could budget and forecast results. And as it became more sophisticated, this practice developed into a system for financial and operating control. Industrialization and technological change during the hundred years after 1850 gave this branch of accounting an ever-increasing significance. It contributed to economic growth, since successful companies tended to be those that used cost accounting practices effectively.
While cost and financial accounting made big strides during the Victorian era, problems remained. The railroads proliferating throughout Britain illustrate some of the difficulties that financial reporting had to deal with. Promoters of these capital-intensive enterprises often used bookkeeping methods that were dicey at best. Yet to attract and keep investors, the railroads required books that fairly reflected the company’s financial performance. Solutions eluded the accounting profession for many, many years.
Two problems were at the heart of the confusion. One was how to allocate expenditures to capital and operations. The other was whether business should make a provision for capital depreciation before calculating operating profits. In an effort to impose order onto the resulting chaos, in 1868 Britain imposed legislation on the railroad industry. The Regulation of Railways Act prescribed uniform financial reporting and audit practices, but the procedures introduced were not particularly successful. They did not resolve the question of the distinction between capital and revenue, for example.
Railroads transformed the economy of Britain as they spread to Europe and North America. In Alberta’s case, a railroad brought the province into being.
Sidebar: Accounts in disarray
One of the many notable men to rise through the ranks of The Bay was Donald Alexander Smith, a Canadian fur trader, financier, railway promoter and statesman. Knighted as Lord Strathcona and Mount Royal later in his career, Smith was apprenticed to the Hudson’s Bay Company in 1838 and worked for many years at the fur trade in Labrador. He served as chief commissioner for the company in Canada from 1870 to 1874. After becoming the principal shareholder, he served as governor of The Bay from 1889 to 1914.
Smith did not scale the corporation’s ranks through his proficiency as an accountant. In 1845, he received a scathing letter from the company’s governor, Sir George Simpson. Simpson had just visited his operation at Mingan, Labrador. “Your countinghouse department appeared to me in a very slovenly condition, so much so, that I could make very little of any document that came under my notice. Your scheme of outfits were really curiously perplexing, & such as I trust I may never see again, while letters, invoices and accounts were to be found tossing about as waste papers in almost every room of the house.”
The wooden structure that served as The Bay’s Mingan trading post burned to the ground the following year. “My personal property has been wholly lost, as I had to make my escape in my shirt without either coat, hat or shoes,” Smith reported. However, he claimed, “the more important papers indeed almost all of them and the whole of the cash except perhaps ten or fifteen dollars have been saved.”
In fact, Smith had little left from which to create a balanced account, despite his repeated promises. On New Year’s Day 1847, Simpson sat at his desk and wrote angrily to another Bay employee in Canada, George Barnston. “I cannot understand Mr. Smith’s want of attention to the transmission of his accounts in proper shape: he is very active but appears to me to be wanting in method.”
Smith may indeed have been wanting in accounting method. Like Lord Simpson, however, he was a towering figure in nineteenth century Canadian business, and he was also an influential politician. In 1885 Smith became the central figure in what is perhaps Canada’s best-known photograph. Surrounded by a crowd of railroad workers in south-central British Columbia, he was driving the last spike for the Canadian Pacific Railway.
Canada’s Railway
In the middle of the nineteenth century, railroads financed by British capital began transporting people and goods in central Canada and the Maritime colonies. Nova Scotia had a flourishing shipping industry, but the other colonial economies were mostly based on agriculture and the export of raw materials to the British Isles. The North American colonies felt reasonably secure in the shadow of Britain’s economic and naval might.
This outlook changed with the American Civil War. During that terrible conflict, British sentiment favoured the Confederacy. This gave a boost to the doctrine of Manifest Destiny, the belief among Americans that the destiny of the United States was to govern the entire continent. After its 1865 victory, the Union did not quickly decommission its large armies. Many eyes in the republic were looking north.
As the bloodshed was ending, Upper and Lower Canada (Ontario and Quebec) made an appeal to England. A political coalition asked Whitehall to create out of Britain’s North American colonies a sovereign country with close ties to London. Westminster responded with the British North America Act. Confederation united Nova Scotia, New Brunswick, Quebec and Ontario in 1867.
Led by Sir John A. Macdonald, a Conservative, the newly minted federal government began a grand project to combine British North America into a governable whole. The chosen vehicle for the western portion of this undertaking was a railroad that would connect the commercial centres of Quebec and Ontario with British Columbia and points between. That railway was the Canadian Pacific (CP).
In late 1869, Canada’s federal government acquired the Hudson’s Bay Company lands in Western Canada. Manitoba and the colony of British Columbia entered Confederation the following year, and Prince Edward Island in 1873. To maintain order and assert sovereignty over the new western territory, in 1873 Ottawa created the Northwest Mounted Police (today the RCMP). In Canada’s prairies, law and order therefore preceded settlement — quite unlike much of the experience in the American frontiers.
To tie a ribbon of steel from Canada’s commercial heartland to her western coast, the federal government used land grants and other concessions to encourage the creation of Canadian Pacific, a railway to the Pacific coast. That enormous enterprise, which arrived in today’s Alberta in 1883 and was joined to the coast three years later, removed the major impediments to settlement in Canada’s west.
Settlement
Before the coming of the railroad, small numbers of settlers had arrived in Alberta by canoe, horseback and cart. Their numbers stood at only about 1,000 in 1881. Ten years later, the non-Aboriginal population had increased to some 17,500.
But the federal government wanted to fill the prairies with productive farmers, and it took the energetic leadership of Clifford Sifton to make that happen. By background a Manitoba lawyer, from 1896 to 1905 Sifton was Canada’s immigration minister under the Liberal government of Sir Wilfred Laurier.
A number of factors contributed to Sifton’s remarkable success. He encouraged major recruitment drives for settlers in Britain and Ukraine, whose “stalwart peasants in sheepskin coats” he believed would be well suited to breaking the prairie to the plow. The Canadian Pacific Railway also recruited settlers. Railroads cannot be profitable without goods or people to transport, and the CPR intended to move both.
Another factor that helped encourage settlement was the closing of the US frontier. Lured by the promise of 160-acre homesteads for males of 18 years or more, Americans and people from other countries who had first migrated to the United States began moving into Canada’s prairies. In addition, the development of strains of wheat that could mature quickly increased the agricultural potential of the prairies. These factors and a generally strong economy opened the floodgates of settlement. Canada’s frontiers quickly retreated to the north.
Growth and prosperity characterized the final years of the century. This prosperity was partly driven by technology, which was lowering the cost of almost everything — from raw materials to manufactured goods to basic transportation. Locomotives began pulling long trainloads of settlers, their effects and supplies into Alberta.
Historians refer to the seven-decade period that began in 1890 as Canada’s Great Transition — the era in which the country developed into a mature nation-state. Much of that evolution was driven by events in the prairies. Between 1891 and 1914, an estimated 215,000 men, women and children migrated to Alberta from Britain, the United States and continental Europe (especially Ukraine). Central and Eastern Canada contributed an additional 90,000.
These new arrivals cleared forests and broke sod to start farms. As they confined livestock with barbed-wire fences, they began closing in the prairie. They operated vast ranches, reporting financial performance back to absentee owners. They set up shops and stores. With an eye to exporting grain and beef, they developed granaries and stockyards. They established breweries and other manufacturing operations. They provided services like blacksmithing, milling and construction. Doctors, dentists and lawyers began hanging up their shingles. Accountants started looking after the affairs of young enterprises and new agencies of government.
The region’s hotels were sometimes unable to accommodate the swarms of people being discharged at crowded train stations. The real estate market went from strength to strength. Religious life flourished around the churches springing up everywhere, and schools began to educate the young. Government and municipal buildings went up in larger centres. Civic life became more sophisticated. Theatres and rodeo created the beginnings of an entertainment industry.
The year 1897 began a period of railroad building gone mad. Line construction fleshed out the CP system and eventually created two new transcontinental railways — the Canadian Northern and the Grand Trunk. Central Canada’s railways were already mature, so crews laid the lion’s share of new rail in the prairies. The Prairie provinces soon boasted a dense complex of trunk and branch lines serving an expanding cereal economy. Hamlets, towns and cities sprang up around railway stations and along feeder lines.
Though especially strong in Western Canada, growth was remarkable Canada-wide. With the buoyant optimism that was characteristic of the times, in 1904 Prime Minister Sir Wilfrid Laurier made an oft-quoted prediction to Ottawa’s Canadian Club: “All signs point this way, that the twentieth century will be the century of Canada.”
In the west, the symphony of growth reached a crescendo in 1905, when an act of Parliament welcomed Alberta and Saskatchewan into Confederation. The new provinces were heir to British traditions of law and corporate governance, and organized around a parliamentary form of government. The province’s first premier was Alexander Rutherford, a Liberal. One of the early acts of Alberta’s government was to create a charter for the University of Alberta, to be located in the City of Strathcona (now part of metropolitan Edmonton).
Such technological marvels as electricity and automotive power began gracing the land. The prairies were already connected to the world by telegraph, and local telephony was making an appearance. So was electric lighting (hydroelectric plants began to appear in Alberta in the late 1890s). And the first recorded automobile trip from Edmonton to Calgary (a two-day journey) took place in March 1906.
By this time, virtually all the office technologies that would dominate the accountant’s work were readily available, although in real terms they were far more costly than they are today. These included typewriters and carbon paper; preprinted ledgers, journals and binders; pencils and nib pens; reams of standard and legal-sized paper. These and the other accoutrements that made accounting possible would not be augmented with much more sophisticated tools until after the Second World War. The main exception was the mechanical calculator, which began to be used in the 1920s.
Coal mines in southern Alberta were supplying rapidly growing demand. In the beginning, the market included coal-fired locomotives and the occasional steam tractor; industrial furnaces, fireplaces and stoves; utilities that manufactured coal gas. Coal would be the province’s primary energy source until the middle of the century, and is still a major export.
Many settlers were somewhat aware of Alberta’s oil and gas potential. Around the then-hamlet of Fort McMurray (a remnant of the fur trade), Aboriginals had known long before Wa-Pa-Sun about bitumen seeping into the river. At the turn of the century, a few hardy souls were already trying to coax oil from surface outcrops of this boundless resource.
The town of Medicine Hat developed gas for light and heat in the 1890s, and a local brick-making industry grew around gas-fired kilns. And by 1909, Eugene Coste (often called the father of Canada’s natural gas industry) was in London to raise funds for a natural gas pipeline to the bustling city of Calgary. When the 274-kilometre line was completed three years later, natural gas would begin replacing coal gas and pot-bellied stoves in Alberta’s second-largest city.
This period of sustained economic growth grounded the economy in agricultural exports. But as homesteaders were breaking the soil, urban construction and development were proceeding apace. Entrepreneurs and the town of Medicine Hat were already beginning to exploit the petroleum resources that would eventually displace agriculture as the prime source of provincial prosperity.
Even tourism had begun. To lure wealthy tourists, in the mid-1880s Canadian Pacific began constructing hotels in the Rockies.
The province’s agricultural economy was still small and prey to endless natural disasters — early frost, grasshoppers, hailstorms and, in the south, drought. But the settlers still felt that opportunity abounded. Economic expansion released an unstoppable sense of optimism into the air. The experience of helter-skelter growth made everything look possible.
The first generation to go by the name Albertans, these settlers were astonished at how quickly the streets of new villages, towns and cities filled with horses and wagons. Dazzled by the first of many booms, they correctly believed growth would continue unabated for many years to come.
It was in this dynamic environment of about 350,000 souls that a small, dedicated and forward-looking group of men organized the Institute of Chartered Accountants of Alberta. Legislated on December 16, 1910, the institute’s incorporation created the legal foundation for accounting as a profession within Alberta.
“The amount of tax to be paid by all persons is divided into three classes known as the Normal Tax, the Supertax and the Surtax, all at graduated rates. The Supertax and Surtax apply only to net incomes in excess of $6,000. The Normal Tax applies to income exceeding $1,000 in the case of an unmarried person or widow or widower without dependent children, and $2000, in the case of all other persons.” — Dominion of Canada Income Tax form, 1917.
Chapter Two — Peace and War: 1910-1917
By the year 1910, there was demand for people to account for the finances of business, and the influx of newcomers included accountants and bookkeepers. Some of those claiming to be accountants had no verifiable credentials. Nor did they have verifiable skills or accounting knowledge. After all, anyone could claim to be an accountant and solicit clients, and still can. There were no provincial standards or certification procedures, and therefore no disciplinary measures for poor practice.
Alberta practitioners would need to form a professional organization to deal with educational requirements and other issues, and provincial legislation had a role to play. To the 11 men who created the Institute of Chartered Accountants of Alberta, this much was clear. They followed a pattern established in other Canadian provinces, and which took the lead from Britain.
Canadian Pioneers
Montreal and Toronto were Canada’s accounting pioneers. Montreal was the largest Canadian city, and the country’s primary commercial centre. Most trade between Canada and Britain passed through this strategically vital port.
Rivalry between Montreal and the much newer city of Toronto (established as “York” in 1791) would endure for the first century of Confederation. Toronto was originally created as a British military centre in the aftermath of the American Revolution. The city was positioned within forests with commercial potential. As Empire Loyalists and their offspring tilled the fertile soil, what is now southern Ontario proved to be rich agricultural land. But in the beginning, Toronto’s greatest asset was an excellent harbour in a fortifiable location away from the US border.
The city quickly emerged as the dominant commercial centre in Ontario, and was the capital city almost from the time the colony of Upper Canada was established in 1790. Government spending and employment boosted Toronto’s economy and regional development, and settlers felt comforted by the presence nearby of British troops and ships.
As financial, industrial and commercial centres, Montreal and Toronto loom large in Canada, but have always been small in the international scheme of things. The early roles they played in North American accounting were disproportionate to their economic muscle, however. On this continent, they were the first to incorporate accounting organizations.
Canadians were leaders in the field because of their close ties with Britain, where accounting was relatively advanced. Canada’s pioneering accountants were often Scottish and English imports sent to the colonies to audit British business. They brought new-fangled accounting systems with them. And they would frequently form business relations with bankers, who were a good source of referrals.
In the profession’s earliest days, businesses were small. They were generally owned by a single proprietor or (like the London-based Bay) by a small group of venturers. Few of these enterprises were accountable to any shareholder other than the proprietor. Neither corporate nor personal income taxes were even twinkles in the eyes of politicians, and businesses were generally content with Bob Cratchit-style bookkeepers to keep their affairs in order. Businessmen were frequently reticent about their affairs, and mistrust of the emerging profession was common.
To the extent that accountants were branching out from bookkeeping, they still had limited training — mostly in estates, trusts and liquidations. The first significant appearance of public accountants in Canadian law was in the Dominion Insolvency Acts of 1864, 1869 and 1875. These pieces of legislation called for “Official Assignees” to administer and distribute estates in bankruptcy. One professional focus of many early accountants was thus to serve as trustees — administering the assets of bankrupt companies and settling creditors’ claims.
The profession continued to evolve with the formation of joint-stock companies during the 1870s — a change accompanied by the beginnings of the Montreal and Toronto stock exchanges. Exchanges made it easier to trade securities, but the birth of stock markets in Canada coincided with a worldwide recession that saw banks and other large companies collapse with depressing regularity. Badly stung by losses in the banks and other companies, the business community began to demand more dependable financial reporting and verification of corporate results.
Coincidentally, accountants in Montreal and Toronto met several months apart in 1879 to discuss creating a professional society of accountants in each of their respective cities. It was not a popular idea with all accountants of the day. Some worried that an organized society with the power to discipline members or disallow them from practising might develop – as, in fact, it eventually did.
In the summer of 1879, Montreal established a professional accounting society. The following year, the Montreal society became the first to receive a charter from government.
What became the governing body for chartered accountants in Quebec was the initiative of pioneer accountants James Court and Philip Simpson Ross, both with Scottish roots. Neither had obtained a formal accounting education. Businessmen who served as bookkeepers to pay the bills, they were aware of the developments in Britain that were turning their occupation into a profession.
Of the two men, Ross is the better known, since he formed one of the continent’s first lasting accounting firms. Ross had arrived in Montreal in 1853. He set up an accounting firm in 1858 with the announcement, “I beg respectfully to intimate that I have commenced business here as an Accountant, Custom House & Commission Agent and shall be happy to receive a share of your favours.” A century later, P.S. Ross & Sons merged with the American firm George A. Touche & Co to form Touche Ross. Ross’s firm is probably the oldest component of one of today’s global accounting giants, Deloitte Touche Tohmatsu.
Court and Ross brought 11 other accountants together in Montreal at the Mechanics’ Hall, a community centre. The group agreed to form an organization, the Association of Accountants of Montreal, which would set professional standards of practice for members. This organization went through several name changes before becoming l’Ordre des comptables agréés du Québec, its present name.
Following the lead of their British forebears, the founders sought statutory recognition as a professional body. According to the Quebec association’s 1880 charter, “the objects of the corporation are to promote the efficiency and usefulness of its members, and to afford opportunity for giving expression to their opinions upon all questions bearing upon or affecting their calling.” Quebec’s Ordre would develop with the profession, and candidates for admission would one day be required to take a qualifying exam. Also, the society would create a formal procedure for regulating the behaviour of members. And accountants would one day have to prove they were competent to practise. Once they had done so, however, they could use the now-familiar professional designation Chartered Accountant (CA).
When royal assent to incorporate the Ontario Institute of Accountants and Adjusters of Canada came in 1883, the association immediately changed its name to the Institute of Chartered Accountants of Ontario. That institute addressed issues like those faced by Quebec accountants — and found similar solutions.
Curiously, a Winnipeg organization received a provincial charter in 1886 and held annual meetings for each of the following two years. The organization then fell into a state of abeyance for 14 years. That point notwithstanding, it is worth noting that Quebec, Ontario and Manitoba all had incorporated accounting institutes before the Americans. The accounting organizations in the United States were not incorporated. They were local professional societies.
The Yanks leapfrogged ahead of the Canucks in 1887, however, by forming a viable national organization. Accountants from New York, Philadelphia, Chicago and other cities formed the American Association of Public Accountants, the predecessor of the American Institute of Certified Public Accountants. Because of jurisdictional disputes, such an achievement would elude Canadians for another quarter of a century.
Accounting Wars
The accounting profession continued to expand. In time, demand grew for a national association to bring the provincial institutes together. Public practice accountants, including many who were not even members of a provincial institute, lobbied for such an umbrella.
In 1901, the Senate introduced a bill to incorporate the Institute of Chartered Accountants, Actuaries and Finance, to be headquartered in Montreal; an early draft of the bill had unrealistically been called An Act to Incorporate the Institute of Chartered Accountants of North America. One year later, this legislation supposedly created a single professional body for the nascent accounting profession. This professional body would set standards of accounting practice and reporting, provide education to its members and confer the use of the CA designation across Canada.
This legislation quickly raised questions about federal and provincial jurisdiction, however, and the provincial institutes soon became involved in a wide-ranging dispute with DACA (the Dominion Association of Chartered Accountants). Provincial rights were the main point of contention. According to the British North America Act, the provinces have authority over education and commercial law. Therefore, the provincial institutes contended, only they should have authority over professional issues.
The bitterest struggles were between DACA and the Ontario Institute. The Ontario Institute (headquartered in Toronto) and DACA, based in Montreal got into turf wars that lasted for years. When these battles were at their worst, the Ontario Institute competed openly with the Quebec and Dominion associations for Montreal members. Among its other tactics, the Ontario Institute tried to restrict to itself the legal right to issue the CA designation within Ontario. If successful, this would have excluded DACA members from bearing the CA designation in Ontario unless they were Ontario Institute members.
In 1908, the warring organizations reached an agreement to resolve their differences through a classic Canadian compromise. The driving force was Harry L. Price, the president of Britain’s Society of Incorporated Accountants and Auditors. Price helped facilitate negotiations among Canadian accountants at a conference sponsored by the American Association of Public Accountants. These discussions took place in Atlantic City, New Jersey.
Once agreement had been reached, it took time to make the necessary by-law changes to put the agreement in place. However, the outcome of the Atlantic City compromise was the structure of Canada’s CA organizations as they exist today: a Canadian association, which serves as an umbrella for the provincial institutes. This arrangement reflected the provisions of the British North America Act, which gave the provinces jurisdiction over both education and commercial law. The Dominion Association was now Canada’s overarching professional organization. However, accountants would only receive membership in the national organization through membership in a provincial institute.
Although these unseemly battles were now supposedly resolved, the bitterness of the early disputes lingered. Some early DACA members from Ontario refused ever to apply for membership in the Ontario Institute.
By the time the DACA/provincial institute turf wars were winding down, there were six provincial institutes. Besides Quebec, Ontario and Manitoba, these included Nova Scotia British Columbia and Saskatchewan. It was now obvious that Alberta’s accountants needed to get busy. They were the only accountants in Western Canada without a provincial organization.
Since Alberta had no formally sanctioned provincial accounting organization, there was no practical way for aspiring accountants to receive CA status. In the absence of an Alberta Institute, only the Dominion Association could issue new CA designations to accountants in Alberta, but it did not have the opportunity to arrange to do so during the turf wars. There are no records of a DACA-accredited accountant who moved to Alberta. Thus, Alberta’s only CAs had been accredited in another province or in Britain.
Sidebar: Sister Institutes
This table shows the institutes that belonged to Canada’s national organization as this book was being written. The by-laws of the Dominion Association’s 1902 charter included the four institutes then in existence as members. In a practical sense, however, the early institutes did not join DACA until 1911, when Canada’s CA profession formally adopted the structure it holds today. The Institute of Chartered Accountants of NWT also serves Nunavut, the territory that began life as a northern jurisdiction in 1999.
Provincial/Territorial Institute Founded Joined DACA/CICA
Ordre des comptables agréés du Québec 1880 1911
Institute of Chartered Accountants of Ontario 1883 1911
Institute of Chartered Accountants of Manitoba 1886 1911
Institute of Chartered Accountants of Nova Scotia 1900 1911
Institute of Chartered Accountants of British Columbia 1905 1911
Institute of Chartered Accountants of Saskatchewan 1909 1911
Institute of Chartered Accountants of Alberta 1910 1911
New Brunswick Institute of Chartered Accountants 1916 1918
Institute of Chartered Accountants of Prince Edward Island 1921 1921
Institute of Chartered Accountants of Newfoundland 1949 1949
Institute of Chartered Accountants of Bermuda 1973 1973
Institute of Chartered Accountants of Yukon 1973 1977
Institute of Chartered Accountants of the Northwest Territories 1979 1979
Government and Business Accounting
In many ways, however, it did not much matter whether accountants called themselves CAs or not. Many of the unaccredited pioneer accountants in the province served Alberta’s business community and governments well – by the standards of the day.
Alberta exemplified early government standards. Edward Burley, who served as provincial auditor from 1905 to 1923, did not become a chartered accountant. The accounting system he presided over consisted of statements of income and outgo. During his years in office, the annual summary financial document was the Receipts and Payment Statement. Burley’s approach to accounting was basic, in keeping with the times. The province’s first balance sheet did not appear until after he left office.
Albert Edward Nash is an example of an undesignated accountant in public practice. Although somewhat tainted by scandal, his life helps illustrate how transient careers could yet establish enduring accounting firms.
Born in Wales in 1884, Nash had worked as a clerk for a CA firm before coming to Canada in 1907. Like most other immigrants to the province, Nash and an English friend went to a rural area to homestead, taking advantage of the government offer of land for settlers. Near the hamlet of Onoway west of Edmonton, they started the backbreaking labour of constructing a farm during the summer of 1908.
Farm life in Alberta was not easy. It was hard work under extreme conditions that were quite different from those of the mild, damp Welsh climate. Nash soon left the farm for Edmonton. With limited experience but a good head for numbers, he took several bookkeeping and auditing jobs. Soon he was in public practice.
In 1910, Nash joined with two other accountants — Arnold Soars and Charles Baldwin, a Scottish chartered accountant. The three formed Nash, Soars and Baldwin. When Nash first opened his practice, neither he nor Soars were chartered accountants. This was quite common practice at the time. However, for Albert Nash to achieve CA status was a long time coming. As we shall see, he was the subject of the Alberta Institute’s first formal inquiry into professional conduct.
In 1913, Nash’s firm briefly became Nash, Soars and Jeffreson. Both of Nash’s partners had left the practice by 1915 so he and his brother, Hugh, formed Nash and Nash. Albert Nash served in World War I, however, and returned to Edmonton in 1919. He then left for Toronto to work as comptroller for Maclean’s magazine. He remained in Eastern Canada and joined Clarkson, Gordon, Dilworth & Nash in 1921 (later known as Clarkson Gordon, today Ernst and Young).
According to one record, Nash “was particularly skilled in company management and, during the depression in the thirties, was in effect managing a number of them, including Massey-Harris and Maple Leaf Milling.” Nash served as an adjutant general in World War II until his death in 1944. He died after accidentally hitting his head on a beam during inspection of a prison.
Brother Hugh operated Nash & Nash until 1934, when his son Alan joined him. During the following quarter century, the firm opened offices in Grande Prairie, Peace River, Calgary and Prince George.
Founding the Institute
Alberta began to follow in the footsteps of the other provinces on Friday, November 18, 1910. On that day, the Honourable John Robert Doyle, the Liberal member for Sturgeon, introduced a private member’s bill into the provincial legislature, perhaps on behalf of institute pioneer John Watson. Bill #52 was an act to incorporate the Institute of Chartered Accountants of Alberta, more commonly the ICAA. Royal assent for the formation of the institute was given three weeks later, on December 16.
While Watson – whose later involvement with the institute involved scandal – may have been the person to induce Doyle to introduce the bill, its preparation no doubt involved consultation with other Alberta accountants. Several (perhaps all) of ICAA’s 11 founding members probably had a hand in shaping the legislation. In addition, the drafters of the Alberta legislation had apparently consulted with other accounting organizations. As the newly founded Canadian Chartered Accountant magazine pontificated, “Alberta, the only one of our group to have the benefit of a family consultation in advance, enters upon its propitious existence fully armed to protect itself against invasion of its rights and privileges...with the means of self defense and incentive to development.”
Because of these efforts, the Institute of Chartered Accountants of Alberta Act mirrored CA legislation in other provinces. The Act, which established the rules and by-laws for the institute, has been amended and updated many times. In the beginning, however, it included clauses that were very specific to the times.
The act made allowances for those who were already members of a recognized institute or association. As long as those accountants applied to the ICAA secretary within six months of the charter’s receiving royal assent, they could become members of the Alberta Institute and retain their CA designations.
Membership was divided into two classes: fellows and associates, or FCAs and ACAs. In the 1880s, the newly formed Institute of Chartered Accountants in England and Wales began using these designations, which had very specific meanings. A Fellow Chartered Accountant was a firm partner or a proprietor in practice, while an Associate Chartered Accountant was a qualified member of an accountant's staff, or a member not in practice.
In the Alberta Institute, any member could use the ACA designation. But Canada was more egalitarian than British society, and Canadians adopted the simple designation CA. This left the qualifications for the FCA designation unclear until 1914, when James Marwick applied to council for fellowship standing. Council ruled against Marwick’s request. “Fellowship standing should be granted only to residents of the Province who have rendered some outstanding service to the Institute.” The original act had another provision for those who rendered conspicuous service in respect to education or the general welfare of the institute; they could be elected honourary members. Although this did not entitle them to use the CA designation, this was a moot point. After all, those early honourary members were institute members and, therefore, already CAs.
The charter members also established membership fees and set up an office, which initially resided with the secretary-treasurer. The institute office was located in Edmonton until Secretary Cecil Race died in 1927. Calgary member John Williams was the institute’s secretary-treasurer for the next 11 years, working from Calgary.
When Williams retired from this position in 1938 a special lunch meeting was held in his honour. In appreciation of his long and valuable services to the institute and the profession, Williams was presented with an illuminated address signed by 116 members and with a “purse of gold” contributed by the members.
According to the charter, between six and 21 members could comprise the institute’s council. Each year the institute would hold an annual meeting to elect council members and conduct other business. A long-observed tradition began in 1918. For the first time, the annual meeting was held in the city (Calgary or Edmonton) other than the one in which the president resided. This remained in effect until 1932, after which the rule was turned around. The annual meeting would now be held in the president’s home city.
Annual meetings and council meetings were held on Saturdays. At the 1920 annual meeting, Harry Patriquin moved to hold future annual meetings on a different day of the week. The motion failed, however. In 1930 Hugh Nash unsuccessfully questioned arrangements for the annual meeting again, writing to council that “a game of golf or tennis would be considerably more enjoyable...the dinner and meeting should be held in the evening.”
At least two weeks before the annual meeting, potential nominees would have to announce in writing their intention to run for office. Their nominations would have to include the signatures of two institute members. All members would receive a list of nominees. They could vote irrespective of whether or not they planned to be present at the annual meeting. Council would consist of a president, two vice-presidents, a secretary and a treasurer. One person could hold the last two positions.
To formally meet the provisions of the act, the founders held two distinct meetings. First, a small group anointed themselves as an interim council, chose an interim president and set the date for the first annual meeting three months later. At the annual meeting itself, an even smaller group formally elected themselves as the first official council. Here’s how this occurred.
The first council meeting took place on March 4, 1911. Six members were present: Calgarians John Watson, James Sutherland and Arthur Edwards; George Percy Blythe and Cecil Race of Edmonton; and W.D. Wing, from Lethbridge. Edwards chaired the meeting.
Gathering at one of Calgary’s new business buildings — the Burns Block offices of Messrs. Edwards and Morgan — their first order of business was to select an interim council. Blythe was elected president; Wing and Edwards were both named first vice-presidents; Watson became secretary-treasurer. They also chose Harry Baldwin as auditor.
Next, the group approved preliminary expenses. This happened to be the cost for the institute to incorporate — $303.40. The charter members appointed the Bank of British North America as their bank and set their first annual meeting for June 24.
The site was the original Banff Springs Hotel. Either the distance to Banff was too great or interest in the institute was too small for most accountants to attend. Only four showed up: Edwards, Race, Blythe and Watson. Although their deliberations took place in the original wooden hotel, construction of a new stone structure — the one that is renowned today — had begun nearby.
Although few men were present, the minutes suggest that they approached that first annual meeting with considerable solemnity. Typed in blue ink with the occasional typographical error, the minutes were otherwise impeccable. The founders clearly had a sense of occasion as they laid the groundwork for the new organization.
With each representing an area of the province, they elected themselves officers of the institute. Edwards (who was named the first Fellow of the Alberta Institute three years later) was president. Race was first vice-president, while Blythe was chosen second vice-president. Watson became secretary-treasurer. Although he was not present, Baldwin was re-elected auditor.
The matter of early wages requires some elaboration, since it casts such an interesting light on both the value of the Canadian currency during those years and the rapid growth in administrative effort that the institute required. When Watson first served as secretary-treasurer, he was the only officer to receive compensation – a $25 per annum “honorarium” for his services. In 1913, the secretary-treasurer received $50 per year; in 1914, $100. And when Cecil Race took the job in 1915, he received an annual “salary” of $150. Clearly, the cost of administration was on the rise. To put those sums in perspective, it is worth noting that the Ford Motor Company made headlines in 1914 by announcing that it would nearly double the pay of autoworkers. The company’s new minimum daily wage was $5, and the new workday was eight hours rather than nine.
At the institute’s first annual meeting, Watson committed to obtaining samples of lithographed certificates. The council’s intent was to issue a formal certificate to members, and it was important to choose an appropriate, dignified and official-looking document.
Also at that meeting, they unanimously declared their support for a proposal by which the Dominion Association would take ownership of the accounting exams being held throughout the country. The goal was to make the exams as similar as possible, nationwide. As we shall see, the goal of establishing uniform exams was not achieved for nearly four decades.
Sidebar: The Founders
The 11 founding members of the institute were all immigrants to the province — not surprisingly, since most non-Aboriginal Albertans were new to Western Canada. By the late 1920s, all of the original members had moved from Alberta, retired or were deceased.
Arthur Edwards originally belonged to the Institute of Chartered Accountants of Ontario. He was the Alberta Institute’s first elected president and first Fellow. Edwards resided in Calgary. Before his term ended, he moved to British Columbia where he sat on the council for the British Columbia Institute. He resigned his brief membership in that institute in 1912, after being subjected to an informal investigation.
Born in Glasgow, John Watson migrated to New York and then to Montreal before moving to Calgary in 1906 to become city auditor. Watson was a member of the Dominion Association, and the first secretary-treasurer of the institute. He was president in 1912-13. As this book explains elsewhere, his professional life was later tainted by scandal.
James Sutherland belonged to the Institute of Accountants and Actuaries in Glasgow before moving to Calgary. He served as president of the institute in 1913-14, 1919-20 and 1924-25. He retired from council in 1921 as the by-laws required, and was re-elected the next year. Sutherland continued to serve council until the mandatory retirement rule forced his resignation in 1928. He was transferred to Winnipeg, where he was accidentally killed after being struck by an automobile.
Hugh Anderson first belonged to the Institute of Chartered Accountants of Ontario. While living in Edmonton, he worked for Twin City Coal until he resigned in 1928 and moved back to Ontario.
Also living in Edmonton was Harry Baldwin, a member of the Dominion Association. He was the institute’s first auditor and a partner in the firm of Blythe and Baldwin with ICAA charter member George Percy Blythe. Blythe also was a member of the Dominion Association and worked for the City of Edmonton as auditor from 1905 until 1913, when he relocated to Victoria. Five years later he moved to Havana, Cuba, and worked as the general auditor of Cuba Cane Sugar Corporation. Although Blythe is not officially recognized as the Alberta Institute’s first president, he unofficially served in that role prior to the first elections. The institute named him a Fellow in 1912; when he retired from the institute in 1933, he was elected an honourary member.
A pioneer educator in accounting, Cecil Race was originally a member of the Chartered Accountants Association of Manitoba and was very active in the Alberta Institute. While living in Edmonton, Race served as first vice-president in 1911 and held the position of secretary-treasurer from 1912 until his death in 1927, except for the year 1918 when he was president. Council minutes note that his impartiality and sense of fair play were a great example for others.
While in Canada, Charles Richardson practised accounting from an Edmonton base. On the occasion of its 75th anniversary, the institute published a history that described Richardson as having been “a member of the Transvaal Society of Accountants Incorporated.” Wherever that information came from, it was probably jocular code that meant he was a veteran of the Boer War and had fought in the Transvaal theatre of that conflict. Richardson was elected president of the Alberta Institute in 1914. He was appointed deputy commissioner of finance for the City of Edmonton, later resigning to go into public practice.
Before moving to Edmonton, Charles Lang was a member of the Institute of Accountants and Actuaries in Glasgow. An Institute president in 1938-39 and elected Fellow in 1939, Lang was also appointed provincial auditor after working with the Alberta Department of Agriculture.
A member of the Chartered Accountants Association of Manitoba when he migrated to Alberta, Alexander Mouat originally came to Canada from Scotland in 1882. He served in the Northwest Rebellion as a member of the 90th Rifles of Winnipeg before moving to Pincher Creek. He was named auditor for the City of Edmonton in 1913, and later worked as comptroller-general in British Columbia. He developed a pre-audit system that was highly acclaimed by financial authorities. Mouat was elected an honourary member of the Alberta Institute when he resigned in 1928.
The only founding member from Lethbridge, W.D. Wing originally belonged to the Institute of Chartered Accountants in England and Wales. He was appointed the seventh member of the institute’s council in 1914.
National Reciprocity
Although they took decades to develop, national standards and a uniform system of education would develop consistency among Canadian chartered accountants. They would share nomenclature, practices and ethical standards with their peers, whether they practised in Alberta, Manitoba or “back east.” This groundbreaking development served the profession well. Accounting is one of the few professions with automatic national reciprocity.
It was clear from the very beginning that exams would set the standard for the professional accountant. As early as 1911, the three Prairie provinces held discussions about the desirability of holding joint exams — an idea that would be broached again decades later. The Alberta and Manitoba institutes actually did hold joint exams in 1911-12. The exam papers were identical except for the section covering law.
Initially, not everyone gave full support to the notion of CA status being tied to exam results. Some argued that accountants who had already proved themselves in public practice should be grandfathered, receiving CA status retroactively. Yet the winning faction stressed the importance of the exam as a guarantee of objectivity and impartiality. The 1914 annual meeting, which admitted five new members, formally confirmed that passing the exam was required for admission.
Aware of the activity in Alberta, the Canadian Chartered Accountant reported in 1912-13, “The [Alberta] Institute is in a very flourishing condition, both financially and otherwise, and the lively interest taken is indeed extremely gratifying to all concerned.”
Education and Membership
The debates and decisions of these early days laid the groundwork for a system of education for the professional accountant. With a progressive attitude toward educating its members, the Alberta Institute stressed education from the outset. In fact, the institute charter included provisions for prescribing a course of studies for students and gave the council the authority to make rules and regulations with respect to exams, lectures and other educational requirements.
From 1910 to 1934, CA students were expected to read a required list of textbooks compiled by the institute. These included texts on high school arithmetic, bookkeeping, accounting theory and practice, corporation accounting and auditing, cost accounts, Canadian mercantile law and municipal accounting. In addition, a number of statutes were on the reading list.
Other provinces had already made it mandatory for each student to article with a practising accountant. In 1916, the Alberta Institute followed suit and passed a new by-law to this effect. Starting that autumn, students were required to article for four years. Beginning October 1, 1916, registering with the institute as a “student-at-accounts” was an essential step in the education process.
That student would then “article” with a chartered accountant. The word “article” can be both a verb and a noun for chartered accountants. It derives from the “articles of agreement,” the contract by which he committed to work for a CA (his “principal”) to learn the profession. (Somewhat later, this became known as the indenture.) Since the profession began, accountants have held direct work experience to be at least as important as classroom study.
After the rule about students-at-accounts had been in effect for a year, the institute recognized the need to make allowances for individuals who had articled with CAs in other provinces. This was an early example of national reciprocity. Depending on individual circumstances, the institute would make special provisions for a student’s articling requirements. A practising accountant who belonged to another institute and relocated to Alberta was eligible for membership in the Alberta Institute if he was considered a “public accountant in good standing.” The institute was still adamant, however, that there would be no exemptions for individuals who requested admission without going through the regular channels. After passing the required exams in 1912, W.W. Gould was the first person to be admitted to the institute.
New members were given formal certificates confirming they were qualified to practise as chartered accountants. As official members, each paid annual dues of $11. One dollar of these dues went toward a subscription to the Canadian Chartered Accountant. Through the Alberta Institute, the province’s CAs held membership in the Dominion Association.
The institute soon began the practice of issuing small booklets each year describing the criteria for becoming a CA. The purpose was to advise and communicate with aspiring accountants. These Bulletins of Information also listed recommended textbooks and discussed educational requirements. In 1932, council considered whether it was still necessary to include a list of textbooks in the booklets. After some discussion, they decided that providing the information served two purposes: it was informative for the students themselves, and it let the public know what was expected of the student-at-accounts.
The professional exams were the institute’s most important focus. Shortly after the ICAA was created, council invited the University of Alberta to play a role in the educational process. University president Henry Marshall Tory met with council in 1913 to discuss the logistics of taking charge of the provincial accounting exams and helping determine what the accounting courses should include.
The following year, the university formally agreed to conduct institute exams. The university Senate and the Alberta Institute signed an affiliation agreement. Under the agreement, the Primary Exam was completely under the charge of the university as a test of preliminary education — similar to that required of candidates entering law, medicine and dentistry.
While controlled by the university Senate, the Intermediate and Final exams were professional in character. These exams were to be carried out by a Board of Examiners in Chartered Accountancy appointed on the joint nomination of the president of the university and the ICAA council. In addition, the Alberta Institute’s president would automatically become a representative on the university Senate.
Exam fees were established at the first Board of Examiners meeting on June 26, 1914. The Primary was set at $5, the Intermediate at $15. The cost of the Final was $20. To retake the Primary cost $5, while the cost of retaking the other two exams was $10 per exam. Aspirants to the profession paid a $50 entrance fee — returned if the candidate did not pass the exam or failed to be admitted.
The Primary Exam was identical to the university’s general entry exam. It included tests in English, history or geography, arithmetic, algebra and geometry or bookkeeping. Both the Intermediate and Final exams covered different levels of bookkeeping and accounts, law, auditing and mathematics. Candidates took their exams in either Edmonton or Calgary at the end of the university year.
Once the agreement with the University of Alberta was in effect, successful students were only admitted to the institute with the approval of the university Senate and an affirmative vote in council. The agreement also provided that council would be represented on the Senate. The institute’s first representative on the university Senate was president Charles Richardson.
During the 1914 Board of Examiners’ meeting, examiners were alarmed about poor Bookkeeping 3 results in the final exam. They eventually agreed that the exam had been too difficult to pass in the time given. Accordingly, they decided to count the highest mark (70 per cent) as the exam’s total points. This greatly increased the number of successful candidates, and the board recommended to the Senate that five students receive certificates for having passed the Final, while 14 receive certificates for the Intermediate.
The five successful candidates then applied to become members of the institute. But when council took its vote in June, only four individuals (Kenneth Bowman, John Harvey, Harry Patriquin and Eric Richardson) were elected members. The fifth candidate, Albert Nash, was not.
The first vote on Nash’s application was a 4-4 tie. Upon taking a second vote, council voted 5-2 against his admission. Tenacious to a fault, Nash renewed his application, and council launched its first full-scale investigation into “the professional standing and integrity of the applicant.”
The sub-committee notified all Edmonton members about the investigation, and began to take evidence. Their report – signed by council members Richardson, Gould and Race – enumerated a number of questionable business dealings by Nash and Jeffreson, one of his partners, and observed that the “general opinion” toward his entry into the institute of accountants in Edmonton was “decidedly unfavorable.” The sub-committee did note, however, that “one member of the Institute who has known Mr. Nash for several years and who was associated with him in the same firm of accountants writes very favorably of Mr. Nash’s claims to admission.”
But “in view of the evidence obtained by the Committee as outlined in the foregoing,” they concluded, “we are unable to recommend that Mr. Nash be admitted to membership.”
But this story had still not run its course. In 1919 Nash applied again for membership. After reviewing the evidence from the earlier inquiry and “considerable discussion,” council admitted him in 1919. The reasons for their change of heart are not given, but Nash’s military service in the Great War was probably a factor. Also, his partnership with Jeffreson (who also went to war in 1915) had long ago dissolved. Whatever the case, Gould – a member of the sub-committee that had opposed his admission in 1915 – now seconded the motion that he become a member.
To encourage students to do well on their exams, in 1917 the institute began to award prizes and honours. According to the Bulletin of Information for 1917-18, “A candidate who passes either the Intermediate or Final with 75 per cent or more on each paper is granted Honours. The Council offers each year a prize of ten dollars in gold to the candidate obtaining the highest aggregate marks in the Intermediate and Final examinations respectively.”
In 1914, constitutions were approved for student societies in Calgary and Edmonton. It took four more years for a student society to be established in Medicine Hat. The Canadian Chartered Accountant reported that this “indicates that the opportunities...[in Alberta] for the practice of the profession are appealing to our young men.”
Business Laws Change
As we have seen, new government legislation and regulations helped multiply the opportunities for accountants. This process began with commercial law in Britain during Victorian times, and evolved quickly. By 1907, most public companies in Canada were required to appoint auditors to examine their accounting records and report to shareholders. But the world leader in business legislation was the Ontario Companies Act, which received royal assent in that year.
This act required that four pieces of detailed financial information be provided to shareholders at the annual meeting. These were a balance sheet current to a date not more than three months before the annual meeting; a statement of income and expenditure for the financial period ended on that date; an auditor’s report; and such other information as letters patent or the by-laws of the company might require. The legislation also specified that the balance sheet should distinguish at least 12 classes of assets and liabilities — each of them named in the act. As this practice took effect, business people developed a better understanding of CAs as important intermediaries in matters of finance.
Revisions in 1913 to the Dominion’s Bank Act required each bank to hire practising CAs to conduct an independent audit of its financial statements. Soon after, Canada’s 21 chartered banks published audited financial records for the first time. Prior to these changes, Ottawa had considered having an external audit carried out by either a government department or by the Canadian Bankers Association. Policy-makers decided against either of these approaches on the principle that neither was adequately versed in the complexities of branch banking.
Under the new regulations, each bank was required to hire two auditors. The appointments had to be in the names of the partners rather than in the names of the firms. Further revisions to The Bank Act a year later required the auditors to be from different firms. Both had to sign the financial statement.
Growth
Large accounting firms with roots in the United States and central Canada began to expand into the newly settled Canadian west. Often, senior accountants were brought in to manage the opening of new satellite offices. One example is the firm of Marwick, Mitchell and Company (later known as Peat Marwick), which opened its Calgary office in 1913. This office was a subsidiary of the firm’s Winnipeg office.
J. Train Gray transferred from Winnipeg to manage the office. During the war, he joined the Canadian armed forces and served overseas. Norman Hindsley was his replacement. Hindsley only stayed a year before joining the large meat packing company P. Burns and Company Ltd. as treasurer.
Sam Broad managed the Calgary office beginning in 1916. During his four-year tenure, Broad secured the audit of P. Burns and Company. According to Peat Marwick’s official history, Pat Burns, founder of Alberta’s largest meatpacking company, was illiterate. The book relates a story in which Peat Marwick accountant Thomas Hutchinson served as witness for this legendary cattle baron, who signed a cheque for $12 with an “X.”
Another of Peat Marwick’s major clients in the 1920s was the Hudson’s Bay Company. Most of the accounting work conducted for The Bay was focused on the company’s western-based department stores, fur trading and wholesale activities. Hutchinson, who would become a senior partner in 1960, remembers Hudson’s Bay as a “notable client.”
Broad was one of the first to qualify as a CA in Alberta. As a student-at-accounts, he worked primarily as a bookkeeper to fulfill the necessary requirements. Broad was thus one of the early products of the ICAA’s system of professional education. His articling supervisor liked what he saw, and wrote a glowing recommendation for the young apprentice. He predicted that Broad would do well in the future, “being a person of great integrity and possessing an old head on young shoulders.”
The Alberta Institute participated fully in the life of the national organization. The first member to represent the institute at a Dominion convention was James Sutherland. In 1913, the institute paid his expenses to Halifax — though they were not to exceed $200.
In 1915, the British Columbia Institute suggested curtailing some of the social functions held during these conferences. The Alberta Institute favoured this suggestion but felt “that the drive about the city or a side trip to some points of interest might be arranged without entailing too much expense.”
Once membership in the Alberta Institute topped 40, the province could appoint two representatives to the Dominion Association’s Council. The province reached that milestone in 1915, and named Charles Richardson and James Sutherland as Dominion representatives. The following year, the institute invited the Dominion Association to hold its annual meeting in Alberta. Council allocated $750 to host the 1917 convention in the newly finished stone Banff Springs Hotel. Every provincial institute was represented at the meeting; W.W. Gould and Donald McCannel attended as Alberta delegates. That year two Alberta members were elected to the national council. McCannel was chosen president, while Cecil Race served as secretary. Alberta had come a long way.
Sidebar: Has the law changed much?
As Frank Harvey made meticulous notes on commercial law in 1916, he would have had no idea that his clear, crisp handwriting would be preserved in its three-ring binder more than eight decades later.
In preparation for his exams, Harvey made detailed notes on how legal statutes affected the profession. His notes included material on partnership law, contract law, company law, The Companies Act of Alberta, The Bank Act, The Trustees Act, The (Dominion) Winding Up Act and The Assignments Act.
Harvey’s fascinating little notebook shows that the broad framework of commercial law was clearly established by the First World War. To the modern reader, some of the legal precepts were very sophisticated. They also summarized contemporary legal precedents that affected the accounting of the day. For example, in contract law “all persons are competent to contract who act freely and voluntarily, and are of sound mind and of full age.
“Incompetents are:— Lunatics, intoxicated persons, infants, Indians, Corporations and Joint Stock Companies (outside the scope of Memo &c.) Alien enemies.”
His notebook also contains some wonderful material on legal precedents that affected accounting. For example, he takes note of the following legal decisions regarding depreciation:
“Depreciation on Floating Assets [presumably Current Assets] must be made good before paying a dividend.
Verner v. General & Comml Invest Trust
Bond v. Barrow Haematite Steel Co.”
“Depreciation on Fixed or Wasting Assets need not necessarily be made good before paying a Dividend, but sufficient assets must be retained to pay liabilities.
Lee v Neuchatel Asphalt Co. Ld.
Bolton v. Natal Land Co.
Verner v. General & Comml Invest Trust
Willmer v. McNamara & Co.”
“But as to whether such provision is necessary or not is a question of fact to be determined by the Court, having regard to the circumstances of each particular case & the Memorandum & Articles of the Company concerned.
Dooey v. Cory
Bond v. Barrow Haematite Steel Co.”
His notes also offer descriptive material on The Audit of Executors and Trustees Acts, The Audit of Solicitors Act, “the Audit of Trust and Finance Cos” and “the Treatment of Fluctuating Currency.” All of these topics are still relevant.
Harvey became an ICAA member in 1917, after receiving the $10 prize for top marks in his Final. (He later returned the $10, preferring to have the gold medal introduced nearly a decade later.) He formed the firm of Harvey and Morrison in Calgary, and his practice included 26 years as auditor for that city.
In his time, Harvey was a stalwart figure in both ICAA and DACA. He served on council for 11 years and was both president of the ICAA in 1921 and of the Dominion Association in 1932. An article in the third issue of the ICAA’s history series, Perspectives, described him as “A man of unsullied reputation.”
A talented musician, he was president of the Calgary Philharmonic Orchestra for three years and played a prominent role in civic affairs. According to Herb Nield, who served in Harvey’s firm and was elected ICAA president in 1955, “Mr. Harvey was the grandest chap I ever saw. He and his partner, Ken Morrison, were princes, and they both really helped me along. We used to refer to Mr. Harvey as ‘The Chief’ when he wasn't around. When he was, it was ‘FM’ or ‘Mr. Harvey.’”
Trying to Establish Rates
Another important development of this period was a proposed schedule of standard charges. At the time, the accountant would negotiate his own fees — a practice that often worked against him. W.W. Gould met with a group of Edmonton members in 1918 and came up with a proposal for a minimum “tariff of fees,” based on a seven-hour workday:
1. $30 for principals on court work;
2. $28 for principals on special work;
3. $21 for principals on general work;
4. $14 for senior assistants; and
5. $7 for junior assistants.
After a discussion among council members, in 1919 the institute secretary sent the following simplified rate schedule and a ballot to the 61 Alberta members for their approval:
1. $35 or $28 for principals depending on the work;
2. $21 for chartered accountant assistants;
3. $14 for senior assistants; and
4. $7 for junior assistants.
The multiples of seven arose because rates were based on seven-hour days. Two-thirds of the members would need to give their consent to establish charge rates. If that vote were successful, the thinking went, council should submit the proposal to the lieutenant-governor. In practice, nearly everyone voted in favour of this tariff of fees. From there, however, the complexities of law and politics killed the idea.
Three years after the idea had first been raised, a committee consisting of President McCannel and Secretary Race was formed to approach the lieutenant-governor. There had recently been a change in the provincial government, with the Liberals being ousted by the United Farmers. McCannel and Race felt it was inopportune to propose the idea, and decided to stay alert for a more auspicious occasion.
When they finally submitted the proposal to the attorney general (not the lieutenant-governor), his department asked that it be withdrawn. They felt that remuneration for court work was under the jurisdiction of the judge, while the other work was a matter of private contract. The issue was thus resolved, though not to the institute’s liking. That said, one wonders how carefully institute members had thought through the implications of having their wages set by government. Once established, political obstacles to having rates increased seem almost inevitable.
Business Development
Members were quite concerned from the beginning about the “proper” way to develop business. The Financial Times had begun publication in 1912 and the daily newspaper industry was robust: all larger towns and cities had them. With members now operating under provincial legislation, some wanted to advertise their services in these newspapers. However, others disagreed with the very notion of professionals advertising their practice and qualifications “like haberdashers.”
The Canadian Chartered Accountant offered a justification for this conservative outlook, commonly held at the time in Great Britain. “As a rule, the class of business that is attracted through advertising is of an undesirable nature, and is looking for a low-priced practitioner. Advertising has a general tendency to discredit the profession.”
Other accountants took the contrary view, arguing in effect that advertising was simply a marketing tool. The dispute raged during the Alberta Institute’s second annual meeting, in 1912. Sutherland brought up the subject of advertising by members. Blythe moved and Edwards seconded that council should discourage members from publishing their business cards in newspapers and other publications. However, the members reached a somewhat grudging compromise: the institute would publish an alphabetical list of its members in the Calgary, Edmonton and Lethbridge newspapers.
All was quiet until the costly First World War. The federal government’s need for revenue created problems for taxpayers and opportunities for accountants. Between 1914 and 1918 new acts created new taxes. The Dominion Income War Tax Act of 1915 created a progressive income tax aimed largely at the well-to-do. Other legislation included the Special War Revenue Act (1915), the Business Profits War Tax Act (1916) and the Income War Tax Act (1917).
According to accounting historian Ross Skinner, income tax legislation “created a need for good accounting records and provided a stimulus to some change in theory. Basically, it shifted attention from the balance sheet to measurement of income. It was advantageous for tax purposes to establish that income arose only upon realization and also to accept the necessity for depreciation as a charge in determining income earned. The need for an objective basis for taxation also emphasized actual transactions, rather than valuations, as a basic groundwork for financial reporting. Thereby impetus was given to the adoption of the cost principle for valuation of assets.”
The new income tax legislation inevitably led to court cases that established accounting precedents. For example, in 1920 a resident of Ontario, Cecil R. Smith, argued that he should be exempt from the profits he had made trafficking in liquor. Because the Ontario Temperance Act made this practice illegal, his lawyer contended, his profits were not income as defined by the Income War Tax Act (1917).
According to the judge’s decision, “This is not a case with a meritorious quality commending itself to a court of justice. The appellant invokes his own turpitude to claim immunity from paying taxes and to be placed in a better position than if he were an honest and legal trader, and asks the court to discriminate against other honest traders. As against an innocent taxpayer no man shall set up his own iniquity to operate such discrimination in his favour. His claim rests upon and is tainted with illegality and no court will lend its aid to a person who rests his case on an illegal act.” The Exchequer Court of Canada ruled against Smith. However, his case involved issues that accountants needed to understand.
Because the body of tax rulings was quickly growing, Alberta members needed more information to help them prepare tax returns. In 1919, Secretary Race asked Ottawa’s commissioner of taxation for a regular list of tax rulings. Four years later, nothing had been accomplished. Alberta member F.M. Oliver’s view was that the government should be forced to issue the rulings. The matter was often discussed at the Dominion Association’s annual meetings, but, for whatever reason, nothing came of it.
When John Williams took office as secretary-treasurer in 1927, he wrote to Commissioner C.S. Walters in Ottawa and explained why such information would be useful to the profession and the government department. Walters replied that he was very much impressed and appreciated the cooperation and assistance the Alberta members had given the department. He enclosed with his letter the principal rulings issued during the past year. These were circulated to members. This practice continued until 1938, when the commissioner stopped distributing rulings.
The favours went both ways, with the institute occasionally offering advice to the commissioner of taxation. For example, in 1929 Ottawa’s T-2 form was changed to incorporate the institute’s suggested revisions, including one that made it possible for taxpayers to have to sign only once.
Advertising
The income and other taxes issued during the First World War rekindled the controversy over advertising. “If we are not allowed to advertise our services,” cried those who wanted to do so, “how will businesses know we are available for hire?”
Their cries received some sympathy. During the war, the institute began using display ads to let the public know that CAs could prepare returns and statements that satisfied the new legislation, and conveniently listed members’ names. However, the question of advertising was on council’s agenda again on May 15, 1918. The outcome was that display and classified advertising and circulars remained prohibited.
At the annual meeting later that month, the report of the Committee on Advertising was read. It included a recommendation to pass a by-law prohibiting advertising of any kind. This draconian ruling included “display advertising; classified advertising in any journal or newspaper published in the Province; issuing of circulars of any kind; block line advertising permitted in alphabetical directory only, but not in classified section; to insist on classification as Chartered Accountants and to eliminate all Chartered Accountants from section ‘accountants and auditors.’”
After heated discussion, members agreed to list members’ names in directories and recommended that newspaper notices, rather than ordinary advertising, be used to educate the public.
When the advertising issue came up again at the 1919 annual meeting, council was adamant. They even suggested the following by-law: “It shall be considered misconduct on the part of a member to advertise in any manner in any publication or advertising medium published within the Province of Alberta. The use of heavy type in the classified section of a Directory will be considered to be advertising.” After much discussion, the proposed by-law died; the matter was left up to interpretation.
Many members felt that it was only fair to be allowed to inform the public of the value of employing CAs. These advertising advocates argued that it was a hardship to be prohibited from publishing their business cards. Thus, the issue of advertising would not go away. It simmered for decades.
Gender Conflict
At the time, all accountants were men — at least, in Canada. For the most part, the only women who held jobs outside the home were single; some worked as nurses or teachers, others as domestics. At a June 1914 meeting of the institute, “it was moved by Mr. Richardson, seconded by Mr. E.D.C. Thomson, that this institute place itself on record as opposed to the admission of women at the present time.”
This was a period of sometimes-intense gender conflict. The Dominion Alliance for the Total Suppression of the Liquore (sic) Traffic and the Women’s Christian Temperance Union cursed Demon Rum, and the women’s suffrage movement agitated for the vote. In all provinces but Quebec, they won on both fronts.
As the First World War raged, in 1916 the Prairie provinces legislated the right of women to vote. The federal government soon followed. And the sale of spirits was prohibited during the war and into the 1920s. However, women would be denied permission to join the institute until 1927, and the first formal application for membership would not arrive at the institute’s doorstep until 1949.
War and Oil
One year in the institute’s first decade stood out among the others. That year was 1914.
Since ICAA formation a mere four years earlier, Alberta had come into the modern business era. The institute had received its charter, and the profession was organized both provincially and nationally. The province had passed legislation that provided for financial reporting, and the institute was creating standards that brought uniformity and clarity to that reporting.
In addition, the institute had developed a framework for educating would-be accountants, and the provincial university had agreed to supervise the exams. The ICAA had made very big gains in a very short time.
As 1914 was an important year for the institute, it was nothing less than a milestone for the province. Two events, four months apart, fundamentally altered Alberta’s fortunes.
The first was the discovery of wet natural gas in Turner Valley, some 40 kilometres south of Calgary. The Dingman #1 well, from which “natural gasoline” (natural gas liquids) could be easily extracted, caused a great deal of excitement in the city. Investors literally lined up at makeshift brokerages to buy shares in “oil mining companies” — many of which had no assets beyond the paper upon which the stock certificates were printed.
For the first time, the province experienced a homegrown version of tulip mania, the period of wild speculation that gripped Holland in the 1630s. In one celebrated transaction, a Dutch investor paid 4,600 gold florins plus a new carriage, two grey horses and a complete set of harness for a single tulip bulb. In Alberta, the instrument of choice for this recurring phenomenon was stock in resource companies — especially shares in oil and gas companies. That tradition, which began with the Dingman well, continues to the present day. In October 1914, pressure to begin trading these speculative pieces of paper led to the creation of the Calgary Stock Exchange. The exchange’s early years represented a period of extreme hardship for issuers, dealers and investors in Alberta equities. By 1917, the exchange had closed from lack of business — temporarily, as it turned out.
With rare exceptions, those early oil exploration ventures led to lost capital. Most of the companies that did acquire mineral rights and began drilling were unsuccessful. Other companies were strictly the work of con artists. Balance sheets were not very rigorous, and there was little difficulty in creating illusions, as the inset balance sheet from 1917 illustrates. Practically speaking, though, it did not much matter whether the investor had bought legitimate or fraudulent shares. Few of the companies formed during Alberta’s first bout of oil mania returned a profit.
What they did create, eventually, was demand for more information and uniformity in financial reporting by oil and gas companies. Both the petroleum industry and the ASE grew greatly in sophistication in the 1920s and beyond. The accounting profession participated in both developments.
The other 1914 event that affected every aspect of life in the province was, of course, the First World War — the Great War. In a way, the first years of war were a struggle among three cousins – King George V of Britain, Czar Nicholas III of Russia and Kaiser Wilhelm II of Germany. Improbably, in response to a tangled web of alliances among Europe’s powers and the assassination of a European aristocrat, Canada mobilized large armies to serve in Western Europe. Ultimately, Canadian participation in the war led to sweeping social change.
That war galvanized Canadians like no event before. The trains that had carried an exuberance of immigrants from the east soon began carrying soldiers (especially British-born immigrants) in the other direction. Newly settled Alberta contributed 123,000 men to the Canadian Expeditionary Force, which trained 1.7 million recruits and conscripts. Some 61,000 of those men died in trenches and battles — many of them in 1916 at Vimy Ridge, where the Canadians ended what to that time had been a stalemate among opposing forces. Even though more than half of Canada’s soldiers during that war were British-born, one outcome of those battles was the birth of Canadian identity and pride.
Migration to the prairies declined in both relative and absolute terms during the war, but was still strong by any normal standard. Wartime demand for wheat raised the price of that commodity. This greatly stimulated Alberta’s agricultural economy. The combination of a robust economy and soldiers at war created labour shortages. A large percentage of Canada’s trained auditors and accountants served with the armed forces. According to the 1918 Bulletin of Information, in that year non-practising ICAA members included eight in active service with the Canadian military and one in the US Navy. With one notable exception, therefore, the profession stagnated.
That exception had to do with wartime accounting itself. During the First World War, James G. Ross developed accounting practices for the Canadian army. Ross was the son of pioneer accountant Philip Ross, one of the founders of the Quebec Society.
While serving as a major-general, Ross was appointed chief paymaster of the Canadian Expeditionary Force. He held this position from 1915-17 and was then named paymaster-general of the Canadian military forces overseas. Using his commercial background, Ross developed an accounting system to meet military needs.
Ross was also responsible for centralizing the Canadian pay system. The system he developed was to create a separate account for each serviceman. Each account kept track of how much the soldier was paid and the equipment he received. Although the Canadian forces would move from place to place, all financial information was reported to Canadian pay headquarters, which maintained strict control. The books were audited every night.
Initially, the war also fuelled acceleration in railway building. Rail construction peaked at an incredible 4000 miles (6500 kilometres) in 1915. This infrastructure bubble soon burst, however. The following year, the Canadian Northern and Grand Trunk railways effectively went bankrupt. Ottawa responded by nationalizing them, creating the Canadian National Railway. By 1918, the year the war was won, there was actually a net loss of track because of rail abandonment.
On the domestic front, the Great War saw the introduction of “temporary” taxes on personal income, corporate profits and luxuries. Although the corporate profits tax was dropped after 1920 (a tax on bank profits remained), these levies had large effects on government and, not surprisingly, on accountancy. While Ottawa created larger bureaucracies to administer the new assessments, the more complex tax code extended the professional reach of the chartered accountant.
Many firms also took on the government assignment of being a custodian of enemy property. This involved taking control of businesses owned by “enemy aliens,” many of whom were on an official British blacklist. A representative from the firm and a police officer would call upon a proprietor unexpectedly and seize his property. The property was returned after the war — although in some cases only after court action.
From a social perspective, the first decade of the ICAA’s existence was one of the most turbulent in Canada’s history. While there was a great deal of popular support for the war effort, the war years were accompanied by national grief for those fallen in battle. An influenza epidemic followed — brought home by returning soldiers. More Canadians died of the Spanish flu than had died in the theatres of war.
Without the stimulus of wartime demand, the economy went into recession as returning veterans began looking for jobs. Many young accountants had served Canada in the war. Like other veterans of that terrible conflict, when demobilized they were faced with the challenges of picking up where they had left off.
Many of those who had articled as students-at-accounts asked the institute for permission to take their exams after their return. The institute made allowances for servicemen, routinely counting their years of service towards their articles.
Institute minutes from this period include frequent references to students-at-accounts asking permission to postpone their exams because of their own illness or illness in the family. In most cases, the illness in question was the flu. For example, institute minutes dated November 22, 1919 cite the case of J.W. Quinney, who “Presented a plea for extension of time limit for his Intermediate Examinations. The ravages of Influenza upon himself and his friends was the principal reason advanced.” Students suffering this illness were invariably granted an extension. Quinney’s was for one year.
The distress and disillusion of returning veterans was great. And because of the success in 1917 of Russia’s Bolsheviks, many of Canada’s employers were afraid of a socialist revolution. The decade ended with a sometimes-tragic combination of labour unrest and abuse of power by employers and public authorities.
In 1919, the western provinces served as the power base from which some elements in the highly fragmented Canadian labour movement sought to create One Big Union. This effort had a great deal of support among the army of unemployed. When public authorities crushed the Winnipeg General Strike in that year, they set the stage for employers to begin major anti-union offensives.
The war, the flu epidemic and social turmoil made this decade a seminal period in Canada’s young life. Nationalism began stirring in Canadian souls — nowhere more powerfully than in Alberta. The nation’s institutions would soon continue with the essential task of applying homegrown solutions to tough domestic challenges.
By the year 1920, the wealthier countries had cadres of professional accountants, and they were beginning to create the world’s national accounting systems. Over many years, the Alberta Institute would contribute to a distinctly Canadian accountancy, with distinctively Canadian standards.
Sidebar
ADANAC OIL COMPANY LIMITED
BALANCE SHEET – FEBRUARY 28, 1917
ASSETS
Balance at Bank 2,596.19
Due from sundry Shareholders 12.30
Natural Gas and Oil Rights 1,000,000.00
Preliminary and Organization Expenses:-
Commissions 1,455.81
Advertising 1,167.88
Printing etc. 1,213.00
Office Expenses 707.32
Legal Expenses 1,213.00
5,778.26
Less Interest on 122.75
Bank Balance
5,655.51
Discount on Shares 8,461.00
1,016,725.00
LIABILITIES
Capital Stock 1,016,725.00
1,016,725.00
We have audited the books of the Adanac Oil Company, Limited, for the period ending February 28th, 1917, and we are satisfied that our requirements, as Auditors, have been complied with.
We also certify that the attached Balance Sheet is, in our opinion, properly drawn up so as to exhibit a true and correct view of the Company’s affairs, the books conforming therewith.
EDWARDS, MORGAN & CO.
CHARTERED ACCOUNTANTS
We, W.H. Berkinshaw and L.M. Roberts, two Directors of the Adanac Oil Company, Limited, do certify that the above report is correct.
W.H. Berkinshaw, Director
L.M. Roberts, Director
Calgary, March 21st, 1917
This balance sheet illustrates the accounting challenges presented by early oil industry promoters. In this instance, the company’s claim of having $1 million in natural gas and oil rights is questionable, since the records show that no one had drilled on that property. However, there were no standards at that time stating how the carrying value of this asset was to be determined.
In fact, however, this was a legitimate company whose founding president (1914) was William Stewart Herron, accurately called the father of Alberta’s oil industry. Although not much is known about this company, it appears to have struck condensate-rich gas in 1922.
Arthur Edwards, one of the ICAA’s founders, might have prepared this balance sheet.
“Witnesseth that the said William Herbert Nield of his own free will hath placed and bound himself and by these presents doth place and bind himself clerk to the said Frank Micklewright Harvey to serve him from the day of the date hereof during and until the full and complete term of four years from the date hereof.... and shall not, at any time during such term cancel, obliterate, injure, spoil, destroy, waste, embezzle, spend or make away with...books, papers, writings, documents, moneys, stamps, chattels or other property....And will at all times keep the secrets of the said Frank Micklewright Harvey and his partner or partners and will at all times during the said term readily and cheerfully obey and execute his or their lawful or reasonable commands....” — excerpts from Articles of Agreement, November 13, 1921.
Chapter Three — Ten Years that Roared: 1920-29
The 1920s witnessed the maturation of Alberta society, which began the decade with 67 chartered accountants. Although newcomers continued to migrate into the province at very high rates, the province was now more than a collection of settlers without roots. The cities were no longer ramshackle affairs, but featured architecturally unique public, business and residential buildings. In rural areas, ranching and farming dynasties were firmly established and thriving.
The year 1920 marked the end of the so-called Age of Invention — a 50-year period that saw endless creation: automobiles and airplanes, tanks and machine guns, typewriters and refrigerators. Such turn-of-the-century technologies as electric lighting, gramophones and telephones were becoming widespread. Since 1909, Edmonton and Calgary had been transporting citizens by electric streetcar, the forerunner to modern light-rail transit. As transportation and communication accelerated, so did the pace of life. Social and economic change was the order of the day.
Forty-five per cent of Canada’s population lived in urban areas. Although the agrarian economies of the prairies meant that urban concentration did not exist at that level in Alberta, the province’s larger cities were nonetheless growing quite quickly. By the middle of the decade, Edmonton and Calgary — both of which had been small towns only three decades earlier — had populations of about 70,000 each.
Political discontent from the post-war period installed Alberta’s first populist government in 1921. Initially led by Herbert Greenfield, the United Farmers of Alberta were elected over the governing Liberals by a broad majority.
The UFA’s election illustrates Alberta’s heavy reliance on agriculture during a period in which the economy put increasing emphasis on mechanization. Some farmers replaced teams of heavy horses with primitive tractors. Trucks began hauling grain to elevators and countless other supplies to stores, plants, mills and mines. The most important aspect of mechanization, of course, was the increasing use of automobiles. In 1921, 40,000 Albertans owned cars. When the Depression arrived nine years later, more than 100,000 gasoline-powered vehicles rattled along Alberta’s rutted roads.
Mechanization spurred bigness and increased efficiency. Such large retail operations as Eaton’s and The Bay reflected urban growth and the relative ease with which many farmers and ranchers could travel into town. Mechanical shops and distribution systems for refined fuels and lubricants provided goods and services for the growing fleet of automobiles. Small refineries sprang up around the province. Most of these processed imported oil, delivered by tank car. The notable exception was a small new refinery at Calgary, owned by Imperial Oil subsidiary Royalite – a direct offspring of the company that discovered oil in Turner Valley. The refinery processed the field’s light oil, production of which increased sharply after Royalite made an important new discovery in 1921. This triggered another drilling boom
Popular culture, which largely emanated from the United States, brought flapper fashions and the Charleston to the ballrooms of Alberta’s big hotels. Movies, which began to develop as a commercial venture in 1909, became the rage in the 1920s. Charlie Chaplin dominated the silent screen. In 1927, Al Jolson ushered in the age of talkies as “The Jazz Singer.” The following year, the first colour movies were made.
By 1922, radio stations were broadcasting from both Edmonton and Calgary. Radio brought people closer together; Albertans began to realize that their problems were not unlike those of their neighbours. It also helped end the sense of isolation commonly felt in farms and ranches, providing some relief from the wintertime “cabin fever” that often gripped people living in the small homes of the day.
In short, in the 1920s Alberta began to become what we would today call a modern society. Business was good, and business required accountants. And the ICAA played the lead role in the business of supplying accountants.
Of course, most of Alberta’s accountants were still imports from elsewhere in the Empire. One noteworthy arrival from this period was another British import, J. Ewart Collins. Collins had begun articling in Carlisle, England, in 1914. According to his son, John Collins, “he paid £100 (a very large sum in those days) for the privilege of articling for five years.” Ewart Collins served in the British army for most of the war and actually articled for about one year. He wrote the exams for England and Wales in 1920 – finishing third. He was refused any refund of his £100 for the years he was in the forces.
During the war some Canadian soldiers had convinced him that Alberta was the land of milk and honey, so he moved after getting his British accreditation. He bought a farm at Coronation, Alberta.
According to his son, Collins had a whimsical sense of humour. In 1920, the story goes, he plowed his farmland in white tie and tails, on the assumption that his English formal dress would be little used in Coronation. Often called “that crazy Englishman,” he sometimes found himself in trouble with the Alberta Institute during his first years in Canada.
Quickly giving up farming, he moved to Calgary in 1921, initially working for J.B. Watson. He set up his own firm in 1922. His brother Larkham soon joined him as an articling student; they later formed Collins & Collins.
The Early ICAA Office
The institute did not own technology and office essentials until the beginning of the 1920s; it borrowed a typewriter from the university to prepare minutes and other business documents. In 1921, however, the institute sprung for a desk ($65) and an Underwood typewriter ($132.55). In real terms, the Underwood cost more than a standard personal computer would cost today. Unlike a PC, however, the typewriter did not quickly become obsolete. A decade later, council traded it in on a new model. This cut in half the cost of the new machine.
The latter 1920s were much the same when it came to office equipment. In 1927, council allocated another $133 for office furniture and equipment. The only supplies Cecil Race had on hand were a few receipt books. Shortly after, the institute purchased stationery and supplies for a new filing and accounting system, for $295.87.
Continually burgeoning cities and towns meant real estate was dear, and good office space was hard to come by. When Peat Marwick opened an Edmonton practice in 1925, its operation consisted of desk space in the office of another firm — H.M.E. Evans and Company Ltd. Amenities were scarce by modern standards. CAs and, especially, their articling students made do with little: private offices were a very special privilege.
Engagement Tendering
At the 1922 annual meeting, a member voiced the opinion that cities and municipalities should no longer be allowed to call for tenders to have their accounts audited. Although president Frank Harvey agreed in principle, he pointed out the difficulty of getting clients to appreciate this point of view.
After a lengthy discussion, the membership agreed that Alberta members should not bid against each other and should always ask who had handled the work previously. They also pointed out that, “instead of asking the Government to deal harshly with municipalities who broke the law by calling for tenders, better results would probably be accomplished by quiet and individual work with various members of the Department of Municipal Affairs as we could come into contact with them from time to time. The President was applauded for his remarks upon the responsibility which rested on each one of us to play the game, and seek to implant a wholesome respect for our profession in the minds of the public.”
The institute concluded that it was impossible to quote anything other than a day rate for municipal audits. Depending on the amount of work that needed to be done and the way the vouchers were kept, accountants could charge from $5 to $25 per diem.
A New Provincial Auditor
Within the provincial government, the retirement of auditor Edward Burley in 1923 was a notable event. Not much is known about Burley, but replacing him with James Thompson, who had become a CA in 1920, enabled the province to modernize its accounting system. Thompson oversaw the creation of the province’s first balance sheet, which was effective as of January 1, 1924.
More importantly, Thompson contributed to the Treasury Department Amendment Act of 1924. That legislation prescribed in detail the manner in which payment of accounts would operate.
There were five main features. First, government departments were to prepare payment vouchers in triplicate, and transmit them to the Provincial Auditor’s Office. The audit office then checked them for validity and the availability of funds for payment. After receiving approval, the Provincial Auditor’s Office would cut the appropriate cheques. The cheques were then delivered to the Treasury Department, where they were co-signed by representatives of the provincial auditor and the deputy provincial treasurer. And finally, the provincial auditor was responsible for the production of public accounts at the fiscal year-end.
Education
Education continued to be a primary focus for the institute, which in 1921 reacted somewhat unfavourably to a correspondence course then being offered by Queen’s University. In its first year, 275 Canadian students registered for the courses offered by the Kingston, Ontario-based school. All but 17 of those registrants were from Ontario. However, the 1923 annual meeting heard that the Alberta students taking the course had noted their high regard for the program.
Like the Manitoba Institute, the ICAA advised accounting students not to commit themselves to this correspondence course. Council minutes do not give reasons for the institute’s concern. Certainly, correspondence courses in accounting had been quite common since the beginning of the century. The two main correspondence schools, Shaw Schools and the Success School of Accountancy, were located in Toronto and Winnipeg, respectively.
One of the drawbacks of the Queen’s program, the institute noted, was its focus on Ontario law. And as late as 1926, an ICAA minute noted that the course was “not giving the service that might be expected.” Queen’s had underestimated the amount of effort involved in marking the returned papers. Especially in the beginning, the program was chronically understaffed.
Seen with the advantage of hindsight, the Queen’s program was very good for the profession. Working with the Ontario Institute, the university had developed Canada’s first academic accounting curriculum. This was an important achievement for Canadian accounting, and a great deal of credit for this effort goes to the Ontario Institute’s irascible council member, George Edwards. In 1922, Queen’s University conferred an honourary doctorate upon him.
In those years, the study of accounting was largely a matter of self-study, with or without the help of correspondence courses. CAs would not be required to hold university degrees for nearly five decades. Students-at-accounts could receive information directly from Queen’s about the university program, just as they could learn about the Shaw and Success School correspondence courses from ads in the Canadian Chartered Accountant. They could thus make up their own minds about participating. Despite council’s misgivings, 15 Alberta students were enrolled in the Queen’s program by 1923.
That is also the year in which the Calgary Students’ Association asked ICAA for a grant to secure an instructor. The students felt formal instruction would be more beneficial than the institute’s usual grant to its Calgary library.
The tradition of annual library grants dated back to 1917. To provide students with easy access to the reading material, the institute had issued grants to the Edmonton and Calgary libraries for accounting texts. The budget for each facility was $100. In 1918, council had formed library committees in Calgary and Edmonton. The purpose was to ensure that reading materials were kept up-to-date. Each committee consisted of two institute members and one representative from the city’s student association. In 1952, the institute stopped maintaining the libraries.
In 1923, the institute budgeted a $300 sum to set up classes in both Edmonton and Calgary They would only spend the money “if the government does not grant the expected assistance.” In the end, the provincial government’s Institute of Technology “had given such assistance that it had been unnecessary to call upon the funds of the Institute.”
On behalf of the institute, Alberta member Eric Richardson began delivering the much-anticipated lectures. Students planning to take the Intermediate and Final exams paid $5 each. Starting in 1926, a student’s articles were considered unsatisfactory if the student did not attend all the lectures offered by the CA Students Association, unless his principal did not require him to attend.
The institute also encouraged students to “network,” to use the modern term. They could mingle with accountants by attending Calgary’s Chartered Accountants Club, and were welcome to do so. ICAA minutes note that they would not need to pay membership fees to attend.
Over time, more accounting students began attending university. To accommodate those who had earned bachelor of commerce degrees (and simultaneously to encourage higher education within the profession), the institute amended two by-laws. If students holding B.Comm. degrees from the University of Alberta had passed with suitable marks in at least three accounting courses while attending university, they would only have to article for two years. In addition, they were not required to take the Intermediate Exam.
Articling students received minimal salaries. In Manitoba, there was a standard salary for young apprentices coming out of school with little office experience. A “gentleman’s agreement” existed to pay them $400 for the first year, $500 for the second, $600 for the third and $700 for the fourth.
In 1924, the notion of creating such a scheme in Alberta was advanced to council, which referred the matter to committees in Calgary and Edmonton. The following year the two committees issued their reports. While the minutes were silent about Edmonton’s conclusion, they report that Calgary members favoured such an arrangement. In the end, council concluded, “this is not a matter in which the Institute should lay down any rule.”
To put the wages of articling students in perspective, it is helpful to compare them to the charge rates billed by the firms those students worked for. Partly because of an economy that became more buoyant as the decade wore on, charge rates increased substantially in the 1920s. In 1924, Peat Marwick’s charges for a day of auditing work were as follows:
Partner $50
Supervisor $35
Senior $25
Assistant $15
Typist $10
These rates did not seriously reflect the meagre salaries paid to the articling student. From the perspective of both employer and employee, temporary servitude seemed a fair price to pay for the opportunity to become a full-fledged professional.
From the beginning, students were required to article for a practising CA rather than a firm. ICAA minutes from the period are replete with requests from students wanting to transfer to another CA during their articles. This was probably precipitated by the quickening economic boom, which made changes in employment easy.
Because the new provincial auditor, James Thompson, could be in charge of more than 100 audits at one time, his staff commonly worked on a variety of different projects. Because of the workload, in 1924 council provided that as many as three clerks could article to the provincial auditor himself. According to By-law 41, they were employed as staff of the audit branch of the Alberta provincial government. In 1939, this by-law was changed so that clerks were employed on the staff of the post-audit branch.
The tradition of difficult exams had already begun, and the pass rate for the Final was rarely much higher than 50 per cent. Beginning in 1917, students who obtained the highest marks in each exam received $10. In 1920, President Arthur Neff of the Dominion Association sent the Alberta Institute a letter concerning a proposed War Memorial Shield. He suggested establishing the War Memorial Prize to be given by each provincial institute. The Alberta Institute referred this idea to the annual meeting, where it died.
Exam Medals
Council continued giving cash awards to outstanding students. However, they reconsidered in 1924 and decided that gold and silver medals were to be awarded to the top performers in the Final and Intermediate exams, respectively. The minimum requirement for these medals was the same as the requirement for the cash prize established in 1917 — 75 per cent.
A reproduction of the institute seal decorated one side of the medal. On the reverse, the inscription included the name of the recipient and the exam taken. Designed by the Calgary firm Jackson Brothers, the silver medals cost $4 each, the gold medals $18. Because the medals were seen as more of a status symbol than the cash prize, the institute allowed those who had received cash prizes to exchange money for a medal. In addition, those who had received top marks before 1917, when prizes were not even in effect, were also to receive medals.
Between 1924 and 1928, no candidate received top honours; therefore medals were not awarded. To continue the tradition of awarding prizes, council decided that when no one achieved a 75 per cent mark, the candidates with the top marks would receive $5 worth of books for the Intermediate and $10 worth of books for the Final.
The Exams
Symbolically, at least, this decision suggests that keeping up with the new information relevant to accounting was becoming a challenge. Practically speaking, such new acts as the Dominion Bankruptcy Act, which became effective July 1 1920, were being added to both the curriculum and the Final exams.
The accounting exams were held on three consecutive days for approximately six to seven hours a day. On the recommendation of Alberta member Bill Findlay in 1928, the institute approached the students to see whether they were in favour of taking the exams over a longer period. After receiving their collective affirmation, the university began holding the exams over a five-day period.
By the mid-1920s, students who wished to browse previous exam papers could purchase them for 35 cents per set from the University of Alberta bookstore. By the end of the decade, the institute secretary was selling the old exams as well as copies of income tax rulings that were not published in the Canadian Chartered Accountant.
The acting registrar of the university, Dr. E.W. Sheldon, informed council in 1928 that there was a problem with the way the institute was admitting its members. Normally, the institute admitted prospective accountants after they passed their final exams. However, the university pointed out that the exam results were not official until the Senate adopted the Board of Examiners’ report in May of each year. Thus, new members were admitted before their exam results were approved.
To resolve this matter and maintain good relations with the university, council changed the exam date from December to April. Although this appeased council and the university, it caused problems for students. They argued that they would not be able to prepare properly for convocation, which took place the day after the Senate’s meeting. The institute handled the matter by asking the university to release the names of those who would be recommended for a pass and degree as soon as they were available.
The Politics of Accounting
While the institute was heavily engaged in matters pertaining to education, politics within the profession were also an occasional cause for concern. For example, the institute learned in 1922 that some of its Edmonton members were supporting the United Accountants and Auditors in Canada.
Formed two years earlier by Chester Walters when he was Ottawa’s Commissioner of Income Tax, the United Accountants were organized under the Dominion Companies Act as a rival to the Dominion Association. Although the ICAA proclaimed itself in favour of promoting the study of accounts, council considered this a “commercial proposition for those persons who are engaged in conducting correspondence courses and issuing diplomas, and deplore the fact that certain Chartered Accountants and Chartered Accountant students are permitting their standing with the Institute to be exploited.”
In the end, they conceded that it was probably “a matter of necessity for certain of these persons in order to make a living.”
Although this episode was minor in terms of ICAA’s development, the growth of one of Canada’s other accounting bodies had important implications for chartered accountants.
In 1926, the United Accountants were reorganized. Its board changed the organization’s legal status from federal to provincial, when the organization received a charter by act of the Ontario legislature. When the time came for royal assent, the lieutenant-governor proclaimed into existence the Association of Accountants and Auditors in Ontario.
One of the ironies about the new organization is that it was the progeny of failure. Walters, who had been promoted to reasonably high office as a non-chartered accountant with the federal government, led the drive to create this organization after failing to receive special consideration for CA status from the Ontario Institute.
Astute in many ways, Walters was also politically influential. In 1936 the organization he founded received authority from the province of Ontario to confer the certified public accountant (CPA) designation upon its members. As we shall see in the next chapter, this development had a big impact on Canada’s CA establishment.
Walters’ organization was actually the third accounting body besides DACA and its affiliates that would eventually receive approval to confer professional accountant status. The first of these was the General Accountants Association, formed in Montreal in 1913 primarily by employees of the Canadian Pacific Railway.
The original objective of the GAA was to organize and develop better-qualified bookkeepers and office managers. Those good intentions notwithstanding, in 1917 the organization found itself in a brief turf war, which it lost, with the Dominion Association. (The issue was that the upstart appeared to be advertising itself as the senior accounting body in Quebec.) This organization survives as the Canadian Certified General Accountants Association, and designates CGAs.
By contrast, the Canadian Society of Cost Accountants was formed in 1920 as a cooperative venture among the provincial CA institutes. “In the early days,” said accounting historian Phillip Creighton, “this society was very much a creature of the chartered accountants. They appointed the directors but really did not seem to have paid the Society much attention beyond that.”
To reflect the transformation of cost accounting into management accounting, the society later changed its name to the Society of Management Accountants. In its early years, this society conferred the designation Registered Industrial Accountant (RIA) upon its members. This later became the Certified Management Accountant (CMA) designation.
Thus, by the mid-1920s the main national accounting bodies had all been formed. As we shall see, their future relations would involve many downs, and many ups.
Advertising
The prohibition of advertising still rankled with many ICAA members. But despite their continuing protests, the institute showed firm resolve. Consequently, there was consternation in 1922, when council heard that members George Kinnaird and James (Jimmie) Henderson had included their names on a Commercial Life Assurance Company “folder” — apparently a brochure of some sort. The managing director of Commercial Life, Mr. Glenwright, took full responsibility for printing the names of the auditors on this document, however, and council dropped the matter.
To satisfy members who wanted to advertise their services, the institute continued listing the names of practising CAs “under a suitable heading” in Calgary and Edmonton newspapers. The institute maintained control over approving these ads, but individual CAs were responsible for costs incurred. After placing a list in the Wednesday and Saturday editions of certain newspapers, the institute agreed to continue this practice. “It was felt that the results were thoroughly satisfactory from the standpoint of notifying the public, while the cost, which had thus far been $18.52 per member, had not been too great.”
Although this procedure was satisfactory for most members, council had to issue occasional reminders regarding the inappropriateness of advertising. For example, a letter to Ritchie Paterson in 1925 noted that the advertisement he had placed in the Lethbridge Herald was “unprofessional and undignified.” The institute admonished him in the future to limit himself to “professional cards.”
The use of professional cards was an important compromise in the long-standing advertising dispute. In the mid-1920s, the institute finally began permitting members to advertise in public media by publishing professional cards. They could only include the firm name or names; the names of the CAs “associated therewith”; the firm’s occupation or specialty; and “the business, telegraph and telephone addresses of the firm and its members.” Edmonton and Calgary members reported in 1923 that this method of advertising “was working very satisfactorily.”
Discipline and Ethics
Since ICAA inception, members would occasionally breach the institute’s by-laws. For the most part, the only disciplinary action was a curt reprimand. For instance, when the institute learned that Ewart Collins was driving recklessly in 1925, he received a letter immediately. The gist of the correspondence was that “he had recently appeared before the public in an unfavourable light,” and the institute trusted “that there would be no recurrence for the sake of the dignity of the profession.” At the suggestion of council member John Williams, two years later the institute struck a disciplinary committee of three institute members.
Despite the occasional by-law violations, it was not until 1930 that council first expelled a member – William Wood – for unprofessional conduct.
Ethics and good moral standing have always been viewed as important attributes for accounting professionals. In 1915 the Ontario Institute’s George Edwards prepared a pamphlet titled Professional Ethics for distribution by that province’s student association. On receiving copies of this pamphlet from the Ontario Institute in 1915, council wrote a letter “acknowledging the gift and thanking them on behalf of the Institute of Alberta.”
In 1922, the Dominion Association’s Committee on Uniformity of Standards suggested establishing a uniform code of ethics for the provinces. These codes were slow in coming, however, and many firms simply did not wait. For example, by 1924 Peat Marwick’s practitioners already had an operating manual with standards that could best be described as an audit-screening device. The manual admonished that those in charge must “decline entirely to undertake work for anyone whose business or moral standing was poor.”
In 1927, the ICAA first considered adopting the Code of Ethics followed by the Ontario Institute. Some members, such as Frank Harvey, voiced their opposition to such a code. Harvey’s reasoning was that their “position is stronger when no written code is adopted.”
Objections notwithstanding, Alberta members adopted the ICAA’s first Code of Ethics the following year. It consisted of several sections of the Ontario code plus the definition of a practising public accountant. Two sections are notable. Rule #2 prohibited the use of the words “& Co.” in a firm name when a member was practising by himself. Rule #3 prohibited members from using a non-personal title or name.
Institute Affairs
The institute faced many important issues during the 1920s, one of which was the need to change the guard. It was believed that new members on council would bring fresh outlooks, so suggestions that would bring new blood to council received general support.
In 1922, John Williams recommended increasing the number of council members from seven to nine with two members retiring each year. This, he argued, would provide for both continuity and variety. However, the suggestion was not adopted. As President Frank Harvey pointed out to the annual meeting that year, “members are either very well satisfied with the manner with which the business of the Institute was conducted, or else they were apathetic, as they did not come forward with many new nominations from year to year.”
In 1923, two important amendments were made to the by-laws. By-law #7 was changed to allow for one extra member of council. By-law #8 was also amended, forcing council members to retire after they had served six consecutive terms. (This rule did not apply to the secretary-treasurer.) Members would be eligible for re-nomination one year after this forced retirement.
In 1927 the number of council members rose to nine. At least two-thirds of council had to be practising members. The five men with the most votes would hold office for two years and the four with the next highest number would hold office for one year. Thereafter, the nine members would be elected for staggered two-year terms.
Like the other provincial institutes, Alberta maintained close ties with the Dominion Association. Sharing ideas and experiences with the other institutes helped reinforce the model of uniformity all provinces were striving to achieve. At most meetings, the ICAA council received reports on Dominion Association activities, including information about committee activities, Dominion conventions and the annual report. The Canadian societies published their first yearbook in 1921. That same year the Alberta Institute revised the by-laws to bring them more in line with those of the other provinces.
Alberta members sat on such DACA committees as the Canadian Chartered Accountant Committee, the Legislation and General Purposes Committee and the Uniformity of Standards Committee. Each year certain Alberta members attended the Dominion annual meetings as provincial delegates. Aware of the costs these men incurred, John Williams suggested in a May 1920 letter that the institute pay their expenses. However, council felt it was unwise to incur these additional costs.
Beginning in 1921, the institute’s retiring president and incoming president acted as representatives at the Dominion conventions. And for the 1924-25 term, James Sutherland and Cecil Race (each of whom had been active with the Dominion Association for some time) were respectively elected to sit on the Dominion council as president and secretary.
The DACA Convention
One of the highlights of this term was the hosting of the 23rd annual Dominion convention on September 1-3, 1925. Prosperity flowed during the mid-1920s, and the Alberta Institute was intent on making a good showing for the province.
The institute set aside $750 to pay for the convention, which included the $10 fee to rent the ballroom of the Banff Springs Hotel for three days inclusive. The understanding was that this was a tentative figure, which might need to be adjusted. Forty-six members of the Dominion Association and 24 of their wives attended the convention, which was held at the still-expanding Banff Springs Hotel. The total cost came to a little more than $1,000.
Lieutenant-Governor Dr. Robert George Brett gave the welcoming address, and Premier Greenfield spoke about Alberta’s natural resources. Business was conducted on the first and third day of the convention. One discussion during the meeting related to institute by-laws. The consensus was that the problems facing one institute would most likely face others as well. Therefore, they concluded, provincial institutes should consider this before making drastic changes to by-laws.
On the second day, the ICAA arranged for the guests to visit Marble Canyon and Johnston Canyon. Brewster Travel Company coordinated this event — an adventure in those days, since there were no paved trails or handrails at those sites.
Another Dominion Association convention worth noting was the one held in 1929 in Vancouver. This meeting left a lasting impression on chartered accountants across the country. Alberta delegates John Williams and Harry Howard spoke with great admiration of the essay read by George Winter of Vancouver on the future of the Dominion Association. In their report to the Alberta council that year they said, “It was considered that this was probably the finest paper which has been submitted to any meeting of the Dominion Association, and that it will be regarded in future years as a land-mark.”
DACA appointed a committee to look at Winter’s speech in detail and make recommendations. Chaired by Williams and made up of representatives from each of the provinces in attendance, the committee met for three hours and came up with several recommendations. These included establishing a permanent secretariat for the Dominion Association; the formation of an executive committee of council that would take care of business between council meetings; and the drafting of a general code of ethics for the individual societies. The committee believed that if these proposals were accepted there would be greater interest in the national association, and greater progress.
The committee’s work was considered such an important task that one of the prominent golfers suggested cancelling golf so the convention could reconvene to discuss the committee’s report. Williams and Howard noted in their report that “This suggestion was enthusiastically received, showing that the members present were much more interested in the future of the Dominion Association than in playing golf.”
International Reciprocity
Besides maintaining close ties between the Dominion Association and the provinces, it was important for Canadian accounting organizations to keep in touch with developments in the United States, particularly as represented by the American Institute of Accountants (later the American Institute of Certified Public Accountants).
In the early days, relations between Canadian and American accountants were sometimes less than cordial. During the fervour of the First World War, for example, Canadian CAs seriously considered reserving the profession for British subjects. In 1917, council discussed a DACA proposal that would have limited future applications for institute membership to British subjects. The ICAA supported this proposal, and council advised Alberta delegates to that year’s national convention to vote in favour of restricting membership. Other regions of Canada defeated the motion, which later appeared in some provincial by-laws. The Alberta Institute at one point introduced a Canadian citizenship requirement, but repealed it in 1957.
To understand the early development of this citizenship requirement, it is worth remembering that Britain had been the world’s dominant economic and military power for more than a century, and was at war. English-speaking Canadians, who had inherited commercial, political and legal systems from the British, were generally proud to be part of the Empire but were worn down from the endless killing in Europe. There was deep fear of enemy aliens, who mostly spoke with thick European tongues.
And, until the US entered the Great War in 1917, British-American relations had ranged from belligerent to difficult. As colonial subjects, Canadians harboured a covert fear of American conquest. Many also held an imperial snobbery about the superiority of all things British, including accountancy.
As we shall see, the Americans apparently took the British subject vote as an insult, and returned the favour a few years later.
American societies would usually send a representative to the DACA convention. For their part, Canadian CAs often travelled to the United States for American conventions. Cross-fertilization of ideas between the two countries began. As the presence of US business in Canada increased, Canadian and US accounting ties strengthened. Slowly at first, the bonds to British accountancy frayed.
It was not unusual for accountants to cross the Canada/US border to work. In his 1923-24 report, for example, Cecil Race wrote that a number of members had recently moved to the United States, becoming non-resident members. Because of the greater market in the US, Canadian accountants were more likely to move south than vice versa. Accordingly, the accounting organizations on each side of the border needed to stay abreast of each other’s professional standards.
Reciprocal relations were therefore an important topic of discussion. At the Dominion Association’s 1923 convention in Saskatoon, Chicago CPA Edward E. Gore (president of the American Institute of Accountants) gave a speech about the “Value of Friendly Neighbours.” Notwithstanding the title of Gore’s speech, which conference delegates felt was of great value to the discussion on reciprocal relations, the proposal put forward by the Americans at that convention was arrogant and self-serving.
According to their proposal, Canadians who relocated to the United States would become members of the American Institute without receiving the CPA designation — the US equivalent of CA status. However, American accountants who came to Canada would become full members, and would have the automatic privilege of calling themselves CAs.
Obviously chagrined at this proposal, council minutes recommended that the matter be referred to the Dominion Association. Council fulminated that “Our feeling is that any member of the American Institute might be admitted to the Final Examination of the Province of Canada in which he may settle, and that any CA of Canada might be admitted to the final examination of the American Institute, and that the passing of these Final Examinations and the payment of the regular fees of admission should be the only and sufficient requirements for reciprocal admission.”
At the next year’s Dominion convention in Quebec, the delegates decided not to recommend reciprocal relations between the American and Dominion institutes. Noting that the provincial institutes had full authority to rule on an individual’s qualifications, they agreed that these institutes should deal with accountants relocating to Canada on a case-by-case basis.
The Persons Case
Alberta boomed in the latter half of the 1920s. In 1929, the Alberta Institute raised its membership fees to $30 for a resident practising member, $20 for a resident non-practising member and $10 for a non-resident member. The 105 members included one honourary member, 33 resident practising members, 28 resident non-practising members and 43 non-resident members. Of these non-residents, 18 resided in Canada, 20 in the US, four in Great Britain and one in Cuba. All of Alberta’s CAs were still men.
In November 1927, council again considered the admission of women to the profession. The last time the Alberta Institute had formally discussed the matter was in 1914, a period of intense hostility between a male-dominated establishment and a variety of women’s organizations, including the Women’s Temperance Union and the Suffragettes. A great deal had changed since those days. For example, every province except Quebec supported prohibition in the last years of the First World War, and enfranchised women either during or soon after the war. Women were not given the vote in La Belle Province until 1940. As always, the cultural differences between Anglo- and Franco-Canada were quite large.
In its 1927 deliberations, the Alberta Institute decided that the time had come to “not draw any distinction of sex between applicants for membership.” It is worth remembering that this discussion took place a quarter of a century after the close of the Victorian era, with its prudish notions about the proper ways for ladies to behave. Like previous generations, Victorians held a strong belief that God had created fundamentally different spheres for men and women. Of course, gender historians argue that the debate over women’s rights would not have been possible without entrenched patriarchy.
But there should be a caveat to this argument. Social values tend to be invisible. Like the air we breathe, they go unnoticed unless disturbed. For the most part, only the rare gadfly questions them. In that particular era, though, there were a lot of gadflies about.
By 1927, the work of many gadfly organizations had made a marked impact on the matter of gender relations. In Alberta, the controversy drew particular strength from the drama created by the Persons Case. This series of judgments began in Edmonton with a court challenge to the legal convention that under law women were not “persons” eligible for high public office. The case was led by Alberta suffragette Henrietta Muir Edwards and supported by the legendary Nellie McClung and other activists. Thus, council’s resolution obviously came out of a serious moral discussion among members about the exclusion of women.
Not only was theirs a noteworthy step – it was more progressive than the one taken by Canada’s judicial system. The following year the Supreme Court of Canada unanimously upheld a lower court’s view that, under Canada’s constitution, women were not persons who could hold public office as Canadian senators.
Fortunately, in those days the Supreme Court was not supreme. The Alberta women appealed the case to the British Privy Council. And that body ruled in 1929 that the exclusion of women from high public office was “a relic of days more barbarous than ours.” They reinterpreted what had been, in effect, a badly drafted clause in the British North America Act.
Council’s decision thus reflected more than a thoughtful understanding of topical issues. It also reflected changing times. By 1927 there were at least three female CAs in Canada: Florence Eulalie Herkins in Nova Scotia (1922), M.E. Crehan in British Columbia (1922) and Irene Lynn in Saskatchewan (1923).
Shortly after council agreed to permit women to join, Marion Wallace of Brooks stated her intention to article as soon as she could find employment with a practising accountant. Wallace receives no further mention in ICAA’s minutes, however, and she did not become a member. In those days there was great resistance to employing women in accounting, and she probably could not find an accountant for whom to clerk.
Attitudes and traditions die hard. As recently as the 1960s, many accounting firms were reluctant to hire female accountants. They were concerned, for example, that it would be difficult to “protect” single women when they were out of town on business.
Having investigated and acted upon the moral issue of women in accounting, council returned to day-to-day institute operations. To give students better access to the required reading materials, in 1928 the Library Committee in Calgary moved the institute’s books from the Calgary Public Library to Frank Harvey’s office. The committee purchased a complete set of textbooks and bookcases for $120.66; they were accessible during business hours. The Edmonton committee had still not acquired the entire set.
Jolly Good Fellows
By 1928, only two members had received the honour of being ICAA Fellows: Arthur H. Edwards on May 20, 1911 and Cecil Race on May 31, 1912. At a special meeting on July 4 1928, the institute’s secretary noted that the citation for Fellow status incorrectly noted that it was received for passing the appropriate exams.
Since there were no fellowship exams, council agreed that this honour is properly granted only for conspicuous service. They then proceeded to name James Sutherland an Institute Fellow with the citation: “This is to certify that James Brown Sutherland having rendered conspicuous service to the Institute was on the fourth day of July, 1928 admitted as a Fellow thereof and is hereby authorized to use the designation Fellow of the Chartered Accountants.”
As the institute honoured Sutherland with the Fellow designation, Alberta was enjoying yet another of those remarkable booms that have visited the province frequently since settlement began. In this instance, it was a boom shared with central Canada (although not the Maritimes), most of the United States and much of Europe. In the language of the day, the economy began to “roar.” The decade will always be known as the Roaring Twenties.
After the post-war recession, prosperity gained momentum slowly during the early 1920s. As the decade ended, however, it was on a spectacular upward trajectory. Construction and manufacturing set records. Commodity prices soared. Bustling ships, freight cars and new-fangled trucks delivered goods to eager buyers. For the first time, a large number of households began to use credit to buy such consumer goods as radios, vacuum cleaners, washing machines, refrigerators and, of course, automobiles.
The Crash
Most families did not own shares, but the stock market was on a tear. The Dow Jones Industrial Average (a measure of 30 stocks chosen to reflect the broad US economy) began the decade at 108 points. It fluctuated greatly over the ensuing five years, but did not surpass 110 until mid-decade.
The move above 110 marked the beginning of a resolute upward march. By the time the index peaked at 386 on September 3, 1929, the markets had reached levels that were astounding by any normal analysis of stock fundamentals. The Dow Jones average had risen by 250 per cent in only five years. Investors — many of whom used borrowed money to buy into this great bull market — explained the high valuations by proclaiming that stock markets had entered “a new era.”
Canadian stocks followed their American cousins into nosebleed territory. Driven by deeper, better discoveries at Turner Valley, the tiny Calgary Stock Exchange, which had risen from the ashes in 1923, was part of this phenomenon. Such companies as Hudson’s Bay Marland Oil Company (a private joint venture formed by The Bay and Oklahoma-based Marland Oil) and Home Oil were joining Royalite, Okalta and other companies in the search for Alberta oil. And prosperous Albertans from a new generation were again betting on their exploration success. Take Home Oil Company — a miniscule operation by today’s standards. The three-year-old Calgary-based producer, which had brought in a good well at Turner Valley, issued shares in 1927 for $1 par value. Within two years, they peaked at $29.
The markets were strong and the economy was strong, but things were still imperfect. Southern Alberta experienced droughts that caused people to abandon their farms. This regional phenomenon represented the first local decline in population since settlement began.
Drought notwithstanding, the prospects for Alberta’s economy looked good. Expanding accounting firms continued to look to the province’s two large cities as sources of potential growth. Price Waterhouse opened its Calgary office in July 1929 through a merger with the Winnipeg firm of Scott & Stuart. Based in Calgary’s Grain Exchange building, the Scott & Stuart practice gave Price Waterhouse a toehold in the province. The firm anticipated increased business in the city, partly because of renewed interest in oil exploration. The landmark event of 1929 soon put an end to both expansion and growth, however. That event was the crash of the New York Stock Exchange (NYSE).
Ironically, a new Alberta Companies Act went into effect just three days before the crash. The Alberta Institute provided advice on the form of balance sheet that should be presented to shareholders at annual meetings. As we shall see, part of the aftermath of the Depression was to de-emphasize the balance sheet’s importance.
On Black Monday — October 4, 1929 — the NYSE was hit with a hurricane of selling. Prices dropped by five per cent in a single day, and continued their general decline for three more years. By the time it bottomed, the Dow Jones Industrial Average had lost nearly 90 per cent of the value it held at its 1929 peak. The Dow would not reach that level again for a quarter of a century. No one understood it yet, but Black Monday signalled the beginning of the Great Depression.
“The long term outlook for shareholders in sound Canadian companies remains good....The outright owner of shares in leading companies...need not worry when stocks sell at below the prices he paid for them, if he has a well diversified list.” — The Financial Post, October 5, 1929
Chapter Four — The Great Depression: 1930-39
The stock market crash set into motion a cycle of events that created the most intense period of economic misery in western history. As stock values declined, bankers called loans on highly leveraged equities. Many investors went bankrupt. Credit dried up, demand dropped and price deflation ran amok among manufactured goods and commodities alike. As the Depression developed, businesses of all kinds and sizes (including banks themselves) declared bankruptcy. Layoffs and closures became the order of the day.
This grim period had a profound impact on the 117 chartered accountants who belonged to the institute as the decade began. Alberta Institute member Merv Graves, who would later become president of the institute and president of the Dominion Association, began his career as the stock market crashed. As an articling student, he watched the margin positions at an investment firm. When the price of grain plummeted, he later recalled, “a lot of big men in town” were devastated. “After that, I’ve never bet anything on margins in my life. I learned not to gamble, and to this day, I still won’t even buy a lottery ticket!”
At the bottom of the cycle, about one half of Canada’s wage earners were on some form of public relief. One Canadian in five was a public dependent. The average yearly income was less than $500 — less than half the estimated poverty level income for a family of four.
Since jobs were scarce, the institute did its best to look after current and potential members. Secretary John Williams received lists of vacant appointments advertised by the Civil Service Commission. In 1933, he reported to council that he would research what qualifications were necessary before chartered accountants could apply for these jobs.
Then a member of council, Francis Winspear pointed out that businessmen do not generally understand the functions or benefits of chartered accountants, especially in matters related to bankruptcy. In response to his prodding, council took on the task of preparing a pamphlet similar to those recently published by the Saskatchewan Institute. This was circulated to commercial concerns and municipal districts.
Many of those fortunate enough to have jobs saw their income dramatically reduced. Charge-out rates for accountants had continued to rise during the 1920s, and at the beginning of the Depression were typically $75 per day for a partner, $25 for a student. When council received inquiries in 1930 with respect to what tariff to follow, they essentially confirmed the point of view expressed by the Department of Justice 10 years earlier. The general opinion, as communicated by Frank Harvey, Harry Howard and J.C. Thompson, was simple: “It is unwise to set a tariff either as a maximum or a minimum and the matter should be left to private contract, the fees depending to some extent upon the class of work done.”
Practice revenues declined swiftly during the economic collapse. Take Peat Marwick. That distinguished international firm had offices in every major Canadian city from Montreal to Vancouver. However, in 1932 the firm’s revenues from Canadian sources totalled only $189,000. After partners’ salaries, net profit was $3000.
While times were hard for many firms, they also presented opportunity. The accountant in charge of Peat Marwick’s Edmonton office, Francis Winspear, struck out on his own in 1930, yet developed a very successful practice during the ensuing decade.
According to Winspear, who was quite familiar with cost accounting, the Depression actually created prospects for the astute accountant. “Business was striving to keep its head above water, to avoid losses. Bankers were concerned. All this represented an opportunity for accountants with analytical skills. We analyzed production costs, departmental costs, distribution costs, and the effectiveness of advertising. We suggested retrenchment here, expansion there. We studied the turnover of inventories, profit margins in departments and lines, collection methods....Sometimes we made frightful bloomers, but our successes far outnumbered our failures. It was a strenuous life because our clients’ aspirations were our problem.”
For his part, Winspear began his practice with personal liabilities totalling $936.14 — quite a bit of debt in those days — and no reserves. But at the end of his first year of practice, he reported, his one-man practice had net income of more than $4000.
Of course, successful accountants maintained quite a good standard of living, even during the Depression. Peat Marwick partners with salaries of $5000 per year generally were able to afford “an automobile and a part-time servant. They also managed to belong to city and golf clubs, largely at the firm’s expense. The Great Depression was a time of declining prices, so people who had jobs or owned property were in a doubly fortunate position compared with those who were unemployed.” Not all property ownership represented good fortune, of course, since real estate values declined rapidly during the first half of the decade, and remained depressed for the balance of the decade. By contrast, stock prices reached bottom in 1932, then began to rebound.
In the first year of the Depression, no one knew how bad the situation would become. To an extent, business went on as usual. Membership in the Alberta Institute totalled 119. The Chartered Accountants Club in Calgary flourished, and the institute encouraged members to set up an Edmonton affiliate because, as a council minute explains, “These clubs promote esprit de corps; eliminate, to a large degree, [the need for] codes of ethics; help out students, and stimulate our membership.”
For the first time, a father and son attended the 1930 annual meeting. They were Secretary John H. Williams and his son, John D. Williams.
Alberta sent two representatives to the Dominion Association’s 1930 annual meeting in Halifax: James C. Thompson and Harry Howard. As they informed council upon their return, “the meeting this year was perhaps the most successful in the history of the Association. More interest is being shown by constituent societies and it was fully realized that the activities of the Dominion body would serve to bind together the Provincial Associations to their mutual advantage.”
The following year Alberta members James Thompson and Frank Harvey attended the Dominion Association annual meeting in Regina as representatives on the Dominion council. In their report, they proclaimed that “there is no doubt that these annual meetings help to cement the various Provincial Associations into one body not only to their mutual advantage but to the advantage of the general public through the effort made to maintain proper standards and as a result the highest professional services.”
By this time, of course, the immensity of the Depression was clear. One of the tragedies of that terrible decade is that bad policy made it worse than it needed to be. Most industrial countries adhered slavishly to a gold standard for currencies while commodity prices dropped. This contributed to severe deflation, and greatly extended the duration of the downturn. In addition, US President Herbert Hoover and other world leaders responded to budget deficits by raising taxes. Worse still, Congress passed the Smoot-Hawley Tariff, which choked world trade by triggering protectionism.
The first Alberta politician to become prime minister, Richard Bradford Bennett, led the Conservative Party to victory in 1930 on a pledge of using high tariffs to force other countries (by which he primarily meant the United States) to open their gates to Canadian exports. His threats were a direct response to Smoot-Hawley.
In an attempt to stay in power, the Mackenzie King Liberals legislated the very high tariffs Bennett proposed, before the election put them out of office. Those tariffs got the country nowhere.
To revitalize trade, Bennett convened the Imperial Economic Conference in Ottawa in 1932. His hope was to negotiate preferential tariffs among the members of the British Empire, and to take advantage of the pound sterling, which was strong relative to the Canadian dollar until Britain abandoned the gold standard in 1931. A great deal of hoopla surrounded the Imperial Conference, which was accompanied by a proclamation from the Government of Canada calling for a national day of prayer. However, it achieved very little. When King returned to power, he signed the 1936 Canada-US Trade Agreement, which helped normalize trade between the two countries.
Canada was heavily dependent on agricultural and natural resources in a severe bear market for commodities, so the Depression was more severe in this country than in the United States. And the four westerly provinces, which depended almost exclusively on primary-product exports, were the worst hit. In the prairies, the enduring symbol of the Great Depression was the “Bennett Buggy” — a team of horses hitched to an automobile because the owner could not afford fuel. Saskatchewan, which was plagued by crop failures and the lowest wheat price in recorded history, saw total provincial income drop by 90 per cent in a two-year period.
With the accountant’s appreciation of the value of money, council paid special attention to the institute’s financial reserves during the hard times. As we shall see, this good care was somewhat compromised when the Alberta government put the touch on the institute’s cash reserves.
In 1933, the institute held Alberta bonds valued at $2,000, with principal and interest payable in US funds. Acutely aware of the economic disaster that had stricken the prairies and under pressure from the province, council made an extraordinary resolution. They resolved that the interest coupons should be cashed in Canadian funds only and that any premiums collected on these coupons should be refunded to the government. In response to this decision, the deputy provincial treasurer told the institute, “I can assure you that your action in forgoing the New York premium on your Alberta debentures is greatly appreciated by the government.”
When the institute’s $500 in 5½ per cent 1934 Dominion bonds matured, council agreed to reinvest the money in three-year fixed-term provincial savings certificates. According to the information they had in October 1934, this would return the high interest rate of five per cent.
The Canadian Bank of Commerce soon advised council, however, that the maximum rate of interest would be 1 per cent per year or 1½ per cent if the money were on deposit for 90 days. The institute placed the funds they had available, $1,000, on deposit for 90 days. When the interest was changed back to 1 per cent the following year, council transferred the money back to savings. In 1936, the institute invested $1,000 in 3½ per cent bonds with October 1949 maturity.
The Birth of GAAP
Although the economy seemed to be down for the count, the Great Depression was nonetheless a period of theoretical and technical breakthroughs in many areas. This was certainly true for accountancy. The stock market debacle had generated a great deal of anger. Investors had made investments based on financial statements that were sometimes of dubious quality. The crisis peaked in 1932 as 11,000 of 25,000 US banks failed. It was now very clear that investors needed financial information that was both more reliable and more useful. American accountants responded by developing a system of universal accounting principles.
The First World War had helped make the United States the world’s leading financial power. In consequence, that country gradually took over Britain’s leadership position in professional accounting. Three landmark events took place in the United States during the Depression, all in response to the stock market crash and the deepening economic crisis.
One of these occurred in 1930, when the American Institute of Accountants struck a special committee on cooperation with the New York Stock Exchange. The committee’s report came three years later.
The others were legislative in nature. The Securities Act (1933), which regulated the issue of new public securities, required audited financial statements — a practice that had been pioneered successfully in Ontario a quarter of a century earlier. The Securities Exchange Act (1934) established the Securities Exchange Commission, which had the authority to prescribe accounting procedures. These two pieces of legislation helped galvanize the profession to promote improvements to accounting principles.
The AIA’s special committee helped discourage the government from imposing prescribed accounting procedures. Chaired by George O. May, who had been trained in Britain but became a leading figure in American accounting, the committee considered the notion of having a competent authority select a detailed set of rules to be made binding on all listed corporations of a given class. Their report rejected this notion, however with these words: “The more practical solution would be to leave every corporation free to choose its own methods of accounting within the very broad limits to which reference has been made, but require disclosure of the methods employed and consistency in their application from year to year....Within quite wide limits, it is relatively unimportant to the investor which precise rules or conventions are adopted by a corporation in reporting its earnings if he knows what method is being followed and is assured that it is followed consistently....”
If the beginning of codified Generally Accepted Accounting Principles (GAAP) can be pinpointed, the publication of the AIA’s special committee report probably represents that moment. The movement toward practices based on generally accepted principles took important strides in the United States during the Depression. And Canada, Britain and other English-speaking nations began thinking about GAAP at the same time. Formalization of those codes would take decades, however.
As all this unfolded, an important change in the Canadian economy was quietly taking place. Regional and national businesses became increasingly significant segments of the national economy during the 1920s. This trend intensified during the Depression, because larger organizations were more likely to have the resources to weather bad times.
Funny Money
As has often been the case, Alberta’s impact on Confederation was disproportionate to the size of the provincial population. Before the immensity of the economic crisis became apparent, the province’s lawyer-turned-politician R.B. Bennett was elected prime minister. An unimaginative leader and a micro-manager, his mean-spirited approach to the gathering crisis alienated both voters and provinces. Rather than help alleviate suffering, his policies — deporting ill or unemployed “aliens,” for example, and setting up work camps in the bush — frequently did the reverse.
Alberta and the other western provinces were technically bankrupt from 1932 onwards, as were hundreds of municipalities. In response to the intense misery, Alberta hatched a populist political party based on a strange economic theory. Yet the doctrine of social credit spread like a prairie fire. After gaining power, the Social Credit Party controlled the provincial legislature for nearly four decades.
Social credit economics derived from the ideas of an English engineer, Major C.H. Douglas. Douglas believed that economic hardship came from an inefficient capitalist economy, which failed to provide people with enough purchasing power to enjoy the bounty of well-developed productive capacity. The wages paid to produce goods, he argued, were always less than the total cost of production — after all, production also required raw materials, transportation and other costs. Consequently, there would never be enough money in society to buy all the goods produced. To resolve this conundrum, governments should issue “social credit” (money) so their citizens could enjoy the fruits of an efficient economy.
Radio evangelist William (“Bible Bill”) Aberhart converted to this doctrine in 1932. Using his electronic pulpit, he preached the gospel of social credit as a solution to Canada’s economic woes. Three years later, his newly formed Social Credit Party (which promised a $25-per-month “basic dividend” to each citizen) won 56 of 63 seats in the legislature. In addition, in the 1935 federal election, Alberta sent 15 Social Credit MPs (of 16 in total) to Ottawa.
Some businesses (Home Oil, for example) were frightened enough by Social Credit ideas that they moved out of the province, but in 1937 Aberhart nonetheless passed legislation based on social credit ideals. In defiance of Gresham’s Law (“Bad money drives out good”), the province began distributing “funny money” or “scrip.”
Scrip was supposed to increase money circulation in Alberta and provide loans to farm communities. Institute member Keith Huckvale, who became provincial auditor, later recalled that the Alberta Treasury Branches were established in 1938 in part to pay and redeem scrip. “The paperwork involved with scrip was tremendous,” he said.
Although the bill was quickly disallowed as an intrusion into federal jurisdiction over currency, it sparked a political row, which led to a Royal Commission on Dominion-Provincial Relations. Former ICAA president and provincial auditor James Thompson served on that commission, which in 1940 recommended a shift of taxation power to the federal government and the creation of grants to equalize provincial revenues.
While Thompson worked in this area, Charles Lang served as acting provincial auditor. Keith Huckvale succeeded him in 1942, then held that position for 30 years. Initially, Huckvale reported to the provincial treasurer. Much later in life, Huckvale pointed out that his job had involved both acting as an agent of internal control of government operations (pre-audit) and conducting external audits. This created some potential for conflict of interest. However, he said, the government was not open to making changes.
Matters of Discipline
Rarely do council’s minutes from the period make direct reference to the poverty of the times. However, the desperate scramble for income was probably one factor behind the many complaints pertaining to ethics and good moral standing that came to council’s attention in the early 1930s. The large number of cases led to amendments to the Alberta Chartered Accountants Act — amendments that gave the institute specific disciplinary powers.
The first case to lead to expulsion from the institute involved Paint and Products, Ltd. — one of countless companies to declare bankruptcy during the Depression. When the company went into liquidation in 1930, a judicial investigation into the actions of some of its directors and officers named two ICAA members. These were Ewart Collins, the company’s auditor, and William Wood, the former president of the company. Council set out to investigate whether these men were guilty of unprofessional conduct.
A. Macleod Sinclair lodged a complaint against Wood on behalf of the company’s shareholders. Institute member Alex Ross charged Collins with misconduct regarding the audits of Paint and Products Ltd. and failing to disclose certain material information to shareholders in the balance sheets.
Council called a special meeting to discuss the allegations. They found Wood guilty, and he became the first member to be expelled from the institute. After notifying him of his expulsion, John Williams visited Wood’s office on February 28 and found his CA certificate still hanging on the wall. Williams demanded that it be removed immediately from public view.
During the investigation, Collins admitted that he was negligent in failing to conduct an audit with due care and precaution. He was severely reprimanded by President Harry Howard for having “brought disgrace or discredit upon the whole profession.” Collins offered to contribute to the cost of the council’s investigation. But council refused, agreeing that the money should come from institute funds. Thus, “each member would therefore pay his proper share of the expenses of protecting the honor and dignity of the profession.”
This incident notwithstanding, Collins’ practice did very well. Although Ewart died of a heart attack in 1948, by then he and his brother, Larkham, had built a substantial practice. Larkham and Ewart’s son, John, were among the builders of what became a substantial partnership. Now called Collins Barrow, the practice has 25 offices across Canada and employs a staff of 400. The firm also helped found Moores Rowland International.
While Collins was being charged with misconduct, he was making his own allegations against member Henry Ford. Collins claimed Ford had solicited the audit of Sykes-Imperial Furniture Ltd. without inquiring whether a chartered accountant was already handling the work. In fact, Collins had been handling it for the previous six years.
The institute president interviewed Ford about the incident and council decided the case was not serious enough to require a formal investigation. When Ford was told of council’s decision to drop the matter, his reaction was that he had been “unjustly and unfairly condemned” in the first place.
A very serious ethics-related incident during this era concerned one of the founders of the institute, J.B. Watson. Well respected while he lived in Alberta, one history cites the following contemporary description: “John B. Watson possesses many sterling traits of character and the proof is found in his business life, where he bears a reputation for enterprise and reliability that is very enviable.” He had been ICAA’s first secretary-treasurer, and had been president in 1912-13. He had also served on the Dominion Association’s council. Watson moved to Victoria in 1928.
Council minutes from 1930 report that the legal advisor of Woodbine Gold Mining Co. Ltd. had accused Watson of fraud. Without admitting wrongdoing, he settled out of court for $26,000. Watson was still using the CA designation based on his ICAA membership. Council felt they could do nothing to stop him, since he was no longer an Alberta resident. However, in 1931 Watson, who then resided in San Francisco, resigned from the Alberta Institute – supposedly because of the increase in annual fees.
The last word in this controversy went to the ICAA. When Watson asked to be re-instated in December 1938 council’s memories proved very long. He was refused admission.
In response to the rash of cases reaching council, the institute needed to strengthen and streamline its disciplinary authority. The institute’s counsel was J.E.A. Macleod, who had been appointed in 1927. Macleod suggested applying to the provincial legislature to amend the charter, and drafted a proposal to present to legislative staff. The legislation, which passed in 1933, was the strongest in Canada, and set the standard for the other provinces. While the institute was working to push through this reform, however, complaints pertaining to unprofessional conduct continued to arrive at ICAA offices.
A case that straddled the period in which council’s new powers came into force deserves special mention. The episode began in April 1931, when Donald McCannel filed a complaint regarding unprofessional conduct against Ritchie Paterson. Before this investigation was finally resolved, the Alberta legislature had amended the Chartered Accountants Act.
McCannel was chagrined that Paterson had applied to be auditor for the City of Lethbridge though he knew that McCannel already had that job. Paterson countered that he had once worked as the Lethbridge auditor, but had resigned in (boom-time) 1925 because of friction with the mayor. Although he knew McCannel had taken charge of the audit, Paterson felt he was still entitled to apply for the position after the mayor left office. He did so in 1929 and 1931.
After hearing the accusations, council appointed an investigating committee. With ICAA now operating under the authority provided by the amended act, the investigating committee prepared a detailed report for council. This included a short summary of evidence, a transcript and various exhibits. They found Paterson guilty of misconduct and proposed a $200 fine payable within 30 days. The maximum fine they could have recommended under the act was $300. They chose leniency because this was the first complaint against Paterson.
Following a reprimand by President Kenneth Morrison, Paterson stated his sincere regret and agreed to abide by the institute’s high ethical standards. Council then prepared a synopsis of the incident for the Canadian Chartered Accountant, carefully omitting names and places. The group also decided not to send out any official notification of the decision. This was probably because most council members believed matters discussed within their chambers should not go beyond without the special consent of council.
The number of disciplinary cases gradually began to take up a huge amount of council’s time. To reduce time spent in adjudication, the institute struck two investigating committees — one in Calgary and the other in Edmonton — to hear future complaints. An early complaint handled under this system came from Provincial Auditor James Thompson. In 1932, he alleged that W.H.A. Thompson (no relation) had been negligent when auditing the books of Hanna Municipal Hospital. The case was referred to the Calgary investigating committee, which found the latter Thompson guilty of unprofessional conduct. He was fined $25 and ordered to refund $100 to the hospital.
In 1934, three members were alleged to have violated Rules 2 and 3 of the code of ethics. Rule 2 prohibited an individual practitioner from using the words “& Co”; Rule 3 prohibited a non-personal title or name. However, council did not find the alleged violations worthy of review.
Three years later, Rule 3 again became a matter of debate when Larkham Collins argued that any Alberta member who is a shareholder of a trust company that offers accounting is guilty of a Rule 3 violation. Both the Calgary and Edmonton investigating committees found this complaint too general; if allowed, it would have meant investigating the portfolios of every member. Specific complaints would have to be brought to council’s attention if Collins wished to pursue the matter any further. Accordingly, another member complained that William Robertson and Ritchie Paterson of the Alberta Co-operative Audit Bureau were also contravening Rule 3.
While these conflicts were brewing, council obscured the bickering with a public commitment to high principles. As president Harry Howard told an annual meeting during these years, “it is indeed unfortunate that any members of our profession should ignore the grand principles upon which it is founded. Truth and its fearless presentation are the fundamentals which are expected of us with regard to the matters which come under our purview, and when we fail to bring them to the light, we become unworthy of our profession.”
At Odds with the Lawyers
Not all of the professional conflicts during these years were internal. For example, the institute had frank discussions with the Law Society of Alberta. Although the two professional bodies normally enjoyed cordial relations, in the early 1930s the Law Society accused the institute of encroaching on its territory. This was a far more significant issue in a period of economic calamity than it would have been, say, in the booming 1920s.
The institute’s legal counsel, J.E.A. Macleod, delivered the particulars. By coincidence, Macleod served as chairman of the Law Society’s discipline committee. In 1931, he wrote a letter to the institute “with the intention of cooperation not criticism.” Speaking for the Law Society, he observed that he had occasionally found that a company’s auditor would advise its directors on points of law. He also noted that some institute members had been undertaking the formation of companies.
In response, ICAA president Kenneth Morrison wrote to Macleod “thanking him for his communication and heartily endorsing the spirit in which it was written and agreeing with him that the two professions are so closely allied that each of us should see that one does not encroach upon the other.”
Morrison also gave the institute’s side of the story — namely, that solicitors sometimes advised their clients on income tax matters, for example. Both groups agreed to adhere to matters of their own profession. And the situation seemed to be resolved...until 1934.
That year the secretary of the Law Society informed ICAA that many provincial applications for incorporation had come from the offices of chartered accountants. The institute acknowledged that, during the oil boom in the late 1920s, numerous applications were received from CA offices. But this was before the informal arrangement between the Law Society and chartered accountants to prevent encroachment. The institute again pointed to encroachment cases by solicitors in the preparation of income tax returns.
The Law Society then proposed that ICAA sponsor amendments to its act in the provincial legislature to prevent further encroachments on Law Society turf. Somewhat miffed at the suggestion, council appointed a committee to discuss the matter with the Law Society’s “encroachments committee.” They eventually arrived at the consensus that neither profession could completely define what constituted an encroachment. They let the issue die, on the principle that neither group should try to enforce unenforceable rules.
Relations between the two groups may have strengthened over the next few years. In 1938 Alexander Hannah, a lawyer, presented new members with their certificates. A lecturer for many years, Hannah remarked on the pleasing relations that existed between the institute and the legal profession.
National and Educational Issues
In 1930, the Dominion Association announced its intention to appoint a permanent secretary-treasurer. The association was searching for someone between the ages of 30 and 40 (not necessarily a chartered accountant) to devote himself full time to the affairs of the association. Alberta member Austin Carr fitted the bill. He was appointed to the position on March 1 of the following year.
The Ontario Institute set up a temporary office for Carr at no charge and the various provincial institutes paid most of his $5,000 yearly salary. The Dominion’s executive committee also decided that $600 previously allocated to print the Canadian Chartered Accountant would go toward his salary: times were, indeed, tough. The Alberta Institute raised its membership fees to help pay his salary; the institute, which then had a membership of 108, contributed $5 per member per year.
Aware that Alberta’s petroleum industry was unique in Canada and growing, one of Carr’s first requests was for an article on oil companies and the audit of their accounts for the Canadian Chartered Accountant. ICAA’s Calgary members argued that the subject had been generally well covered in textbooks, and suggested instead an item on allowances by the Income Tax Department for depletion and development costs.
Ironically, shortly after council completed this correspondence with Carr two oil promoters, R.A. (Bob) Brown Sr. and George Melrose Bell, used an innovative approach to oil and gas financing to finance what would become Turner Valley’s most important well.
Although the economy had begun to grow after reaching bedrock in 1932, funds for petroleum investment were as scarce as confidence in the fledgling sector. Investors were still smarting from the share-price debacle of 1929 and beyond. Oil prices had declined by as much as 90 per cent. And the doctrine of social credit was creating investor uncertainty.
Despite these obstacles, in 1934 Brown and Bell founded a company named Turner Valley Royalties. They proposed funding a well by promising investors a “royalty” from well production, if the well were successful. The company committed 70 per cent of the production of its projected well to the payment of royalties.
Work began in April 1934, but experienced many delays in drilling. More than two years later, the well came in as a gusher, splattering oil onto the surrounding field. The following day, it went into production at almost 1000 barrels per day. Investors received their investment back within a few months.
This well was an important development for Canada’s petroleum industry. It was the first true oil well in the Turner Valley field, and the industry it helped create later spawned countless clients for accounting professionals. However, the royalties system of well financing was poorly received in Ottawa. In 1938, the federal government decreed that net income from oil production was taxable as profits in the hands of the producing company. In the investor's hands, it was taxed again as income, rather than as return of capital. Although a producing company successfully appealed this decision, the incident shook investor confidence in the royalties system of exploration finance.
This was one of a number of instances in which early oil financing and accounting practices were confirmed by reference to the courts. An unsuccessful attempt to change another federal policy began in 1934. That is when a company named Sterling Royalties took the minister of national revenue to court over development expenses. At the time, the federal government permitted companies to calculate development income for income tax purposes as a percentage of net operating income. The oil company argued all the way to the Supreme Court of Canada that development expenses should be based on a reasonable portion of the actual expenses incurred.
In 1946 the company lost the case. According to the court, “it was not said and cannot be said categorically that the use of this practical formula will not fairly serve the purpose to be aimed at in administering this feature, dealing justly with and promoting enterprise in the development of this kind of natural resource.”
It is worth noting that R.A. Brown’s son took control of Home Oil in the 1950s. One of the most colourful oilmen of that era, Bob Brown Jr. surrounded himself with CAs, many of whom became very successful businessmen. For example, Bart Rombough became president of PanCanadian Petroleums. Ross Phillips served as president of Home Oil. Mike Williams became president of Candel Oil Ltd. Bill Atkinson was a principal player in Westburne Industries. And within Home Oil, Max Govier provided him with senior accounting support.
The Canadian Chartered Accountant
DACA’s Carr was determined to strengthen the Canadian Chartered Accountant, and Alberta member John Williams was named the western representative. The by-now-perennial Frank Harvey sat on the magazine and publications committee. Carr stressed the importance of having professional CAs write original articles to be included in every issue of the magazine. He pointed to the fact that at every Dominion Association annual meeting “exception had been taken to the too free use of scissors and paste in the make-up of the magazine.” In support, President James Thompson said it was the institute’s duty to help the magazine committee by writing articles and even suggested that members write about the students’ lectures.
In 1933, Harvey sent a letter to the provincial institutes informing them that the magazine’s editorial committee was contemplating whether to ask the institutes to encourage students with high standards to prepare articles on accounting. In return, a small monetary prize would be given to those who submitted outstanding papers. Thus began an important new approach to finding written material for the publication.
Two years later, the Canadian Chartered Accountant announced another essay competition, this time to encourage members to submit articles. Of the seven prizes awarded, Edmonton CAs received two. A second prize award of $35 went to Winslow Hamilton. O.H. Harder received $10 for an honourable mention.
The Dominion editorial committee followed this competition by offering $25 for the best essay on a subject of current importance in each province. Only two Alberta members prepared essays. Winslow Hamilton received $25 for his article on the right to specialize, and Jim Kergan received $10 and an honourable mention for his essay on the irrigation problem in Alberta. Kergan’s practice was in Drumheller, where droughts and related environmental problems devastated crops for much of the Depression.
Essay competitions became a common occurrence. In 1938, Alberta’s representative on the publications committee was Merv Graves. Graves received a letter from Carr, who was both executive secretary of DACA and editor of the Canadian Chartered Accountant, concerning the lack of material available for the magazine. Soon after, Graves announced that $25 would be given to any member who prepared an article of at least 1,500 words, which was published in the Canadian Chartered Accountant magazine.
As these competitions suggest, Canada’s CA organizations were still quite focused on professional education. If the 1930s were a decade of innovation in accounting theory, they were also the decade in which the profession’s educational system began to coalesce.
The Plight of Students
Since education was a provincial responsibility, the important educational initiatives arose from within the provinces. For the Alberta Institute, important milestones included making the Queen’s University correspondence course mandatory for Alberta students, and increasing the term of articles for students from four to five years. These steps were a continuation of activity that had begun in the 1920s.
At the 1927 convention of the Dominion Association, Keith Drennan gave an address “of such inspiration” that it roused the three Prairie provinces and British Columbia to again consider standardizing their accounting exams. It had been more than a decade since they had last considered doing so. In 1929, representatives from the four provincial institutes gathered at a Vancouver hotel to discuss the pros and cons of such a task.
To standardize the exams, they estimated, would cost a considerable sum — about $4,000. They considered two proposals for raising that money: billing the individual institutes or obtaining a portion of the exam fee from the university. They eventually opted for the former, and asked each institute to make an initial contribution of $200. This amount would cover the cost of holding a “dummy” exam.
One suggestion from the task force was that the Dominion Association take charge of the exams. This proposal was quickly quashed, since education was outside the jurisdiction of a federally chartered body. To complicate matters, the institutes realized that after they completed the job of standardizing the exams, they should consider standardizing their by-laws as well, particularly with respect to the students’ qualifications. This was a good insight, and during the decades since it has actually come into practice. Over the years, harmonization committees have gradually enabled Canada’s institutes to create by-laws that are consistent with each other.
This early initiative to standardize exams fell apart, however. There were a number of obstacles, but the deal-breakers were two. First, the British Columbia institute was not affiliated with that province’s university. Second, the University of Saskatchewan also had concerns with the proposal.
After the collapse of the discussion about standardizing the exams in Western Canada, council did little to improve the situation for students. Resistance to change in council was quite strong during the early 1930s — understandably, perhaps, since those were hard times for almost everyone.
Complaints about the examinations were common. For example, students and institute members alike expressed unhappiness about the facilities for the 1930 exams. An Alberta member pointed out that Edmonton students were using desks that were unsatisfactory. He also complained that the blank paper being used was not uniform.
In response, council considered striking an education committee to find out how to root out the causes of discontent. The motion failed, however, partly because of a dissenting opinion from Harry Howard. Such a committee was unnecessary, he believed. After all, the institute had already set up lectures for the students in Calgary.
In addition, the Canadian Chartered Accountant had recently established a new section called “The Students’ Department,” similar to the one set up by the New York Journal of Accountancy. As Professor Smails of Queen’s University envisioned the Students’ Department, once a year an institute member could work out a solution to one or more exam problems. In addition, a couple of members could contribute short articles on something relating to accounting work or student activities.
While there was some innovation, the situation for CA students was little changed from the one that began to develop during the First World War. Prominent business and professional people gave lectures for students — “at some inconvenience to themselves,” according to council minutes. In Calgary in 1930, for example, they included a barrister, a city prosecutor, a manager of the Canadian Credit Men’s Trust Association and an employee of Great Western Company. Whatever the quality of those talks may have been, students took full advantage of them. They supplemented those presentations with prescribed readings and whatever other course materials they could lay their hands on.
At the very pit of the Depression, in 1932 Stuart Johnstone again brought forward concerns from some Edmonton students about the accounting exams and the lack of a prescribed course of study. Noting that jurisdiction for the exams belonged to the U of A’s Board of Examiners, council again paid little heed. In response to the notion that students needed a more definite course of study, council observed again that students could attend lectures from chartered accountants and others. They also noted that there were excellent correspondence courses, including the one from Queen’s University. Any further action, they felt, should be deferred until there was a large increase in the number of registered students — not a likely prospect, given the desperate state of the economy.
Unfortunately for the students, progress came with glacial speed.
For those accounting students working towards their bachelor of commerce degrees at the University of Alberta, university president Robert C. Wallace (who succeeded President Tory in 1928) made a recommendation to the Alberta council in 1933 “in the best interests of the profession.” Dr. Wallace suggested that commerce students at the university be required to take at least three courses in accounting. Of these, he suggested, Accounting 52 and Accounting 53 should be required, and the minimum mark should be 65 per cent in each. Council gave full support to the idea, after which the proposal went before the university senate and passed.
The Board of Examiners’ report of that same year also discussed ways to improve the accounting exams. The report noted that cost to the students was obviously an important factor in whatever changes took place. While Dr. Wallace showed sympathy for this problem, he felt that it would be unreasonable for the university, which was already in charge of administering the exams, to take on additional costs. He believed all expenses should be borne by the candidates, and that the examiners themselves should be paid to prepare and review the exam papers. You can imagine the howls of protest when the students heard about this report.
During the Dominion Association’s 1934 annual meeting, there was much discussion about extending the course from four to five years, in part to correspond with the five-year term of apprenticeship that was now common in Canada.
George Kinnaird and Frank Harvey, who had both attended that meeting, reported on recent improvements to the course and expressed their confidence in recommending it to students. Revisions were made with the assistance of chartered accountants, a lawyer, members of the Faculty of Commerce and Finance at Queen’s and “an economy specialist.” Part of the financing for the improvements came from the compensation given to the university for administering the course. The Ontario Institute gave Queen’s $75 per year per student. This covered the cost of textbooks, a subscription to the Canadian Chartered Accountant for each student and other general expenses to run the program.
In 1934, the long-suffering Edmonton students’ society again approached the institute in regard to recommending a definite course of study. They pointed out that other provinces, including Ontario and British Columbia, insisted students take the Queen’s course. According to council minutes, they felt that too many educational decisions were left to their personal discretion.
Council could no longer be silent — after all, a solution was clearly in view. They decided that future students who asked what course of study to follow should be advised to take the Queen’s course. They also considered making the course compulsory. Before doing so, however, they felt it was important to look over the course outline and materials. They requested that Queen’s forward them the information so they could make a decision. They also sought the advice of other institutes.
Three of Canada’s institutes had already made the Queen’s course mandatory. On the principle that there were many benefits to offering a course prepared and endorsed by chartered accountants, in the late 1920s the British Columbia and New Brunswick institutes had joined Ontario in requiring the course for their students.
In a letter to the ICAA, Secretary Douglas Whitelaw reported that the British Columbia Institute viewed the program as “a step toward uniformity, which all institutes were striving to achieve.” The Manitoba Institute reported that it too had investigated the program in the 1920s and found it “most excellent,” but decided not to make it mandatory.
After much consideration and debate, ICAA decided that students who registered for articles on or after July 1, 1935 would be required to take the Queen’s course. They would also need to complete the correspondence course prior to taking their Final exams. The 1935-36 Bulletin of Information eliminated the list of textbooks and statutes to make room for course details.
At the 1936 annual meeting, President A.J.J. Fanshaw commented on the recent decision: “We have adopted the courses of instruction of the Ontario Institute in answer to the request by a number of students to provide some means whereby they could receive expert and systematic education for the profession; and we have every hope and sincere wish that these courses will be of assistance to our students.”
Fanshaw understood that there were many challenges ahead, and that there was dissatisfaction among the students. As he explained, “we were somewhat surprised at the number of exemptions requested by students either from the whole or part of the course, having regard to the fact that the Institute had been requested to assist the students in the manner of their education. However this merely constituted one of the difficulties which had to be faced and it is hoped that the next few years will see the complete disappearance of all difficulties.”
However, the following year President Einar Gunderson told the annual meeting that the benefits to the students of having a definite course of study were plainly visible to the examiners. “There is no doubt that the average student will approach his final examination and his work thereafter with better training for his chosen profession.”
Nova Scotia and Prince Edward Island soon followed. Thus, by the end of the 1930s only Manitoba had a separate, institute-controlled training program. Saskatchewan and Quebec used the facilities of their universities. The other six provinces had formally adopted the Queen’s University correspondence course. The students were not of one mind about the course, however.
In 1936, an articling student in the Queen’s course, L.W. Shulman, criticized the way the university instructors were marking papers. When council asked for opinions from other students taking the course, 11 complained that their instructors’ comments were inadequate.
The Ontario Board of Instruction asked to see the lessons in question. Only four produced samples, and these were discussed with the chairman of the board and the director of accounting courses at the university In the director’s opinion, two of the complaints were unjustified, one was minor and the fourth “is a type of student who is likely to profit little from the Instructors’ criticisms and comments and less interested in becoming proficient in his profession than in demonstrating that he is right and that others are not.” These comments were passed on to Shulman. For the time being, the matter was dropped.
ICAA also changed the terms of articles for students; university graduates with a standing similar to that required for admission to the University of Alberta’s School of Commerce were allowed to article for four years, rather than five. The institute felt that for most students, the five-year term made sense. After all, less than one-third of the students who took the Final Exam had passed in less than five years. As council explained, “Five years is not too long a term for the average student to obtain the necessary knowledge and experience.” This was already being done in Ontario, Manitoba, British Columbia and “the Old Country,” according to council minutes that demonstrate the still strong tie to Britain.
Sidebar: Finance is Fun!
One of the truly remarkable men to arise from the early years of accounting in Alberta was Francis G. Winspear (1903 — 1997).
Born in England and raised in the now-defunct hamlet of Namaka near Calgary, Winspear articled for ICAA founding member James Sutherland. “By all measures, Francis was a clever student of accounts,” reports Keith Huckvale. “In fact, his peers had every expectation that he would be a medal winner. A temporary delay occurred in his career, however.” Winspear worked as an articling student for another year, then passed the Final in 1929. Nearly three decades later, his son William earned the 1957 gold medal.
During a long and productive life, he formed Winspear, Higgins, Stevenson & Co. — a major Canadian accounting firm, and one of the leaders in the post-war transformation of the accounting firm into a business consulting organization. (The firm combined with Deloitte Haskins and Sells in 1980.) An astute businessman who believed with passion that “finance is fun,” he retired in 1964 a wealthy, respected and honoured man. He devoted his last years to philanthropy.
One of many fascinating aspects of Winspear’s life was his tenure at the University of Alberta. Just as he began his private practice, he received a short-term contract to take over the university’s accounting program because, in his words, “accountancy lectures had floundered in a sea of alcohol.” The instructor had not appeared in class for several weeks, and the university students quite rightly complained. Although he never worked fulltime at the university, Winspear remained loyal to the university. He was a full professor and head of the School of Commerce when he discontinued lecturing in 1948.
Winspear’s memoirs offer important insights into university education for the university-trained accounting student in the 1930s. In those days, two streams of students entered the profession. The larger group had high school diplomas and studied through the ICAA’s educational program. The much smaller group earned B.Comm. degrees from a university.
In 1930, when Winspear began teaching at the university, there were only four courses for commerce students with an accounting concentration — one in elementary accounting, two in advanced accounting, and one in business administration. Because of his close association with the U of A, Winspear’s firm was one of the few to article university graduates during the Depression. This practice, he says, “redounded to our advantage. As our practice grew we had trained men available.” Ironically, in the 1940s he was confronted with a delegation of competitors who told him they wanted to article some commerce graduates. This was presently not possible, said the competitors, because “They all go to you.” Surprised by this assertion, Winspear arranged for representatives of accounting firms to interview graduating students interested in accounting as a profession.
During the Depression, the demands of business meant Winspear had to bring in assistants to instruct at the university. These included his partners, Winslow Hamilton and Alex Hamilton (unrelated). In 1945, the university appointed J.D. Campbell as a full-time associate professor.
Winslow was ICAA president in 1946; he tragically died ten years later in an airplane accident on Mt. Slesse, B.C. Alex was institute president in 1954. “JD,” as his students called him, became Deputy Minister of Health (Hospitals Division) in the provincial government.
Articulate, urbane and cultured, Francis Winspear was one of the giants of Canadian business. He made numerous contributions both to the profession and to his country.
Abdication
The strength of Canada’s ties to Britain can be demonstrated by President A.J.J. Fanshaw’s report at the institute’s 1936 annual general meeting. He began by reading the following excerpt from an address by the president of Britain’s Society of Incorporated Accountants: “It is not fitting that today’s proceedings should begin without some reference to the event which plunged the whole nation into grief some months ago. The occasion inspired many noble and moving utterances from the leaders of our country. Perhaps the truest and simplest thing which we ordinary men can say is that each of us felt the kind of pain which is associated in our minds with the loss of an elder brother; one whom we looked upon as kindlier and wiser than ourselves, and one whose uplifting and steadying influence we had – somehow – come to regard as part of the permanent scheme of things. Our affections and our hopes are now centred in the son who has taken up the life long burden which his father had laid down.”
This requiem was, of course, to the memory of George Frederick Ernest Albert of the House of Hanover – better known in Canadian history as George V. His oldest son, Edward VIII, succeeded George, who had reigned for a quarter of a century. Edward was especially popular in Alberta because, after the Great War, he had bought and developed the EP (“Edward, Prince”) Ranch just south of Calgary. After reading this excerpt from Britain, Fanshaw offered his own flowery eulogy. “Our affections and hopes are indeed centred in the son,” he affirmed.
If the death of King George symbolized the passing of the era in which royal marriages cemented bonds among European states, the brief reign of his son was symbolic in quite a different way.
Edward had been involved with a married American woman, Wallis Warfield Simpson, since the beginning of the decade. Shortly after his accession to the throne, Mrs. Simpson received a first decree of divorce, but England’s Royals (encouraged by the Church of England) refused to fully accept a divorced woman into the family. In an act that transfixed the world, Edward VIII abdicated at the end of the year. ”I have found it impossible,” he said, “to carry on the heavy burden of responsibility and to discharge the duties of King as I would wish to do without the help and support of the woman I love.”
Notwithstanding the low comments that accompanied this affair, it was certainly the great romance of the century. Dashing monarch of history’s most powerful empire renounces his throne and expatriates himself out of love for a commoner, and a foreign one at that – fiction is rarely this powerful. In a curious way, Edward’s abdication foreshadowed the dissolution of Empire and the coming shift of world leadership. The embrace of America could be very alluring.
Edward’s brother George was next in line for the throne. When he became George VI, the royal succession changed. His daughter Elizabeth became a princess, and later the Queen.
The Image-Makers
Correct use of the chartered accountant designation has always been an important concern for Canada’s chartered accountants, and for very good reason. A kind of brand name, the letters CA and the designation chartered accountant provide the client with a clear understanding of the services for which the accountant is qualified. It is a valuable property, and the profession has long guarded it jealously. Thus, when advised that a non-member was using the CA letters after his name, council would deal with the violation promptly.
When R.C. Farris referred to himself as an “Incorporated Public Accountant” in a Lethbridge Herald advertisement in 1931, council quickly issued a reprimand. The institute was the only provincially chartered organization authorized to designate accountants. Therefore, Farris’s claims to hold an accounting designation must be spurious. This done, members were under the impression that the matter was settled. They were therefore not pleased a few months later when they found that Farris had done it again. He promptly received a letter “giving him a final warning that he is acting contrary to the provisions of Section 15 of the Alberta Chartered Accountants Act.” Council also informed him that, if he did not stop using the improper designation, they would take whatever proceedings against him that they felt were necessary. It is not a matter of record whether he did stop advertising.
It was important to establish “CA” as the champagne of accounting designations. The CA identity was well established throughout Canada by the time of the Depression, but it became somewhat tarnished in the years leading up to 1936. During that period, the indomitable Chester Walters — who had now become the province of Ontario’s most powerful civil servant — used his influence to have Ontario’s new Liberal government grant the designation CPA to his association’s members. The Association of Accountants and Auditors became the Certified Public Accountants Association of Ontario.
According to council minutes, Frank Harvey informed the Dominion Executive Council that the Alberta council felt the Ontario legislature would be taking a “backward step” by authorizing this designation. H.E. Guilfoyle, past president of the Ontario Institute and a Toronto partner in Clarkson Gordon, replied that his institute had “opposed this legislation most vigorously.”
The main reason Canada’s chartered accountants opposed the CPA legislation, of course, was concern about direct competition from Ontario’s newly designated CPAs. If you think of the CA designation as a brand name, there are obvious advantages to having it well established. With the benefit of hindsight, it is therefore surprising that Canada’s CA organizations had not put much emphasis on brand advertising and public relations (or “press agentry,” as it was then commonly known). The Dominion Association and the provincial institutes took steps to correct this oversight.
These steps were probably a response to three factors. The first was the lousy economy. Perhaps publicity would generate business. Competition from other accounting organizations was another. It was important to stake out in the public mind the CA’s territory.
The third factor — a bout of bad publicity, especially in Ontario — was related. Chester Walters had secured CPA designation for members of the Association of Accountants and Auditors in part by fostering the perception that the Ontario institute was a “closed shop.” Although every provincial institute actively sought and helped educate new members, many people outside the profession believed the institutes deliberately made the exams difficult, so that existing members could maintain their privileged social and financial status.
The economic well-being of successful chartered accountants made the profession worth mimicking, of course, and imposters abounded. In response to individuals claiming to be accountants and using letters resembling the CA designation, in 1935 the Dominion Association’s executive committee asked members to spell out “chartered accountant” after their names rather than use the initials.
And new accounting organizations proliferated. For example, the International Executives and Accountants Corporation, Ltd. received a Dominion charter in 1932. This organization claimed thousands of members in 80 countries. Yet only two years later, two of its founders formed the Certified Accountants Association (later called the Commercial Accountants Association).
As the instance of Charles John Mackay illustrates, the very rigour of CA training was often a force behind the creation of competing organizations. Mackay became registrar for the Calgary branch of the International Executives and Accountants Corporation, known as the International Accountants’ Club. In his case, only months before taking this job he had asked the Alberta Institute what his standing was as a student. The reply was that he would need to article for his full term. His response, apparently, was to change allegiances.
DACA needed to respond to these upstarts and to the specific need to protect the CA brand. The Dominion Association therefore began investigating ways to improve the profession’s public image. In 1933, Francis Winspear asked “that the council be requested to give consideration to the entire broad question of educational publicity as to the service and work of a Chartered Accountant, by the publication of booklets, newspaper articles, radio talks, etc.”
Members were asked for their recommendations. These included preparing articles on a CA’s work, for publication in newspapers; wider circulation of the Canadian Chartered Accountant; preparing a text on municipal accounts; and radio talks. Armed with these ideas, the institute urged the Dominion Association to take the lead in addressing “educational publicity.”
In 1934, DACA secretary Carr consulted the American Institute of Accountants in New York concerning its experience with advertising campaigns. Carr found that the American Institute had run a publicity department from 1924 to 1926. Its main purpose was to produce pamphlets of interest to the business community, on topics ranging from credit fraud to bankruptcy reform. The notion was that the American Institute would publish material on subjects on which accountants were the foremost authority. This would help establish their credibility.
The New York office soon found the costs prohibitive, however, and many members felt there were no direct benefits. The program was therefore scrapped. A different PR program began in the early 1930s, when the American Institute subscribed to a news-clipping service and hired a man with newspaper experience to run a publicity campaign.
Public Relations, Canada-Style
While the Americans chose press-agent style publicity, the Canadians rather characteristically preferred a lower profile. In 1934, the Dominion Association produced a report entitled Educational Publicity. As the report concluded, “the public need of knowledge of the work of the Chartered Accountant [is] primarily a local matter. [Furthermore,] publicity carried on by the Provincial Institutes is much more effective than any campaign the Dominion Association could conduct at a reasonable cost.”
For the first time, DACA promoted the use of advertising to the institutes. The national organization also followed the lead of the American Institute by subscribing to a news-clipping service. An experienced newspaperman was hired part time to write up matters of local interest relating to the profession.
The Educational Publicity report made several recommendations. One was for provincial institutes to hold meetings that were of interest to the profession and could also be publicized. This would leave a positive impression of chartered accountants on the public mind. The association also recommended that each institute set up a publicity committee.
After receiving the report to which ICAA had contributed so much, in October 1934 the Alberta Institute set up two such committees — one in Edmonton, the other in Calgary.
This was a major step forward for the institute, which had a tradition of excluding the press from its meetings. Two newspapermen who had asked to photograph the 1931 annual meeting, for example, had found permission unceremoniously withheld. Unrepentant minutes from the following year summed up the institute’s antediluvian attitude to the press.
“With the exception of a resume of the proceedings at the annual meeting of the Institute, or of some other important event, the Council does not generally speaking, favor the giving of information to the press on matters which are not of actual public importance.”
The institute had started to change, however. In 1933 council began to investigate approaches to advertising and publicity. They found, for example, that the Saskatchewan Institute had published a booklet called “The Chartered Accountant and His Work.” This pamphlet was distributed to business and professional men in that province. There was discontent in the ranks, however; some Saskatchewan members had formally complained that the booklet did not do any real good. In their opinion, it was not worth the money expended on it.
When asked for suggestions to improve the profession’s image, ICAA members had offered mostly standard, low-cost fare. The most obvious was to prepare articles dealing with the value of the work of a CA for publication in the newspapers. Another suggestion was to distribute free copies of the Canadian Chartered Accountantto the press.
They were a place to start, and the institute followed up on both ideas. They sent material for an article on “the natural business year” to the daily papers in Calgary and Edmonton. They also sent 39 copies of extracts from the Canadian Chartered Accountant to provincial newspapers. Response from the newsrooms of Alberta went unrecorded.
Another suggestion for ways to improve public relations was to prepare a textbook on municipal accounts. This idea went nowhere, fast. Other proposals included organizing radio addresses and business talks for clubs and conventions.
More successful than these efforts was the Dominion Association’s recommendation for publicized public meetings. While council felt that the chartered accountant clubs in Calgary and Edmonton already served this purpose, they agreed to pay closer attention to the topics chosen. In future, they would place emphasis on subjects of general interest, and the press would be alerted early.
Accordingly, in November 1934 the Calgary Chartered Accountants Club hosted guest speaker Col. Lockhart Gordon, FCA, to talk about the responsibilities of auditors. Council reported that the Calgary press dutifully covered the comments made by Gordon, who was a founder of the Toronto firm of Clarkson, Gordon. Similarly, DACA president J. Gray Mundie, a Manitoba CA, addressed chartered accountants in both Edmonton and Calgary the following year. The newspaper articles reporting his visit were positive.
The institute was pleased with these results. Good publicity was good news, and vice versa.
Of course, good publicity is often tied to advertising, and the interminable topic came up again in 1935. The larger topic was newspaper announcements and promotional expenditures. Council felt that the public was not well informed of the differences between chartered accountants and other accountants. A list of members was therefore published in the leading newspapers, at a total cost of $90.97.
At the following year’s annual meeting the institute authorized practising CAs to publish a newspaper announcement in February, March and/or April of “a dignified nature” that said they were duly qualified to prepare income tax returns.
Two years later and after lengthy deliberations, council resolved that an announcement concerning income tax would be inserted in leading newspapers for March and April. It would read as follows:
INCOME TAX
It is not customary for Chartered Accountants to advertise individually. The Institute of Chartered Accountants of Alberta therefore announces on behalf of its members that their services are available for the preparation of the Returns required by the Provincial and Dominion Income Tax Departments. A list of the CHARTERED ACCOUNTANTS in public practice in the City appears in the classified section of the Telephone Directory under the heading of “ACCOUNTANTS — CHARTERED.”
This ad was inserted in the Edmonton Journal, Calgary Herald, Calgary Albertan and the Lethbridge Herald. The cost was $173.
Institute Governance
If the ICAA’s educational and press relations activities became more sophisticated during the 1930s, that decade was also a period of growing sophistication for the institute as a political entity. In 1934, council appointed a committee to look into the advantages of adopting a system of proportional representation. Membership totalled 118, and included several classes of members — “resident practising,” “resident associate practising,” “resident non-practising” and “non-resident.” Each of these members could cast a vote of equal weight.
There was a great deal of concern among younger members, in particular, that equal votes kept an Old Boys’ network in council. After all, members with established practices were better known and therefore more likely to be elected to the board than relative newcomers, irrespective of their merits. The proposed solution was to weight the voting in favour of resident, practising members.
On the advice of Lachie Campbell, Calgary’s assistant city clerk, the institute decided to adopt proportional representation at the 1935 annual meeting. Campbell had experience with proportional representation and attested that the system would produce broader representation.
Beginning with that election, members changed the practice of marking their choices with a simple “X” near the names of the members they wished to vote for. Now they would use numerals to indicate their choices. They were allowed to vote for as many members as they wished, but had to vote in a numerical order of preference. At the 1937 annual meeting the institute voted 20 to 17 to discontinue proportional representation. The “X” system was back in effect for the 1938 election.
While turnover in council was important, so was continuity. To build in continuity, the membership agreed to overlapping two-year terms on council. At the 1935 annual meeting, the nine council members were elected for two-year staggered terms.
Reciprocity with British accounting organizations made a great deal of progress during the Depression. Canada’s chartered accountants learned in 1934 that the Institute of Chartered Accountants of England and Wales would allow them to practise accounting in England. They were asked to combine the CA designation after their name with their province of membership.
Meanwhile, the Society of Incorporated Accountants and Auditors of England had agreed to grant reciprocity to Quebec and, council noted, “no doubt to other Canadian Institutes if they desire it.” Alberta quickly requested a reciprocal agreement. In 1935, the London-based Society granted reciprocity to Alberta members working in Great Britain or Northern Ireland.
In 1937 council took steps to prevent members from employing more than two or three articling students at one time without permission. Council felt that this was the maximum number any member could efficiently train. Alberta member Ritchie Paterson had four students articling to him and requested a fifth. The only member of the institute with more than two clerks, Paterson was having difficulties running his Lethbridge business and was given special permission for one more student.
That same year, council learned that Nash & Nash was running an office in Grande Prairie without having a resident CA in that community. Alan Nash explained that either he or his father travelled there three to four times a year to check on the business. Also, he said that the Edmonton office reviewed all of the accounting work being done by the two students there. Nash & Nash presented a problem that was equal parts economic and social. Council adopted a pragmatic solution.
On the one hand, there was not enough business in such a small town to support a chartered accountant. On the other, if Nash & Nash closed their Grande Prairie office, the public would be deprived of service. Council resolved “that Nash & Nash be deemed to be in continuous personal charge of the Grande Prairie office as all Balance Sheets and reports upon work done at Grande Prairie are issued from Edmonton.”
Many other firms opened satellite offices in Alberta’s smaller towns. Articling students would take turns working in these offices. Because places like Lethbridge, Drumheller and Medicine Hat did not have accounting libraries, the students often took books from ICAA’s Edmonton and Calgary libraries on these assignments.
Libraries
The institute attempted to keep its members educated about new statutes. The institute kept recent tax updates and other useful information in each ICAA library. Amended acts such as The Companies Act, The Corporations Taxation Act, The Town Act and The Village Act were also in these libraries for reference, as were other materials from other provinces. In addition, council continued to distribute information to members directly. A 1935 bulletin, for example, included information on provincial taxation. It was prepared specifically for those who worked for companies conducting business in more provinces than one, and provided information about how to file returns.
A report of the Edmonton library committee in 1937 found that several books were missing and unaccounted for. Council sought a better way to manage the library materials. One suggestion was to move the library to an Edmonton member’s office, as had been done in Calgary a decade earlier. In 1938, the Edmonton accounting collection was moved from the public library to the offices of Winspear and Hamilton. This was satisfactory until 1944 when James (Ross) Henderson pointed out that a small amount of money was being spent on the libraries and questioned the service being rendered to members. Very few books were being checked out, most likely because they were not meeting the needs of the members.
Winslow Hamilton responded that the libraries should be either “built up to a good standard or abandoned.” The reason students weren’t using the library, President Gordon Skinner pontificated, was that they were using their own books from the Ontario course. In 1945, the Alberta council gave the Society of Industrial Accountants permission to use its libraries.
That same year Alberta members were surveyed to find out what they thought should be done about the Calgary and Edmonton libraries. The majority agreed that the libraries should be moved to the public libraries in each city and be “increased and improved.” Acting on a suggestion by Winslow Hamilton, council allocated $1,000 to bring the libraries up to a more “usable condition.” The books in the Edmonton library were considerably increased and the library itself moved to the Edmonton Public Library.
The Minimum Wage
A matter of considerable gravity was the Male Minimum Wage Act (the province had established a minimum wage for women in the early 1920s). This 1938 legislation established a Board of Industrial Relations to establish a minimum wage. The board now wanted to apply it to accounting firms.
Outraged that articling students should be paid a minimum wage, Ritchie Paterson of Lethbridge and the Calgary Chartered Accountants Club asked council to apply to the board for exemption. Einar Gunderson was asked to speak with board chairman Clayton Adams to see whether the act really applied to the accounting profession. In fact, he was told, it did.
Gunderson pointed out that few articling students were paid below the minimum wage. He also said that the institute did not have a formal scale of salaries — rather, there was an informal agreement among members that articling students would receive $40 per month for the first year and $50 per month for the second.
Adams was not convinced that chartered accountants should be exempted from the new act. He gave two reasons. First, there was the possibility that principals would pay their clerks a low salary for five years of service and charge the work out to the public at a higher rate. Second, by not setting a minimum wage, it might discourage potential students from entering the profession if their parents could not afford to support their sons. Gunderson’s response was that at least the students would earn some money while they earned their credentials.
After a series of discussions, an agreement was reached. In the future, if articling students were going to be paid less than the new minimum wage, their principals would need to gain approval for the proposed wages from the Board of Industrial Relations. From that time until this book went into production, the institute was successful in arguing that CA students should not fall under minimum wage laws. This exemption was slated for removal in 2000. Thereafter, students would be subject to a minimum weekly wage of $236.
The Ponton Affair
The high cost of good help was not the only educational issue affecting council. A curious event from this period concerned ICAA president George Ponton. In 1938, Ponton resigned from his presidency. Although the details are unclear, the gist of the problem is not: some members had accused him of playing Little Caesar with the training program.
In October, he received a petition from 18 members with two specific complaints. The first was about “students who would ordinarily be able to write examinations in April 1939 not being allowed to write in December 1938.” The second was about “candidates writing supplementals being required to obtain 70 per cent on the same papers other candidates will only be required to obtain 50 per cent.”
The following month, Ponton attended the Board of Examiners’ meeting to show them the petition he had received. According to council minutes, the chairman requested to see the petition three times. However, “Ponton had refused to do so and had left the meeting because he was not allowed a free hand to discuss all questions relating to examinations in so far as both the Board and the Council were concerned. Two days later, Ponton sent in his letter of resignation. Charles Lang took the remainder of his term.
One of the statistical oddities of the 1930s is that, for most of the Great Depression, the economy was actually growing. The reason is that after the Crash of ’29 the economy sank so quickly and so deeply that there was soon nowhere to go but up.
At the 1938 annual meeting, President Fred Smith told members that “our natural resources continue to be developed by private enterprise to the extent that the latest Babson chart shows Canadian and United States business on a comparable basis not unfavourable to our country. This perhaps is the more interesting to us since our great neighbour persists in trying to ‘book keep’ her way out of trouble.”
That said, it may have seemed like a sign of renewed prosperity when, in 1939, an obscure company named International Business Machines asked council for a list of its practising members. The firm wanted to send literature about their products to ICAA members. Council obliged, and asked to be included on the mailing list for IBM’s Think magazine. They also noted favourably that IBM had sent books explaining their machine bookkeeping system for ICAA’s Calgary and Edmonton libraries.
Of course, William Lyon Mackenzie King would take full credit for an improving economy during his watch as prime minister. That is to be expected. But by itself, the economic growth of the latter 1930s would not bring good economic times back to Canada. Rather, prosperity would re-emerge through the bloodiest, ugliest war in human history.
“You ask, what is our policy? I can say: It is to wage war, by sea, land and air, with all our might and with all the strength that God can give us; to wage war against a monstrous tyranny, never surpassed in the dark, lamentable catalogue of human crime. That is our policy. You ask, what is our aim? I can answer in one word: It is victory, victory at all costs, victory in spite of all terror, victory, however long and hard the road may be; for without victory, there is no survival.” – Sir Winston Churchill, May 13, 1940.
Chapter Five — The War Continues: 1939-45
In the European theatre, at least, the Second World War was a continuation of the First. The belligerents were largely the same, and so were many of the geopolitical and social issues. In addition, the fall of Germany’s Weimar Republic and the rise of Nazism were partly the result of a mishandled peace.
Although weakened by the Depression, the British Empire was intact. Even more importantly, British ties with such increasingly independent Commonwealth countries as Canada and Australia were still strong. As the senior dominion, Canada obediently and swiftly followed Britain to war in September 1939. As in the Great War, Canadian participation in the effort had considerable popular support, especially among English-speaking Canadians.
There were giants in the earth in those days. Titans and their armies roamed the planet — such larger-than-life figures as Adolph Hitler, Joseph Stalin and Franklin Roosevelt. It was Britain’s good fortune to have elected the most remarkable leader of them all.
Known for his courage, determination, intelligence and fortitude, the articulate Winston Churchill was one of the great personalities of the twentieth century. He characterized his role during the war years thus: “I have never accepted what many people have kindly said — namely, that I inspired the nation....It was the nation and the race dwelling all round the globe that had the lion's heart. I had the luck to be called upon to give the roar.” In Prime Minister Mackenzie King, he had a loyal ally. Although unpopular with Canadian troops, King built a highly effective wartime government.
Churchill told King that Canada was “the linchpin of the English-speaking world.” Anxious to have the United States as a declared ally, he particularly valued Canada’s ties to the US. “Canada, with those relations of friendly, affectionate intimacy with the United States on the one hand and with her unswerving fidelity to the British Commonwealth and the Motherland on the other, is the link which joins together these great branches of the human family, a link which, spanning the oceans, brings the continents into their true relation and will prevent in future generations any growth of division between the proud and the happy nations of Europe and the great countries which have come into existence in the New World.”
When the war first began, the challenge for Canadians was to supply Britain with fighting men and with food, raw materials and the tools of battle. The country had been recovering slowly from the Depression. After the declaration of war, agricultural and industrial production swiftly went into high gear. The Second World War transformed Canada into an industrial nation.
To provide labour for an economy working flat out while hundreds of thousands of servicemen boarded ships, women swarmed into the workforce. They served in such non-traditional roles as riveters in shipyards – indeed, “Rosie the Riveter” was one of the fondest caricatures of Canada’s war years.
Women also took jobs as civil servants in government offices. And accounting firms responded to staff shortages by introducing “lady audit clerks” into a previously male domain. These developments represented major cracks in the industrial convention that presumed most kinds of paid work to be for men. The lady audit clerks were emblematic of an important change in the profession’s demographics.
In Alberta, another symbol of changing demographics occurred in 1943 and 1944: A woman won two important academic accounting awards – one of them on its inaugural run.
Established by Winspear, Hamilton, Anderson and Co., the scholarships for commerce students each had a cash value of $25. The Cecil Ethelbert Race Memorial Scholarship would be awarded to the second-year commerce student with the highest average marks in Accounting 1 and 52. The ICAA Scholarship would go to the student with the highest mark in Accounting 53. Mary Vair Souch won them both, one year apart. She won the Race Award in its first year, and the ICAA Scholarship in its second.
While Souch did not become an ICAA member, her achievements are important in a symbolic sense. So are the achievements of several other Alberta women – women who began their articles during the war. Of these, Dorothy Reid became a CA in 1949. The Alberta Institute’s first female member, she died half a century later.
These women and others who contributed to the profession worked in a world in which government accounting procedures had become much more sophisticated than during the First World War. As Ottawa geared up for the overseas mission, Treasury faced the almost overwhelming task of accounting for huge and urgent public expenditures.
Government levied high taxes on business and became directly involved in the economy. Tax laws and regulations changed rapidly, and paper work proliferated. For accountants, these realities meant opportunity.
As in the First World War, the Custodian of Enemy Property appointed accountants to serve as provincial deputies to seize and manage assets held in Canada by “enemy aliens” — the citizens of enemy countries, many of whom had been long-term residents or were even Canadian born. At one point on the spectrum, the custodian’s responsibilities included taking possession of assets belonging to German and other enemy nationals who happened to be in Canada during the war. At another, it involved accounting for assets deemed to belong to enemy organizations. At yet another point, it meant assuming responsibility for the management of local businesses on behalf of the Dominion government. When Japanese Canadians were “evacuated” from British Columbia to any place in Canada east of the Rocky Mountains, it meant accounting for their assets, which were generally sold at fire sale prices.
Labour Shortages
The impact of the war on Alberta’s accountants becomes quite clear when you compare the bound volumes of council’s minutes during the 1930s to those from the 1940s. Depression-era minutes comprise two volumes and approximately 750 pages. The minutes from the war years comprise 261 pages of the single volume from the 1940s. This illustrates how most institutions in Canada were somehow subordinate to the struggle in Europe.
A browse through ICAA’s minutes gives a sense of how quickly the war began affecting the profession. At a council meeting on September 23, 1939 — less than two weeks after Canada’s Declaration of War — Colin Mackintosh reported that he had received numerous inquiries about how enlistment would affect members and students. Yet with astounding understatement, council’s 1940 report to the annual meeting noted that “the outstanding event in world affairs was the unfortunate outbreak of the second world war in September last. This untoward happening has had world-wide repercussions and in turn has affected the decisions made by the Council.”
It also affected decisions made by everyone else. “We were in a holding pattern during the war,” said ICAA president Keith Huckvale many years later. “We had just come through the Thirties, when the number of firms was actually decreasing. From having a surplus of manpower, we suddenly had a shortage.”
Wartime adversity notwithstanding, in 1940 institute membership reached a milestone, 154, with many of those accountants in the military. Membership greater than 150 represented an increase in national power. Alberta could now send three voting representatives to DACA’s annual meetings.
The great demand for accounting services was especially difficult to meet because so many young accountants and articling students had enlisted for overseas service. Before the war, a typical firm’s staff consisted of intelligent, healthy young men between the ages of 18 and 30. The armed forces and government services relied heavily on just such people for the war effort. Those who stayed behind were hard-pressed to keep up with the work.
The Dominion Association struck a War Purposes Committee to address the growing problem of government departments requiring more accounting personnel while the military was depleting the inventory of both CAs and students. The committee conducted a survey to determine what contribution the profession was making to the war effort. By 1941, 269 members and 553 students were in the armed forces. A year later, 371 of Canada’s 2,765 chartered accountants were in military service.
In 1942, ICAA’s council summarized the war’s impact in the following words: “The demands upon the services of Chartered Accountants and students by the Dominion Government departments and the Armed Services must necessarily continue during the period of the war. This, together with the increased services required of Chartered Accountants by present war and tax requirements, has placed greater responsibilities upon Chartered Accountants than ever before.”
The shortages of labour explain an internal dilemma the institute faced when Colin Mackintosh resigned as secretary-treasurer in 1941. Nobody seemed to want the job of handling the institute’s books, despite the annual income of $900 it generated. This led to the first recorded discussion of hiring staff for the institute. Council considered either increasing its membership from nine to ten to fill the job or hiring a registrar. This new position would have taken charge of the secretarial work, as the Ontario Institute’s registrar had been doing for that institute since 1935.
In the end, council chose only to appoint a tenth member. Jimmie Henderson, who had been ICAA president in 1928, was named the tenth member of council and appointed secretary-treasurer. He held the position for only one year.
Practice in Wartime
Council sometimes looked the other way or developed special wartime rules. One brief story tells the tale. When the war broke out, Elvin Christenson was the only articling student in Colin Mackintosh’s firm. Mackintosh’s main practice was in Calgary, but he also had an office in Edmonton.
When Christenson took the Primary Exam in the fall of 1938, he remembers receiving the wrong exam. “They gave the class the Intermediate Examinations instead of the first year exams. I must say there were a lot of pretty worried fellows before the door flew open one hour later and the correct papers were brought in.”
The problem corrected, Christenson passed the Intermediate Exam in December 1941 and worked in Mackintosh’s Calgary office for the first three months of the following year. Then Hugh Black, who managed the Edmonton office, joined the Department of Labour in Ottawa. Mackintosh, who was the principal partner in the firm and ICAA’s secretary, asked Christenson to run the Edmonton office. Christenson agreed, but recalls that the firm’s main client was soon sold. “There was very little business after six months and I had the decision to make: would I stay in Edmonton and try to carry on or would I go back to Calgary. I found the decision easy and I decided to stay. There was quite a struggle to find enough clients to pay the rent and provide some basic standard of living. The real story is this: a young fellow in his fourth year, and then going into his fifth year, running a small practice. I wasn’t even a chartered accountant!”
Christenson learned later that council knew a student was running this office. They had decided to take steps to close it down if Christenson did not pass his Final Exam in December 1943. He passed, after having taken only four years of the Queen’s course.
With students occasionally running accounting offices, it is easy to imagine that the wartime workloads of practising accountants were routinely horrendous. Christenson recalls Pat Ponton — the CA who had unceremoniously resigned the ICAA presidency a few years before — complaining about the lack of staff at his practice.
One day Ponton described how he had managed his practice since the war began. “I go to my office in the morning and I sit down in my chair and I wait for the phone to ring. The first client that phones, I take his file and I work on that file for the morning and then I go and have lunch. I go back to my office and I sit down in my chair again and I go through the same routine again. That’s the way I’m managing my practice. I’m so far behind, I know there’s no way I can catch up, so that’s the way I’m scheduling my work.” By Christenson’s account, during the war accountants were practising “out of the seat of our pants or the pocket.”
For ICAA’s 75th anniversary, the institute published a series of historical newsletters entitled Perspectives. In its commentary on the war years the publication observed, “the most pressing issue during the war was recruiting and making the profession more desirable to students. Our big trouble was that so many students left to join the armed forces, and that left us without adequate help. Then we had to work on how to entice them back after the war.” This is succinct. Students were no longer eager to article under poor working conditions for poor pay. Other opportunities were too readily available.
Thus, one outcome of the war was to improve the lot of the accounting student. Articling students received considerably higher wages than the minimums that had existed during the Great Depression.
Sidebar: Articles of war
“In 1942, the armed forces wouldn't have me, so I articled with William Reid in Calgary. I was an articled student from February 1943 through the following five years. My salary from February 12 to December 31, 1943 was $970.00. They didn't want to have civilian pay higher than that of an army recruit.
“I was supplied with a green pencil, a small rubber stamp and pad and a check sheet, then sent out to verify the accuracy of the poundage of incoming milk. No adding machine was to be used. For seven days I did nothing but straight addition in my head. For the first couple of days I had to add each column three or four times to get the same answer as shown on the sheet. By the end of the week, if I didn't get the same answer, I knew the records were wrong.
“The first while, I would blindly tick and check client records without much idea of what all the deadly boring work was about. As for formal studies, there was no classroom. You didn’t meet with other students. A few textbooks were recommended and lesson material came in a three-ring binder from the Ontario Institute. Once we finished our lessons, we sent them to Queen’s University for correction or comment. I found out later that papers were being marked by students with little more knowledge than we had.
“I would go out to a flight training school every four weeks to check inventories and logbooks. The logbooks recorded total flying time, which was used as the basis of payment by the government. As civilians at a military base we felt out of place.
“There was a bit of a flap after one inventory count when a whole airplane could not be found. A trip to the nearby equipment depot looking for the airplane gave us our first look at a Hollerith Machine. A pioneer in advanced data processing, this device was a punch card sorter. We couldn’t find the airplane in it, however.
“The plane was finally found in a farmer’s field in southern Saskatchewan. It had been sitting there for some considerable time – ever since a student pilot was blown off course by a sudden windstorm, and then ran out of gas. We found the airplane, but I have no idea what happened to the cadet. That was not our problem.”
– Norm McGie, by email, May 10, 1999, 10:38 p.m. McGie became a chartered accountant in 1953.
Concessions to Students
Of course, the exigencies of war often affected students quite profoundly. The institute had to find ways to accommodate both those who enlisted and those who stayed behind. In English-speaking Canada, popular support for the war was intense. Those who remained in Canada did what they could for those headed overseas. The institute certainly felt an obligation toward articled clerks who were going abroad.
In 1940, the Education and Examinations Committee met in Montreal, where much of their discussion centred on the treatment of students in military service. The Dominion Association had received numerous inquiries from other institutes on this matter. It was not DACA’s policy to make rules of this sort, and the national organization replied that provincial institutes should make their own decisions.
They did, and their decisions were often inconsistent with each other. For example, the Manitoba Institute allowed its students to substitute one year of service for their articles, but made no concessions as to studies. In Ontario, each student was dealt with individually: an allowance was made if a student were a month or two short of his articles or a few lessons short in a course.
At the 1941 annual meeting, the Alberta Institute instructed council to use discretion when it reviewed cases regarding remission of articles for students on active service. Council resolved “that when a registered student is called up for four months compulsory military training these four months are to be treated as part of the time served by him under articles.”
The institute took many steps to hurry up the education of articling students, including making special arrangements to accelerate their exams. Students were allowed to write Final exams after finishing the fourth year of the Queen’s course, for example, if they had completed their articles. Articling students who had enlisted before they could take their exams were permitted to do so – if they had completed “in a manner satisfactory to council” the first term of the last study course leading up to their exam. Some candidates were even allowed to apply for membership before passing the required exams.
In addition, many institutes granted candidates who had enlisted or were liable to be called for service the privilege of taking their Final exam after only four years of articles. If they passed, they were required to finish their lessons and terms of service before they were admitted as members.
Council also responded to the needs of firms that found themselves short-handed when their articling students enlisted. In 1939, Ritchie Paterson asked council whether he could take on another student after his articled clerk, Parsons, enlisted. Council sensed that this would become a growing problem. They therefore took steps to simplify the process by which members could replace with other students those articled clerks they had lost to the military.
Hoping for a quick end to the war and the return of accounting staff, council authorized CAs to insert the following clause in the articles of agreement for these replacements: “Provided that it is understood between the parties subscribing hereto that the party of the second part is replacing an articled clerk who has enlisted in His Majesty’s Forces and that if and when an enlisted articled clerk returns to his duties this indenture may be suspended for the unexpired portion of the indenture of the returning articled clerk.”
At the June 1940 annual meeting, the institute also passed a resolution regarding the remission of dues. A member who enlisted in the Canadian Active Service Forces or in His Majesty’s Forces had dues remitted for the year he became a member and for the duration of service.
The institute also offered to pay the magazine subscription for the Canadian Chartered Accountant for members who enlisted – if the Dominion Association did not do so. Council approached DACA on these issues, which were addressed at the 1940 Dominion convention in Montreal. The Dominion Association agreed to make a $7 grant to provincial institutes that remitted the fees of their members. However, the provincial institutes would continue to pay the $2 subscription fee.
After the national plebiscite on conscription in 1942, the Alberta Institute changed the policy on remission of dues –presumably because a member’s decision was now less likely to be based on personal choice, and because conscripted men could essentially avoid foreign service. Thereafter, the institute remitted the full dues of members who joined the Armed Forces in the first six months of the fiscal year. Those who joined during the second six months had their dues remitted from June 1.
DACA also returned the fees of members, but in a selective way. Students whose fees had been remitted by their provincial institutes also received DACA’s portion of their fees back. This policy was probably an attempt to balance regional attitudes toward the war. In the plebiscite, about 73 per cent of Quebec residents had voted against conscription. The “Yes” vote in the other eight provinces, which supported the draft, was 80 per cent.
Sidebar: Man of Service
Photo caption:
Mervyn Gilmore Graves, FCA (1907-1987)
ICAA President, 1941-42
CICA President, 1968-69
The greatest service an Alberta CA can render to the profession is to serve as president of both the Alberta Institute and of the Canadian Institute. One of the men to do so was Merv Graves. This is his story.
In June 1927, Graves began articling with Eric Richardson, who had been the institute’s president in 1925. A year after passing his Final Examination, Graves became a partner of the firm. During the Depression, he was active with the Alberta Institute’s educational committees. Graves served on ICAA’s council from 1937-43, and was the 1941 president.
In 1948, Richardson & Graves merged with Clarkson Gordon. Graves became a senior partner of the expanded Calgary firm and a member of Clarkson Gordon’s National Executive.
Beginning in 1964, Graves spent five years on CICA’s executive committee. That term culminated in his taking on the presidency in 1969.
During his term as CICA president, Graves predicted the accelerated emergence among practising accountants of two distinct groups. These were specialists, “whose practice would be restricted to small but complex fields such as systems, management audits and finance, and generalists who would work with clients in all areas, calling upon specialists as necessary.” It was nearly 30 years before CICA's National Specialization Council began to implement a specialist certification and accreditation plan for CAs. Not until the latter 1990s did CICA approve the first formal specialization, in investigative and forensic accounting.
Graves’ foresight extended to continuing education; he speculated in 1964 that professional development courses would some day be required for all CAs. The BC, Quebec, and Manitoba institutes implemented mandatory professional education for their members in the latter 1990s. Alberta CAs also voted in favour of such a proposal in 1999.
Graves believed that a robust economy would especially benefit smaller firms. “As long as our economy keeps expanding with smaller businesses forming, the future of the local practice is strong. They will have many opportunities to perform important and essential services for their clients.”
After 21 years with Clarkson Gordon, in 1969 Graves retired from his professional accounting career and became vice-president of Cee-Der Log Buildings Limited. He left Cee-Der in 1976 to manage MGG Developments Ltd.
When Graves died in 1987, he left behind more than 50 years’ service to his profession and to the community he lived in.
According to the firm he helped establish, “We are pleased that the history of the Alberta Institute has recognized Merv Graves’ contributions to the profession. Clarkson Gordon, now Ernst & Young, has a long history of developing Canadian business leaders both for the profession and for industry. Merv was a leader in his firm and his profession, and he provided outstanding service for his clients. We are proud that we can claim him as one of the builders of Ernst & Young.”
Ernst & Young LLP Chartered Accountants
The Primacy of the Income Statement
Before we delve into further particulars of the war years, a theoretical development from this period is worth noting. It had a significant impact on accounting theory’s progress.
In Canada, CAs were involved in accounting or fighting from 1939 onwards; this left little time to give thought to theory. In the United States, however, for two years there was increasing prosperity without a declaration of war. During that period, the American Accounting Association, an academic accounting body published an extremely important monograph.
Prepared by W.A. Paton and A.C. Littleton, An Introduction to Corporate Accounting Standards presented a theoretical framework by which the corporate income statement achieved a kind of primacy over the balance sheet. Paton and Littleton’s treatise helped knit together a number of ideas and practices into a persuasive intellectual framework.
They began with the idea that the large corporation is a matter of concern to more than its shareholders. In effect, they developed for accounting the now widely accepted notion of corporate “stakeholders.” For example, employees receive their wages from the corporation. Governments receive taxes. Customers receive products and services; suppliers find in the corporation a market for their goods. Each in its own way, these disparate groups have an interest in the corporation’s financial welfare.
As Ross Skinner explains in his book Accounting Standards in Evolution, Paton and Littleton articulated a number of principles to suggest that the income statement needed to be taken more seriously. In Skinner’s words, one of the basic concepts they developed was that “Continuity of enterprise is the typical experience; hence, accounting may normally assume a ‘going concern.’ It follows from this that financial statements for a part of the life of a business are provisional in character. It was also argued that the continuity characteristic of business makes ’earning power‘ the most significant determinant of enterprise value. Hence the income statement is the most important accounting report. Each statement, however, should be considered only as part of a series covering a number of years, in view of its tentative nature.” Their notion of the primacy of the income statement was new, and represented a marked break from precedent.
Paton and Littleton’s influence, which was most immediate in the United States, took a long time to work its way into practice. Over a period of years, the leaders and advisory committees of the American accounting profession gradually adopted and applied their basic ideas. In Canada, by contrast, their influence was probably indirect.
Although Canada cannot claim such a monumental achievement from that era, the 1940 report of the Committee of Accounting Terminology was noteworthy. Headed by John Parton, the committee completed a glossary of general accounting terms. This significant document was published in the Canadian Chartered Accountant. The following year, J.G. Glassco was asked to prepare a similar glossary of cost accounting terms.
Government Relations
Business demand for accounting changed quite dramatically during the war. Francis Winspear, who had used cost accounting as a lever to develop his practice during the Depression, explained the new period well. “With the commencement of World War II, and for a period thereafter...income and excess profits tax was the most important single consideration facing a business. With the government taking anywhere from 50% to 80% of a corporation’s profits, it was obvious that we had to concentrate on becoming tax experts. We not only prepared applications supported by extensive briefs to the Board of Referees under the Excess Profits Tax Act, and negotiated such matters as salary and wage allowances under the War Salaries and War Wage Boards, but spent a great deal of time advising our clients how to place their affairs in the best possible order from a tax perspective.”
Besides looking after clients, accountants had to look out for themselves. The Excess Profits Tax nearly cost the profession dearly. In 1942, DACA’s Legislation Committee drew to the attention of the Department of National Revenue an inequity in the standard profits established under this act. As drafted, the legislation set standard profits at a minimum of $5000 before partners’ salaries in the case of a partnership. The minimum for a corporation was determined after deduction of salaries. The outcome was unfair discrimination against accounting and other professional partnerships. The government agreed to interpret the legislation so that, for tax purposes, partnerships were treated like corporations.
Practising accountants sought ways to shield clients and themselves from wartime tax. Yet council sought to invest its own cash reserves in ways that would contribute to government revenue.
Prior to the war, the institute invested its surpluses in government bonds. In 1939, for example, $1,000 went into City of Calgary bonds and $1,000 into City of Edmonton bonds. After war broke out, however, council became less interested in interest income. In 1940 the institute consulted with solicitor Macleod, to find out whether council had the power to make a cash donation to the Dominion government. When Macleod reported that they did not have such a power, president Merv Graves found a way to convert Dominion of Canada bonds into an interest-free loan.
To do so, the institute sold $3,000 in Dominion bonds before their due date. Council then invested the money in Dominion registered non-interest bearing certificates, series A. These instruments were redeemable at par any time after six months from the date issued. Although ICAA renewed this investment in 1945, it was converted to three per cent Dominion bonds shortly thereafter.
Despite forgone investment income and unpredictable outgo based on remission of dues ($380 in fees from 16 members in one year alone), in 1940 the institute reported an annual surplus of $901.10. Council invested $1,000 in three per cent 1956 War Loans.
The 1942 Dominion Association annual meeting was to be held in Calgary, and council decided not to include round table discussions or technical papers. This followed a precedent set at the 1940 meeting in Montreal. The institute also attempted to follow another precedent from the Quebec society, without happy results.
The Quebec precedent seemed simple: The provincial organization did not provide entertainment for the 1940 Dominion convention, and donated the money thus saved to the Dominion government. Council wanted to follow this approach, since it would save money and help the Dominion government. As he had when council wanted to make a contribution to the war effort, solicitor Macleod said it was beyond council’s power to donate money to government. In Alberta at least, his advice put an end to this line of thought.
The profession supported the war effort, but also sometimes had strained relations with government on war-related issues. These issues seemed to peak in the middle of the war. As council reported to the 1942 annual meeting, “The war has brought many difficulties and problems to the members of the Institute. These will tend to increase with the intensity of the struggle but the Council is confident that the members will continue to give the best service possible under the conditions imposed upon them never forgetting the great issues at stake.”
In 1940, DACA asked the federal government not to recruit CAs for positions “not requiring Chartered Accountant standards.” Ottawa’s response was not exactly what anyone wanted. The government replied that men under 35 would be expected to join the active services if they were physically fit. There was a war on, and after the 1942 plebiscite, conscription became reality.
DACA formed a National Selective Service committee in 1943 in response to revised conscription legislation. The committee would review applications for deferment from military service; most of the provinces formed sub-committees to contribute to this task. The national committee’s recommendations would be presented to the registrar of the federal government’s National Selective Service.
By August of that year, the DACA committee had received 63 recommendations for deferment from provincial institutes. Fifty-five were approved and submitted to the divisional registrars. In reviewing the committee’s work for council, chairman Harry Norman said more consideration was given to granting deferment to a man over 30 years of age than to granting deferment to a man under 30. Nearly all of those over 35 were exempted from war service.
Because conscription had become so politically divisive, the federal government provided that those recruited under the National Resources Mobilization Act could ask to serve in Canada only. Although this became politically impossible by the end of the war, only a small percentage of conscripted soldiers were actually sent overseas.
As one of the English-speaking provinces, Alberta was solidly behind conscription. But whatever the opinions of members might have been, the institute had an obligation to work within the system.
Alberta Institute secretary Jimmie Henderson interviewed Major Rogers of the National War Services Board regarding changes in the enlistment of students. After that meeting, the institute asked CAs with articled clerks to report whether their students were in the reserve army or had attempted to join, pointing out “the desirability of urging the students to take this action.”
Henderson gave the facts and nothing but the facts to the National War Services Board: the number of students taking exams and how many years they were articling, their marital status, their age. By 1943, nearly all institute members and students in Calgary belonged to the reserve army. The regional War Services Board received this news quite favourably.
The Dominion government intervened in society and the economy in many ways during the war, and at one point the accounting profession nearly faced profound government bureaucracy. CAs were under threat of being registered with a Technical Personnel Bureau.
This proposal did not come to pass. Had it done so, it would probably have been an administrative nightmare for the rapidly growing numbers of civil servants. For the accounting profession, it would unquestionably have been a horror of quite a different sort.
The proposed Technical Personnel Bureau illustrates the intrusions into people’s lives that seemed justifiable to a country girded for war. If enacted, the bureau would have affected accountants in three general ways. First, all CAs plus their employees and students would have been required to register with the bureau. Second, those wishing to engage chartered accountants would have to go through the bureau. Third, CAs or accountants who wished to leave their employers would need bureau permission before they could begin another job. On the brighter side, nobody registered with the bureau could be drafted without bureau consent.
Henry Norman, who would serve as president of both DACA and the Alberta Institute, was chairman of DACA’s National Selective Service Committee during the war. He explained the Technical Personnel Bureau proposal to the 1944 annual meeting in the following words: “They classify requirements, and the most urgent requirements in the war effort viewpoint are met first.” The establishment of such a bureau would thus be a way for government organizations to recruit help. Norman’s sense of patriotic duty appears to have caused him to look for good in the proposal; he zeroed in on this feature as a positive angle: “I feel sure...we will be able to economize by picking out from the government departments the people that they want themselves, and probably save further inroads on ourselves having in mind our responsibilities to the government as a whole.”
The tides of war in Europe were changing, however, and the perceived need for draconian intervention in the economy began to diminish. Talk about a Technical Personnel Bureau thankfully died.
Educational Advances and Reciprocity
Canada’s accounting institutes made a great deal of progress during the war.
An oddity of the early war years was that the University of Alberta routinely sent students’ marks to the institute but did not disclose their marks to the candidates themselves. In 1940, the Alberta council recommended to the Board of Examiners that students be advised of the marks they obtain on their exams. This perhaps-trivial episode is the tip of a series of educational innovations from the war era – innovations that were quite profound. The breakthroughs began shortly after Canada’s declaration of war with Germany.
Uniform Intermediate and Final exams in accounting and auditing were first given on December 4-9, 1939. Except for Saskatchewan, which planned to join the following year, all provincial institutes participated. It was not long before the Uniform Final Exam was known almost universally as the UFE. In a very real sense, Alberta led this development. According to council minutes, “The Alberta Institute may be credited with taking the first step towards standardization of examinations in using the complete set of papers of the Ontario Institute for all their examinations in 1938.”
Council’s view was that “greater centralization...would secure greater efficiency and uniformity of treatment, particularly in the marking of papers.” And their vision quickly sprang to life.
DACA agreed to create a central examination body with responsibility for marking exam papers. This would contribute to a more uniform marking system. Beginning in 1942, Intermediate Exams and the UFE were under the supervision of a member of the Board of Examiners.
In council’s view, Alberta students scored well on the Dominion’s first Uniform Final Exams – those held in 1939. All candidates passed the Intermediate Exam, and 37.5 per cent passed the UFE. These scores were surpassed only in Manitoba. (However, in the latter province an exceptional 64 per cent passed the UFE.) Alberta candidate Clem King, who later became DACA secretary and research director for the national organization, won DACA’s gold medal in 1939.
With adrenaline flowing from the move to standard testing, DACA quickly began to pursue uniform instruction. At the September 1939 meeting of the Dominion Committee on Education and Examinations, this issue was hot. The committee soon began to investigate the notion of merging the best features of the Queen’s and Manitoba courses.
Most Education and Examinations committee members favoured the idea, and they appointed a sub-committee to investigate further. They were therefore both disappointed and critical when the sub-committee reported that “the merging of the Manitoba and Ontario instruction courses is not feasible or practical at the present time.”
When the Education and Examinations committee asked them to look into the matter further, the sub-committee forcefully reported back. Although it was desirable to have one uniform course of instruction, they said, it would be too burdensome under war conditions to move forward. To design a new five-year course would take money and a great deal of time, and they would not commit their respective institutes. They tried to appease the members of the larger committee by pointing out that the courses were continually being modified and updated. But they would wait until victory before making further recommendations.
Although uniform education would have to wait, the profession did take strides in reciprocity among Canadian institutes, which evolved in important ways. By the end of 1941, five institutes (Alberta, British Columbia, Ontario, Quebec and Saskatchewan) had passed or proposed reciprocity-related amendments to their by-laws.
DACA formed a committee consisting of a representative from each institute. Although unable to agree on full reciprocity, the group adopted a resolution that allowed a member of one institute to become a member of another without paying an additional entrance fee. However, that resolution suggested that the CA retain membership in the “mother institute” and pay annual dues to both. For example, if a practising member moved from Alberta to Ontario, he would remain a member of the Alberta Institute if he paid his $15 annual fees. He would also have to pay $18 in fees to the Ontario Institute. On the plus side, his fees to the Ontario Institute would be reduced by DACA’s $7 fee.
This approach did not go into effect. At the Alberta Institute’s annual meeting, the members ruled that the institute’s admission fees would be waived for members of other provincial institutes – as long as those institutes made similar provisions for Alberta members. By 1942, only New Brunswick and Manitoba had failed to amend their by-laws to allow for this form of reciprocity.
In the end, a member belonging to more than one institute would only pay one fee – and that would go to the institute in which he had his longest standing. The institute responsible for the member’s DACA dues would pay the subscription fee for the Canadian Chartered Accountant.
Preparing for Victory
During the war, advertising was not a source of much contention – probably because there was so much demand that there was little need to advertise.
In 1940, council had no objections when Alberta Government Telephones asked to approach institute members to find out if they would like to have their names inserted into the Calgary telephone directory in bold type. Similarly, in 1941 a salesman from The Albertan, inspired by a recent campaign in Montreal, approached Secretary Colin Mackintosh with the suggestion that the institute insert a list of chartered accountant cards. Council responded that the decision to take out such ads was up to individuals. As long as they stayed within the rules, individual CAs and their firms could advertise as they liked.
The institute was still concerned about its image and that of CAs in general, of course. In 1941, council set aside $50 to be divided between the Calgary and Edmonton public relations committees on the understanding that “council does not expect to pay anything for ordinary news paper publicity but is prepared to contribute towards ‘print outs’ as decided upon by the committees in each city.” The institute also invited local press to annual luncheons, and sought publicity for the annual meeting.
Although the Canadian Chartered Accountant magazine survived the war, it did so without distinction. In 1941, the publication had 4,270 subscribers, including 82 who were not members of a provincial institute. According to Magazine and Publications Committee chairman H.P. Herington, there was “a very serious lack of articles from members.” During the war years, this problem was chronic.
Herington urged members to write about problems they had encountered in their work or on general subjects of interest in their province. In his 1942 report, Herington noted that members of the provincial institutes had contributed only 23 articles the previous year. Only one of these had come from Alberta. By 1947, the amount paid to an Alberta member who submitted an article had been raised from $25 to $50.
As the war ended, concern about public relations continued. Alberta representatives Bernard Aylen, Winslow Hamilton and Bill Reid took a bold proposal to DACA’s 1945 annual meeting in Winnipeg. They suggested that “much trouble in the future could be avoided through the proper establishment of a strong public relations committee of the Dominion Association to act as a steering and guidance committee.” This was already being done in the United States. However, British Columbia was the only other institute to support the Alberta proposal. Most participants in the discussion felt that the “indirect type of publicity was the most beneficial.”
But let’s go beyond the public relations issues. After the American declaration of war, it became inevitable that the Allies would win. This meant the profession would have to prepare for the return of students and CAs from active duty.
Accountants who continued to work in Canada during the war years had been fortunate in many ways. They obviously did not risk life, limb and health on the battlefield. In addition, they were able to develop their practices and careers during a period of prosperity and heightened demand for accounting professionals.
At the institute’s 1944 annual meeting, President Gordon Skinner summarized the impact of the war in the following words: “The requirements of war services have taken additional members of our Institute during the past year. Students also have enlisted in the forces. Young men who otherwise would have commenced service of articles have been required for the armed services. Several lady students have taken out articles with practising members. The increase in services required of Chartered Accountants by the war, and tax requirements together with restricted personnel, has increased the responsibilities of Chartered Accountants above those of previous years. We are, however, pleased to thus directly and indirectly take our part in the present conflict.” That is the view from the home front, clearly stated.
By contrast, the thousand or so enlisted CAs and students made professional sacrifices in addition to the other sacrifices of war. Many did not come home at all. And because of ruined health or simply missed opportunities, many others were unable to achieve the financial success of peers and colleagues who had stayed in Canada.
Council frequently noted the “supreme sacrifice” made by those who served in the armed forces, of course, and wrote: “to them we record again our undying gratitude.” While the inequalities of this period would never be corrected, it was essential that the profession find ways to help its returning veterans.
In 1943, DACA set up a committee on Post-War Rehabilitation of Students. The committee subsequently prepared a report on their findings; these, the Alberta Institute approved in October 1944. In essence, the proposed strategy was to show support and encouragement for returning members and students, and to help them continue their careers where they had left off.
These issues were “of such vital importance to both principals and students” that the institute published a small booklet in 1945 with the committee’s recommendations. These included the rules on articling and on taking courses and exams.
Entitled “Outline of Post-War Rehabilitation Plans of the Institute of Chartered Accountants of Alberta,” the booklet was compiled by a committee chaired by Bill Reid. The booklet received favourable comment at the 1945 DACA annual meeting, and Reid suggested that other institutes might want to publish something similar.
Preparing for victory involved making concessions for students. For example, in 1945 DACA made arrangements for some Canadian students to take exams in England. To become members of their respective institutes, students would need to finish their lessons and last year of articling when they returned from service.
This kind of reciprocation was common during the war. For example, Canada took responsibility for training the Commonwealth’s air force personnel. Alberta became a particularly important part of this huge effort, since the Turner Valley reservoir (“the biggest oilfield in the British Empire,” as Calgary oilmen bragged) offered the raw material for manufacturing aviation fuel.
This development gave an interesting twist to a reciprocity arrangement with Britain’s Society of Incorporated Accountants and Auditors. While the Alberta Institute had achieved professional reciprocity with this organization in 1935, council were quite moved when they learned that Society Secretary A.A. Garrett had offered hospitality to ICAA members serving in Great Britain. In appreciation, the Alberta Institute offered to return the favour for those members of the British organization who were training in Alberta. Accordingly, they asked Garrett for a list of Society members and students serving in Alberta with His Majesty’s Forces.
In 1944, the Ontario Institute’s committee of instruction made several suggestions pertaining to students who returned from military service and wished to continue with their studies. These focused on reduction of articles, exemption from exams and refresher courses. The Alberta Institute formed two “rehabilitation” committees in 1944 to investigate Ontario’s recommendations.
The institute considered restricting the benefits granted to students. There was continuing bitterness over conscription, and the obvious inequity that conscripted men could opt out of overseas service. Council ruled that those students whose terms of enlistment were limited to service in Canada’s Reserve Forces were not eligible for shortened articles.
Only registered students who served in the armed forces and “in the opinion of council have suffered a break in their educational life of not less than six months” were granted a reduction in articles. If they registered with the institute within one year of discharge from active service, students were entitled to a reduction in articles equal to the period served in the armed forces. The proviso was that they could not serve less than half their required articles. Thus, if a student were supposed to article for five years, he could not have that term reduced to less than 2.5 years because of military service. Ex-servicemen were also exempted from taking the Primary Exam. (Concessions regarding pre-examination requirements ended in 1946.)
Ex-servicemen were allowed to continue the Queen’s course at any time. There was a delay in lessons in 1945 because the university had more applications for enrolment than they had anticipated. In that same year, Queen’s set up a combined fourth and fifth year course for ex-servicemen. Many members who had served in the armed forces and wished to take a refresher course also took the course. Other students were required to complete the full five years of the Queen’s course.
As council reported during the 1945 annual meeting, “during the years of the war Chartered Accountants have had to carry on additional duties with reduced staffs. Many of our members are in the armed forces. Others are in government services. Increased controls and taxation have increased the work of those left to carry on. With the termination of the war in Europe many members will be returning to civil life, while many students will be returning from the services. All this will require much attention to the rehabilitation and re-establishment of members and students.”
The impact of the Second World War on Canada was beyond imagination. Dominion expenditures rose from $118 million in fiscal year 1939 to $4.5 billion in the peak year, fiscal 1943. And every penny of those enormous, rapid expenditures needed to be accounted for.
It is beyond the scope of this history to discuss Canada’s military contributions to the struggle. Canadian sailors showed valour at sea throughout the Battle of the Atlantic. Infantry showed their courage at Hong Kong in 1941 and Dieppe the following year; in the Sicilian and Italian campaigns of 1943-44; at Normandy and the liberation of the Netherlands in the final year of battle. Canada’s airborne forces played an enormous role in the Battle of Britain and throughout the later stages of the war. More than one million Canadians and Newfoundlanders served. Of those, 45,000 died and another 55,000 were wounded.
The development of Canada’s armed forces gives a sense of the engine that powered the economy during those years. The Royal Canadian Navy began the war with 13 vessels and 3,000 men. At the end, the Navy had 373 fighting ships and more than 90,000 personnel. Another 232,500 men and 17,000 women served overseas or in home defence with the Royal Canadian Air Force.
It would be a mistake to overstate Canada's contribution to the defeat of the Axis powers. But the country’s 11 million people had quickly become a formidable force. When peace arrived, Canada had the world’s third largest navy, the fourth largest air force and an army of six divisions.
Canadians boasted the world’s second highest per capita income, and their Dominion had the fourth largest industrial economy. Adapting that economy to peacetime would create prosperity and opportunity on a scale that was previously unimaginable. The post-war era would also create new forms of business enterprise — forms that would greatly affect the organization of the accounting firm. The end of the war signalled the end of a small, close-knit Alberta Institute. The next decade would bring quite different challenges.
The war years would be followed by an event that was singular to the province, but would be its defining event for years to come. As the war years ended, Canada’s petroleum industry began its modern era — in Alberta. This would profoundly affect economic growth within the province. It would create a wealthy new industry and a complex network of new accounting clients. It would also present major new challenges to theory, and it enabled Alberta’s profession to become the leader in oil and gas accounting.
“The real need seems to be to assemble and rationalize the various techniques which are being followed and to introduce some measure of standardization into those which are most appropriate to Canadian conditions. It is perhaps because the [oil] industry is at an early stage in Canada, and because...a heavy burden of work has fallen upon petroleum accountants, that little consideration has been given...to the fundamentals of petroleum accounting.” – Robert E. Waller, 1956.
Chapter Six – From Leduc to Suez: 1946-56
For Canada, the Second World War was the seminal event of the twentieth century. It profoundly touched every aspect of life, every sector of the economy, every institution. As we shall see, in the post-war era the Alberta Institute – indeed, the entire profession of accounting – grew up, quickly. But to understand how the war transformed our lives, it is important to review the nature of the immediate post-war world.
In the aftermath, the United States could have returned to its traditional isolationism. But with Fascism defeated, American policy-makers identified Communism as an equally sinister and aggressive enemy. The world divided into two political camps, each led by a superpower. The Soviet Union led the eastern bloc. The United States led the West. European colonialism quickly collapsed; centuries in the making, the expiration of the British Empire came quickly – greatly hastened by its war debt.
The international character of the post-war market (to a large extent the product of American capital and consumer markets) has had an enormous influence on business organization and the accounting profession. For example, global corporations began to require accounting firms with multinational expertise. As we shall see, this paved the way for accounting firms to expand internationally and to do far more than accounting and auditing. By the end of the century the largest of these firms would be business consultants, with greatly diversified worldwide operations.
After the Depression and six years of war, Canada emerged proud, prosperous and a consequential player on the world stage. The prime minister was still Mackenzie King (soon to be replaced by Louis St. Laurent). Alberta’s premier, Ernest Manning, would govern for 25 years, until 1968.
Canadian troops were still returning from theatres of war, and there were long lines of European refugees and other immigrants. The reconstruction of Western Europe and Japan had barely begun, and Canadian factories were working full-throttle to help supply a broken world. In response to Ottawa’s protective tariffs, this period witnessed the beginnings of a branch-plant economy in many of Canada’s important industrial sectors. As Fords, Chryslers, Chevrolets and Studebakers rolled off assembly lines, the post-war release of consumer demand in North America created a robust market for oil.
Most of Canada’s energy still came from coal, and most of her petroleum from the United States. The Turner Valley oilfield was still the country’s only large domestic oil supply. And its producing life had taken a bad turn during the war, when the federal government had ordered the field pumped without regard for good engineering practices. This had increased the oil available for the war effort, but it meant that the field would go quickly into steep decline. Thus, as the war ended Canada’s petroleum future looked bleak.
This changed on February 23, 1947. With some fanfare, Imperial Oil brought in an oil discovery just south of Edmonton. Leduc #1 provided the geological key to the most prolific of Alberta’s oilfields.
The story of the rapid growth of the Alberta-based petroleum industry has often been told. For the purposes of this history, however, the key factor is the economic impact of the industry in the years since Leduc. This can be seen through a simple comparison. In the late 1940s, Alberta, Saskatchewan and Manitoba had roughly equal populations — under a million souls each. Half a century later, Alberta’s population had more than tripled, while the populations of the other two provinces had increased relatively little. For most of that period, oil and gas were the drivers behind Alberta’s astonishing growth.
As the province grew, so did the provincial government. Flush with resource revenues and taxes from a fattening economy, provincial spending grew rapidly. Construction and development increased Alberta’s municipal tax bases, and infrastructure gradually began to stretch into northeastern British Columbia and the territories. Oil and gas companies built roads into remote forests, and the forestry industry followed. Hamlets became towns or, in the case of Fort McMurray, a small city. As field development created demand for specialized oil and gas equipment, manufacturing facilities went into production in Edmonton, Red Deer and Calgary and in other Alberta communities.
The oil industry went through a remarkable period of expansion. To help meet the needs of the capital-intensive petroleum industry, Canada’s banks slowly developed energy finance specialists. In time, Central Canada’s banks opened operations close to the oil industry’s corporate offices in Calgary. In the early years, however, junior companies often had difficulty arranging bank financing for growth, while senior companies like Imperial Oil and British American could use existing operations as collateral.
Oil Accounting
The petroleum accounting practices of the day were borrowed from many sources, and were formalized when the CICA’s Committee on Accounting and Auditing Research sponsored Canada’s first major text on petroleum accounting. The author was Bob Waller, an Ontario CA who arrived in Calgary shortly after the Leduc oil discovery and soon found himself with oil companies as clients. “Oil taxation was different than anything we had ever seen before,” he later recalled. “The deductions you got for drilling, dry holes and producing wells and royalties were unique. We had to learn by trial and error.” He took two years to write Oil Accounting, which was published in 1956.
Waller provided a thoughtful analysis of the issues accountants faced. He explained the nature of Western Canada’s petroleum deals, which were often quite different from their US counterparts because of large Crown ownership of mineral rights. His book articulated a code of accounts for oil production, and even provided a foldout sample of a production ledger. But perhaps the most interesting issues pertained to exploration.
In those days, the provincial government issued petroleum and natural gas “reservations” – extremely large blocks of Crown exploration land, part of which the companies were required to return to the province after choosing the amount of prospective acreage they could retain. This added another layer of complexity to petroleum accounting.
Waller’s preferred solution to exploration spending was to charge all costs to profit and loss, “without regard to any benefits that might have resulted from the expenditures.” When this is done, he said, “accounts presented to the shareholders reflect clearly the actual scope of exploratory operations for the fiscal period.” As we shall see in a later discussion of full cost accounting, Canadian CAs eventually rejected this approach.
A second approach recognized by Waller was “the principle of capitalizing exploration expenditures which result in the retention of properties and writing off other exploration expenditures.” According to Waller, “on the basis of its wide use, [this practice] must be considered acceptable.” The other approach, “capitalizing all exploration expenditures whether or not they prove beneficial,” is actually the one most in keeping with today’s precepts of full cost accounting. In his book, however, Waller rejected it; “other available methods are preferable.”
It is important to remember the environment in which Waller made these judgments. For one, Canadian petroleum accounting was heavily influenced by American practices, since most of the large producers were the subsidiaries of US companies. Alberta was still wildcat country, and petroleum and natural gas reservations were a widely accepted way to entice oil companies to the province. By the time full cost accounting was being developed, exploration was far less risky and “land sales” (the auction of mineral rights by sealed bid) were the norm.
As Waller and other accountants grappled with petroleum accounting, they began to create approaches that would eventually become the standard in Canadian GAAP. These came slowly, however: some very central approaches did not mature until two decades after Leduc. As we shall see, they culminated in the articulation of full cost accounting principles in the 1960s and early 1970s. And Bob Waller was one of the accountants to help create the theoretical framework for this approach to oil and gas accounting.
Sidebar: Forward Thinking
Photo Caption:
James George Duncan, FCA
ICAA President, 1948-1949
CICA President, 1959-1960
As a CA, Jim Duncan has always been ahead of his time. For example, during the Second World War he hired Dorothy Reid as an articling student; in 1949, she was the first Alberta woman to become a chartered accountant. During Duncan’s term as ICAA president, he was a proponent of efforts to better regulate the accounting profession. As president of the Canadian Institute, he presided over the final decision to require that new CAs have university degrees. In each case, his decision took years to bear fruit, but it was no less inspired for the delay.
While aboard a train to Vancouver on business for McGavin Bakeries, in 1948 Duncan penciled a brief but revealing letter about regulation of the profession. As president of the Alberta Institute, he was concerned about a private member’s bill being presented to Alberta’s legislature on behalf of the Accredited Public Accountants. He wrote that “a committee should try to speak to Premier Manning with a view to having the bill withdrawn or else our bill substituted....Manning was very sympathetic at our last meeting.” During Duncan’s term on council, the issue of professional regulation became a priority. As this history explains elsewhere, it took four decades for Alberta’s accountants to finally resolve the issue of professional regulation.
Soon after completing his ICAA presidency, Duncan began his term on the Canadian Institute’s council. During his term, Canada’s CA institutes began adopting the “1970 Proposal.” That proposal set the date at which a university degree would become a requirement of new CA candidates. As CICA president, he stressed the importance of specialization – another forward-thinking notion, which the profession formally recognized three decades later.
Duncan began his CA career in 1929 as a clerk with Patriquin, Johnstone & Co. Although he passed his Intermediate Exam two years later, “fun and games” (his words) prevented him from challenging the Final Exam until 1937. Four years later, he became a partner of the firm, which later merged to become Deloitte Haskins and Sells. Duncan held the position of managing partner of the Edmonton office, and later of the Toronto office. In 1965, he became senior partner of the Canadian firm, a position he held until his retirement in 1976. In the years following, the firm continued to merge, and is now Deloitte & Touche LLP.
In a letter reflecting on his term as CICA president, Duncan said the position was "a vastly different job in 1959-60 than it is today. No one wrote your speeches for you in those years....[However,] there is no doubt that my services to the profession, provincially and nationally, were beneficial to me personally and advanced me in my firm."
His firm clearly agrees. According to Deloitte & Touche, Jim Duncan’s career “showed his commitment to the growth of the CA profession, notably in his presidencies of the Alberta and Canadian institutes. The strength of our past leaders helps forge the way for our present and future leaders.”
Deloitte & Touche LLP Chartered Accountants
Institute Growth
The Alberta Institute had grown from 154 members in 1940 to 260 a decade later. Continuing membership growth came from accountants and articling students returned from the military, and from the migration of accountants from other parts of Canada. It also came through requests to join from a worldwide assortment of accountants. They mainly came from Great Britain and, as American oil companies set up subsidiaries, the US. But others hailed from such countries as Holland, Trinidad and South Africa.
In 1951, institute president Gordon Burton read a letter to council regarding the admission of accountants “who had received their standing through foreign accounting societies.” Council agreed to change the by-laws to make it easier to accept these accountants, but recommended that CICA assess the qualifications of foreign societies. (CICA struck a committee that evolved into today’s International Qualifications Appraisal Board.) Council also noted that CAs needed to be Canadian citizens – a requirement that was not changed until 1957.
According to Allan McTavish, the institute’s executive secretary, “There were some people who came in from European countries that had excellent backgrounds but their native language was Dutch, for example. I used to be the hatchet man and had to say to them, ‘Sorry, you don’t rate. You have to take other courses or examinations.’ It was tough. But I had a happy experience a number of years later, when one of those Dutch guys said, ‘I’m glad you did it.’”
Between 1947 and 1956, institute membership increased from 208 to 503. Price Waterhouse reports that staffing levels in its Calgary office quadrupled during that period. CAs set up many new offices in Alberta. These ranged from the large to the small – for example, Clarkson, Gordon & Co. and Riddell, Stead, Graham & Hutchinson opened offices in Alberta. Howard, Munn & Richards set up an Edmonton practice. And James C. Miller hung up his shingle in Medicine Hat.
Cities and Towns
As Calgary CA Lorne Baxter recalled years later, “Many people felt the institute was not fully serving its public as long as it was only in Calgary and Edmonton. There were some people in Lethbridge, but I remember how good everyone felt when Malcolm McKenzie went to Red Deer and Jim Miller went to Medicine Hat. I remember everybody talking about how important it was to get people involved outside of Calgary and Edmonton.” Baxter’s memory helps focus on an issue that had long, deep roots.
Since its beginnings, accountancy has been centred in cities. That is, after all, where wealth tends to be concentrated, and one of accounting’s essential functions is to measure value. In Alberta, that expertise resided with the accountants in Edmonton and Calgary; most of Alberta’s towns did not have resident accountants.
Of course, those communities had accounting to be done, and generally did so in three ways. One was to go to the cities to seek out an accountant. “All of the rural municipalities, school boards, hospitals, credit unions, and all sorts of similar organizations required audits of their accounts,” Eric Geddes later explained. “So they came into the city to have that work done.”
Another approach was for accountants to go to rural communities. In the late 1940s, Lorne Baxter worked for a firm that had the southeast BC town of Fernie as a client. According to Baxter, “we did the whole town, including the lumber companies. Four of us would catch the train from Calgary at suppertime, getting off in Fernie at four in the morning. We would work from one end of town to the other.”
A third approach was for city-based accounting firms to set up rural offices, and rotate new accountants into those offices. According to David Bentley, Francis Winspear’s firm had a policy of sending new CAs for six months to its Dawson Creek office, on the Alberta-BC border. “I had spent all my life in a small town, except for university years, so this was not new to me. In some ways I preferred it. You could arrange your schedule so you could curl. If you had a bonspiel during the day, you could work at night. We had flexibility there.”
As smaller communities grew and prospered, qualified CAs began to see them as attractive places to set up shop. Once they were established, however, they often had trouble finding qualified help, especially since few students wanted to article in small-town Alberta. So the small town firms engaged “what we today would call technicians,” said Eric Geddes. “They hired people to do non-opinion work, the write-up work. These people were not expected to be qualified.” Gradually, the smaller communities began to acquire students – usually, local men or women who eventually wanted to work as CAs in their own communities.
One of the first CAs to set up shop in a small town, Jim Miller went by train to Medicine Hat – a town of 10,000 – in 1947. He had difficulty finding either office space or accommodation for himself and his wife, Norah, but soon found himself in business. “Few people had filed income tax returns, and the Department of National Revenue sent every farmer, small businessman and Chinese person a tax package for the years 1942 to 1946, and we were inundated with people who had never filed tax returns before. My staff consisted of a full-time stenographer, a female accountant and Alf Bennett, a CA student. I had received very little experience during articles on personal tax returns, so it was a new field for me. I worked long hours with little time off.”
One of the first recipients of the Alberta Institute’s Lifetime Achievement Awards (1998), Miller never regretted his move to Medicine Hat. A participant in every aspect of the city’s civic life, he later said, “I have found a great deal of satisfaction in my life as a CA in a small community. I could get involved in many things that I am sure I would not have experienced had I remained with a large firm in Calgary. I always felt that service to a community is the rent you pay for living in that community, and I found this to be most rewarding in my lifetime. I enjoyed bringing up my family here, and the social life and association with other professionals were very rewarding.”
Demand for CAs
To a very large extent powered by the oil industry’s rapid growth and expectations, booming Alberta easily absorbed the influx of professionals and those who came through the normal articling and examination procedure. As Tom Mundy later recalled, “Being a CA certainly put you in demand. The oil industry was taking everybody who was available and for the next 15 or 20 years pretty well the same thing happened. Other industries had to fight the oil industry to get somebody. The oil industry pretty well set the prices – not only in Alberta, but also in Saskatchewan.”
Opportunity abounded. Council received many requests for CAs to work as managers at branch offices, and to fill executive and government positions. In May 1948, W.A. Crosbie, the assistant comptroller for Canadian Pacific Railway, informed council that “CPR has several openings for young CAs with good opportunity for advancement.” Aware of the competition among employers for qualified hands, he wrote again a month later that he “is not wishing to take young men from CA offices, but that if any young CA wishes to enter the railway accounting work the CPR offer is open to them.”
The lure of the private sector meant government found itself squeezed for qualified accounting staff. In 1954 the federal director of taxation in Alberta, Gordon Northfield, broached to council the idea of an exchange system between the government and accounting firms. He proposed that properly qualified professionals from various practising firms work for the Tax Department for a couple of years and then return to their previous jobs.
Rather than endorse his proposal, the institute suggested that Northfield take his request to individual firms. Council opposed the idea for several reasons. They argued, for example, that those who spent their time dealing with previous years’ returns would gain little experience with respect to current requirements. And when they returned to their former jobs, they would find themselves about two years behind in matters of income tax law. Client confidentiality was another concern.
As we have observed, after the war the US was a powerful, rich and friendly neighbour, while Canada was just rich and friendly. By contrast, increasingly distant Britain was staggering under wartime debt and clearly would never again be more than a second-tier power. A visit to Canada by Princess Elizabeth in 1952 and her coronation the following year created a hurricane of interest in her reign, but it was a last hurrah. Canadian affection for the Crown went into decline.
Canada’s ties with the United States grew stronger as the movement to codify Generally Accepted Accounting Principles gained momentum. Assailed by “a superabundance of accepted alternative practices,” the American Committee on Accounting Principles led this effort. Because of excellent intellectual contributions from some American academics and concerted efforts by the American Institute to rationalize financial reporting practices, American approaches to accounting began wielding greater influence in Canada.
The profession’s need for research goes back many years. In 1939, Queen’s University asked DACA to provide financial assistance for accounting research, and the Dominion Association set aside $1,000. The Dominion Association also appointed an Accounting and Auditing Research Committee that year. That committee worked with Queen’s University on two projects. One was an enquiry into the valuation of marketable securities; the other, a statistical study of statutory reports rendered by auditors.
Alberta’s representatives to the 1939 DACA convention reported that “some doubt was expressed as to the practical value of the researches so far conducted....” However, it was finally agreed that the $1,000 appropriation should continue.
Because of wartime conditions, DACA’s research committee ceased operations in 1940, and the organization sought and received permission to reprint in the Canadian Chartered Accountant several American research papers. DACA also set up a post-war planning committee in 1943 to consider and make recommendations to the Dominion government on principles of taxation, presentation of financial statements and uniformity of companies acts.
Alberta set up a provincial sub-committee that year, chaired by Fred Smith. One outcome was the formation of another committee consisting of Harry Howard (chairman), Les Munn and Larkham Collins, to co-ordinate accounting requirements with the needs of stock exchanges. As always, the intent was to achieve consistency in reporting. Not particularly productive, this committee was disbanded in 1945 and its work passed on to the Accounting Research Committee.
DACA’s first research publication was a 1946 bulletin titled A Statement of Standards of Disclosure in Annual Financial Statements of Manufacturing and Mercantile Companies. Seven years later, the recommendations of this document were incorporated into revisions to Ontario’s Corporations Act. As other provinces emulated the provisions of the Ontario statute, the legal impact of DACA’s recommendations spread throughout the land.
Alberta’s formal contributions to the research effort began in 1948, when the University of Alberta formed the Accounting Research Committee. Dr. Robert Newton, the university’s president, spoke highly of the research being conducted. So did council, which “considered the activities of the committee not only important now but likely to be still more important in the future.”
Council, which did not feel qualified to pass judgment on particular projects, recognized that granting autonomy to the research committee was essential. Chaired by the university’s J.D. Campbell, the committee shouldered the responsibility for its own projects.
In 1951 the research committee asked council to have groups or individuals prepare papers on oil, grain, farming, brokerage, lumbering and construction – in order, the economic activities that were of most interest to Alberta-based accountants. However, council’s minutes record only that Arthur Maw was asked to prepare a paper on oil accounting. Council had hoped that the material these committees prepared would contribute to the creation of the Canadian GAAP, but intra-provincial committees on accounting principles often failed to follow through.
ICAA supported the research committee’s work in such modest ways as a small provincial institute could. For example, in 1952 the institute allocated $50 to help pay for the publication costs of bulletins. In addition, project reports were occasionally distributed to Alberta members.
Notwithstanding relatively small resources, council reiterated the importance of communication between the provincial and national research committees. This would help ensure that suitable standards were developed. In 1953, council still worried that “specialized local problems with local industries in various parts of the country might not receive due recognition” unless efforts to coordinate the activities of the CICA research committee with those of the provincial institutes were successful. A year later, the provincial research committees became sub-committees of the national research committee.
Canadian committees often worked closely with their US counterparts. For the accounting profession, the shift to closer ties with the US is symbolized by a recognition of the broad framework of US GAAP. Canada’s differences were confined to specific secondary issues. Normally shorter and less detailed than the American version, Canadian GAAP leaves the practitioner with more room to exercise professional judgment – a distinctive feature of Canadian accountancy.
Canadian GAAP grew slowly from simple beginnings. Perhaps its most important milestone came in 1962, when the Ontario Securities Commission issued National Policy Statement #19. Although issued by a provincial agency, this “national policy” acknowledged the primacy of CICA standards for public companies. Ontario’s economic strength was great and Toronto’s stock market powerful, so this ruling further established CICA as the agent of national accounting principles. In effect, it created the regulatory framework for Canadian GAAP.
Canada becomes a modern state
In the immediate post-war period, English-speaking Canadians began thinking of themselves as citizens of a modern state. They developed both national and territorial ambitions, which Britain’s Labour government seemed almost too eager to accommodate. The national ambitions received a symbolic boost in 1947 with the decision of George VI to delegate to the Governor General his full authority as sovereign. The territorial ambitions were consummated two years later, when Newfoundland (after two hotly debated referenda) reluctantly became the tenth province. A new Income Tax Act required Canadian citizens to report world income – no matter where it was earned.
With Canadians now less likely to think of their country as a Dominion, the movement to remove the word from the name of the national organization began to gather strength. CAs now wanted to belong to a profession that was Canadian by name as well as character. DACA and the institutes began to moot the issue in 1949. The Alberta Institute proposed that the Dominion Association change its name to the Association of Chartered Accountants of Canada. While this suggestion was not the one finally adopted, it illustrates Alberta’s support for ending the Dominion designation.
The successful new moniker was adopted at DACA’s last annual meeting, in 1950. It was, and remains, the Canadian Institute of Chartered Accountants (CICA). In September 1951, Alberta hosted the CICA’s annual meeting, again in Banff. The meeting featured an address by Premier Manning, who had also taken ministerial responsibility for developing the province’s petroleum industry.
Council agreed that no registration fee would be charged for that conference. ICAA’s preliminary budget was $7,000, an amount that included entertainment and publicity. In the end, however, ICAA paid $8,290.95 toward the total cost of the convention. CICA contributed $1,330 and other institutes contributed $650.73.
This prompted the institutes to discuss who should pay the expenses of future conventions. In 1937, the Dominion Association had agreed to contribute a set amount per visiting member ($10) to the provincial institute holding the convention each year. The maximum contribution was $1,000.
The British Columbia Institute suggested that visitors be charged a larger registration fee – a notion to which Alberta members took exception. New Brunswick proposed that CICA pick up the full tab. Ultimately, Alberta recommended that CICA and the host institute should divide the costs of future conventions. Following the lead taken by other institutes, Eric Connelly moved that $750 be set aside each year to build a reserve to pay Alberta’s share of the meeting when Alberta hosted it next.
Hosting the annual meeting of the national association enabled Alberta accountants to understand the thrust and parry of accounting’s national affairs, and was a sought-after privilege. The practice of awarding these meetings, which are not allocated equally among provincial institutes, evolved fitfully over the years. For example, in 1939 DACA’s executive committee proposed a formula based on regional groupings of provincial institutes (the Maritimes, Central Canada, the Prairies and the Pacific Coast). Because so many CAs were located in the Central and Prairies regions, these groups would each host two meetings during a six-year period. Each area of the country was responsible for deciding which city in this region the annual meeting would be held in.
A different rotation for DACA annual meetings went into effect in 1942. In the new arrangement, Ontario, Quebec and BC would each host the meeting every six years; each of the Prairie Provinces would hold the meeting every nine years; and every 12 years New Brunswick and Nova Scotia would welcome a meeting. No provision was made for an AGM in tiny, agricultural Prince Edward Island, and Newfoundland was not yet a province.
Thus, professional accounting began to mirror the Canadian pattern of regional organization. By the time DACA changed its name, regionalism was a well-established principle within the profession. In 1952, CICA President Emile Beauvois encouraged the western institutes to maintain close contact with their regional representatives, since the national executive committee often did not include representation from Alberta. In response, Secretary Allan McTavish prepared a digest of the Alberta council minutes for Western Canada’s regional representatives “so that they might be informed of our attitudes on various matters, particularly those which affect the CICA.”
McTavish had become the executive secretary for the institute on December 1, 1951, at a salary of $250 a month. When he accepted this appointment, McTavish later reported, “There was too much detail being dealt with by the council. Every committee that had to do anything always had a council member on it, and the council member made all the decisions. Whatever had to be done was done by committee. And council looked after all the details....The council meeting used to go on for two days, over nothing.” Initially, McTavish was a member of council. He later asked to be taken off, on the principle that he should not be voting on his own decisions. This ended the tradition of having the administration of the institute performed by a member of council.
When McTavish became executive secretary, “I provided office space at the McTavish Business College and Bea McLay was the stenographer. The first two or three months, it was a straight steal because I did absolutely nothing. There was nothing to do. Then all hell broke loose.” One reason was the increasing work associated with qualifying new CAs. New students and other applicants were flooding the system.
Creating New CAs
The return of Canada’s servicemen included many who had been or wanted to become articling students. To cope with increased demands on their time, in 1948 council formed a committee to screen candidates and make recommendations on their status. The first committee, which included Malcolm Tweddle, Malcolm McCannel and J.D. Campbell, presented written reports to council meetings.
Council did not formally delegate its work to this group, of course. When setting out the committee’s mandate, they wrote that “nothing in the foregoing shall be construed to take away from the council its responsibility or powers in respect to matters reported on by the said committee, the intention being merely to facilitate the work of the Council.”
This effort echoed the Dominion Association’s creation of a Committee on Personnel Selection. The DACA committee’s mandate was to look into the increasing flow of students, help its members select candidates, prepare brochures to circulate to schools and colleges and screen candidates using tests. As we shall see, this last part of the mandate would lead to a brief but bitter dispute between ICAA and the national organization.
Testing based on “modern psychology” became fashionable in the immediate post-war era. IQ tests, for example, soon abounded in North American grade schools. While the limitations of these tests were not generally understood, testing was as much in the profession’s blood as the educational imperative. It was therefore a natural progression for Canada’s accountants to become early participants in this development.
In 1950, the institute began administering a Personnel Selection Test as an aid to screening candidates. The spur for this program came from the national organization’s secretary, Clem King. King urged Alberta to follow Ontario’s lead and adopt the procedure. No one gave it much thought at the time, but the financial arrangement between the two organizations was entirely one-sided. DACA would receive $5 for each test. Those who administered and marked the tests would receive another $5 per test.
In its first year, three students took the test in Calgary, nine in Edmonton. Disappointed with these poor numerical results, council also grumbled that the tests were “not of any real value because they did not distinguish between students of varying qualifications.”
In 1952, the institute paid nearly $600 to have these preference tests given to grade 11 and 12 students who had expressed an interest in the profession. Members then issued invitations to those who scored well (and their parents) to come to their homes for interviews. That year approximately 10 out of the 55 tested were deemed “acceptable,” but only six of those applied for articles.
Council was again disappointed with these results. Undaunted, Public Relations Committee chairman Eric Connelly gave his efforts a positive spin. He pointed out that the high school program had helped bring prestige to the profession, and had improved public relations. Other professions were considering joining this effort, he said. Further, less newspaper advertising was needed and, most importantly, the public was receiving accurate information about chartered accountancy.
Alex Hamilton argued that, at $10 per test, the amount of money involved was much too high. “The same result could have been obtained from an ordinary intelligence test at the cost of a few cents each.” He suggested that in the future the institute should hold some sort of “elimination” test. This test “would weed out the less suitable candidates, judged on the basis of mental ability, and then more extensive and more expensive tests could be given to those who had proved themselves basically suitable.”
Council decided to try using the orientation tests developed by the American Institute of Accountants rather than the CICA tests. The main issue was cost: CICA was still charging $5 per test, whereas the American Institute tests were pennies apiece. Furthermore, according to council minutes, the CICA tests “were not satisfactory in any case.”
Council minutes record that Clarence Richards had tried on various occasions to obtain copies of the US test, but to no avail. It appears that the American Institute did not want to offend CICA by giving a supply to the Alberta Institute. Council expressed “indignation...at the attitude of the Canadian Institute,” and asked Richards and McTavish to “proceed with obtaining the American institute test by any means available, regardless of the opinions and feeling of the Canadian Institute.” Presumably in the interest of professional harmony, CICA soon had a change of heart. The national organization provided Alberta with 200 sets of the American orientation tests.
To streamline the evaluation process in a more practical way, the institute also proposed amendments to Alberta’s Chartered Accountants Act. The revised act, which went into effect on July 1, 1952, enabled the institute to establish two new boards. Section 10a of the revised act provided for the assessment of academic and professional examination standards through the Academic Appraisal Board of the University of Alberta. Section 10b provided for the assessment of professional background through the formation of an Accounting Experience Appraisal Board, the first chairman of which was Alex Hamilton.
Prospective accountants could apply to these boards to have their examination and/or articling requirements reduced. By the spring of 1955, the Academic Appraisal Board had issued 50 certificates under section 10a, each indicating that the applicant had preliminary standing or better. The Experience Appraisal Board had issued 32 certificates. In all, 69 students had applied to one or both of these boards; the first to become a CA under this system was Doug Hagerman, who was already a CPA.
Virtually all of those who applied to the academic board were exempted from either the Primary or the Intermediate Exam. For its part, the Experience Appraisal Board adopted the formula that “two years of practical experience is equivalent to one year under articles.”
In his 1955 annual report, institute president Alex Hamilton gave a glowing commentary on this approach, which was unique to Alberta. “Continuing favorable experience with this legislation,” he said, “has quieted practically all of the earlier fears as to the possible lowering of standards....and because such a route now exists, able and well-qualified persons are now finding it financially possible to qualify for membership.”
In Hamilton’s view, this approach was reducing the threat of competition. “Several persons...who not long ago had been active in trying to incorporate competing professional accounting associations are now proceeding through the necessary program of study and examinations and some of them have actually became members of the Institute.” It was time, he said, “to spread the word” to other institutes that this “Alberta method of qualifying for membership...could very satisfactorily meet the growing problems of competing professional accounting associations.”
The creation of academic and practical boards was symbolic, in a sense, of a longstanding debate about the relative value of practical versus theoretical knowledge. As we shall see, the university was becoming an increasingly important training ground for CAs.
An institution that has traditionally placed heavy emphasis on ideas, the university tended to emphasize theory over practice. By contrast, chartered accountants believed the school of hard knocks should have preference. Thus, when the university voiced the opinion in 1953 that Walter Nobbs was eligible to write the UFE, council demurred. Since the Experience Appraisal Board had not certified Nobbs, council agreed with the recommendation of the By-Laws Committee that his “experience and practical training should be complete before the examinations are attempted.”
The issue did not rest there, however. Later that year J.D. Campbell, an accounting professor at the university, suggested that the institute adopt a system used in many parts of the US, where students could take exams before obtaining practical experience. Campbell based his proposal on the case of a student who had earned a B.Comm., then worked for several years “in a commercial position in the accounting field.” Campbell suggested that the student be permitted to take the Final after returning to university for his honours degree in commerce.
Council would have none of it. They ruled unanimously that this approach would “not give satisfactory professional training.” Eric Connelly cited conversations with representatives of the legal profession in Canada and with the accounting profession in the US to support his contention that they “were envious of the procedure which had evolved here in Alberta and in Canada generally with practical experience being obtained along with theoretical training.”
Since its inception, the ICAA had approved articles routinely. For the most part, this consisted of listing the names of the clerks, their principals, the number of years they would be articling and the dates registered. In 1952, however, there was considerable discussion about whether the institute should also give thought to the student’s character.
In previous years, council had relied on the principal’s judgment in this regard. However, President Gordon Burton now suggested that, “when articles are submitted, the principal should certify that he has investigated the man and that in his opinion he is of good character and would eventually be a suitable member of the Institute.” Council went as far as to draft an application form that could be used as an affidavit from the principal that would give detailed information about the student. In theory, the ICAA would refer to this information when approving articles. The matter was eventually dropped, however. Council agreed to continue trusting in the judgment of the student’s principal.
Building Membership
Quite concerned about the profession’s ability to meet the demand for chartered accountants, the institute sought ways to build membership. As we have seen, one approach was to increase interest in accounting among high school students. The first shot in this campaign came in 1950, when Allan McTavish expressed concern about the shortage of articling students. He suggested that the institute forward information to A.A. Aldrich, the guidance supervisor for the province’s Department of Education.
Aldrich soon received a few hundred copies of the pamphlet Career of Chartered Accountants plus the institute’s current booklet of information to distribute to high schools. In 1951, the institute received several letters asking what it was like to be a CA and inquiring about typical salaries for articled clerks. As we shall see shortly, the matter of wages was still a controversial matter.
Always an optimist, the Public Relations Committee’s Eric Connelly was encouraged by these letters and took charge of a high school campaign. He arranged for panels of speakers to make presentations at Edmonton, Calgary and Lethbridge high schools. The practice of participating in Career Days (now known as Career Fairs) continues to this day.
Pointing out that it was often too late for students in grades 11 and 12 to change their vocational plans, his committee focused on ninth grade students. After all, that was the first year they could choose their own courses. Connelly and Gordon Burton wanted to convince students that, if they were planning to go into accounting professionally, it was vital that they take the matriculation program.
To build rapport with high schools, they decided to enlist the support of vocational guidance counselors. “The first reception had been very cold,” Connelly reported. “The counselors had the impression that the chartered accountancy profession was ‘closed’ and they accordingly did not wish to participate in any campaign to obtain students for such a profession.” Connelly quickly changed his approach. Now he focused on demonstrating that “chartered accountants actually needed the help of vocational guidance people.” He received a much warmer reception.
As he pursued this challenge, Connelly quickly realized that the institute’s booklet of information was not the sort of thing that appealed to young people. He commissioned an advertising agency to revise it. With input from high school counselors, the agency created a new marketing brochure called “Chartered Accountancy – A Career for Young Men.” The institute had not yet noticed that women were making inroads into the profession.
The shortcomings of the articling period contributed to the shortage of accounting students. Most accountants were still high school graduates who could only receive their professional designation after a five-year apprenticeship that involved long hours, extensive study and poor pay at the bottom of the profession’s pecking order.
Tom Mundy was a university graduate when he began articling at the Winspear partnership, one of Alberta’s more progressive firms. “After the war, we had one adding machine in the office, but there were 30 staff, including students and CAs,” he later recalled. “If you were the lowly student, you stood aside and allowed other people to use that machine. If you had lengthy additions, you’d come in before everyone else and get those calculations out of the way.”
Mundy added, “Depending on who you worked for, you could often find yourself working until midnight. Working on Saturday mornings was standard. Even non-accounting businesses worked on Saturdays.”
If articling was still a difficult life, it is easy to imagine why. Most senior accountants were accustomed to driving their students hard – a practice that had always been part of the profession. Since the sheer volume of work to be done during the boom was great, the principals at most firms must have found it perfectly reasonable to continue pushing students hard.
After the Leduc-fuelled boom began, work was plentiful while labour was scarce, just as it had been during the war. But the job market was robust, and the exigencies of war no longer justified long hours and low pay without complaint. Other jobs were easily come by, and there were easier ways to prepare for a career. Students were more likely to squawk. And squawk they did.
Squawking
In 1954, Alberta’s Board of Industrial Relations received complaints from articled clerks and associate practising members, who felt they should be paid for their travelling time and overtime. When the board conveyed these concerns to the Alberta Institute, it also asked why a qualified CA should not accompany articled clerks when they work out of town.
Council did not believe the board should pay attention to complaints from associate practising members, opining that “these men, who were fully qualified members of a professional association, should be quite able to take care of themselves so far as salaries and hours of work are concerned, and should be prepared to work on a professional basis and not like non-professional clerical workers.” Council asked Secretary McTavish to write a letter to the Board, requesting exemption for all ICAA members from the Alberta Labour Act and Hours of Work Order. Council also mulled the question of whether the entire profession should be exempt, including students. Council later reported that the prospects for a blanket exemption were dim.
The controversy throws light on working conditions for the articling student. Council considered that the time members and clerks spent travelling outside regular hours of work “was not considered as working time but as part of the job.” They said that it was “best possible practice” for students to be out on their own. This enabled them to take responsibility for different accounting jobs, without having an experienced CA looking over their shoulders. Besides, council noted, their supervisors would review their work once it was completed.
Council directly opposed the payment of overtime, pointing out that nearly all CA firms gave bonuses to their clerks or time off for studying to make up for any overtime hours they incurred. Furthermore, hourly pay would make the clerks too time-conscious. They would not overcharge for a job done by an unduly slow student, of course, but they argued that the emphasis should be on doing a job properly rather than on concentrating on how long the job takes to complete.
The rather obvious irony, of course, is that the billable hour is the lifeblood of every CA firm. And while the controversy over the treatment of articling students continued for many years, it was not something the institute could really resolve – although in one magnanimous moment in 1956, members passed a resolution making it mandatory to pay articling students at least $100 per month.
For the most part, however, some firms treated their students well while others did not. Over the years, the former group of firms began to dominate.
Reciprocity Plus
Until 1949 it was up to each institute to decide whether members from other institutes could be admitted. Traditionally, members from other institutes were accepted without being required to take another exam or paying additional entrance fees. There was still a lack of uniformity across Canada, however, and reciprocity was not always smooth.
This caused a furor in 1954, based on the case of Lloyd C. Wright. An ex-serviceman, Wright had graduated from the University of Alberta with a bachelor of commerce degree. The Alberta Institute had exempted him from one year of articles because of his military service, and he had therefore articled for only two years. After successfully passing his Final, the Alberta Institute admitted him as a member. Later, the BC Institute did so as well. However, when he sought membership in the Ontario Institute, he was turned away because of insufficient practical experience.
Outraged, council protested Ontario’s decision and eventually referred the matter to the CICA. “Every Institute had made some kind of concession due to the war, so it made a beautiful test case,” according to then-secretary McTavish.
The Alberta Institute has always been a strong supporter of full reciprocal relations between provinces. The concern that Wright’s situation raised was the possibility that other provincial institutes might not accept Alberta members who had been admitted after applying to Alberta’s unique academic and experience appraisal boards. This put reciprocity in jeopardy. It was time to take a stand.
In 1956, the Alberta Institute presented its view at the CICA’s spring meeting and asked the other institutes to consider “that a reduction in the terms of practical experience arising from war service should not alone constitute a reason for refusing to admit an applicant from another Institute.” In the end, Alberta’s appeal was successful; Wright was admitted to the Ontario Institute. This was an important precedent for the profession. It helped the profession keep intact the principle of national reciprocity, a principle that was already more than half a century old.
Of course, reciprocity can take many forms. In 1952, several Manitoba students applied to transfer their articles to Alberta. Since the Queen’s course had recently altered its method of instruction, this transfer could save them a full year on either articles or course of instruction. After extensive discussion, council agreed not to accept the students “unless they are able to meet the regular preliminary academic standing or had passed the Intermediate Examination.”
While this item was small on an often-cramped agenda, it illustrates that there was a need for nation-wide education and training standards. Mooted many times over the years, that pursuit was the object of many of the institute’s efforts during the 1950s.
Regulatory Legislation
Other efforts were directed toward provincial regulation of public accounting. Because of competition from other professional accounting associations, many CAs were beginning to feel that their profession was losing undisputed leadership in the field. Since the Alberta Institute was the only one with a provincially legislated professional designation, ICAA took upon itself the task of seeking new legislation that would bring order to the ranks of Alberta’s accounting community.
In 1947, Gordon Burton urged council to draft an accounting regulation act, which would reserve to CAs the exclusive right to practise. He reviewed the British, American, Quebec and proposed Ontario acts and, with ICAA President Les Munn, attended a meeting in Toronto to discuss the logistics of creating such an act. The approach taken by Quebec seemed to be the most preferred, with the British approach considered second best. After recommending that Alberta base its act on Quebec’s, Burton was appointed to head a committee charged with drafting such a piece of legislation for discussion with the government. With the proposed act written and members having had an opportunity to offer their comments, President Jim Duncan took the proposal to Premier Manning in 1948. Manning strongly discouraged the institute from presenting the bill to the legislature, however, and it was subsequently dropped.
Eventually, it became necessary for the institute to cooperate with the governing bodies for the RIAs, the CPAs, the APAs and the Comptrollers Association. Efforts to get this process rolling had been under discussion since at least 1947, when T.R. Humphries, the president of the Alberta chapter of the RIAs, wrote to council asking for recognition of their society.
Council notified him that they would give the matter further consideration if the Alberta chapter would restrict the use of the RIA designation by public accountants. Several months later, Humphries reported that the organization had changed its by-laws so its members were not allowed to use the RIA designation when they practiced public accounting. Accordingly, council agreed to approve that society. Henceforth, CAs might join the Alberta chapter of the Society of Industrial and Cost Accountants under the provisions of rule 21 of the code of ethics.
While council made short steps forward like this one, in the public eye there was considerable confusion about the accounting business. While most accountants understood the internal workings of the profession, there were internal problems. For example, many courses were being offered to accountants and accounting organizations, frequently using similar instructional materials. According to council’s minutes, “in a single university three separate programs of accounting training were being followed by three separate sets of instructors for three different accounting groups and all three programs had approximately the same instruction material.”
The profession tried different approaches to cleaning up duplication. For example, council considered joining with other accounting bodies, such as the cost accountants, on matters of research and education. As we shall see, the legislative process would not resolve the structure of the broader accounting profession for years to come.
Ever Higher Education
Education was becoming more complex and, as we have seen, Alberta had become a magnet for immigrants and other newcomers. An increasingly complex economy increasingly required accounting expertise. The need to manage this demand was perhaps the institute’s most important task in the post-war years. During that time, the university became an important centre for CA education.
This was partly because the war had alerted policy-makers to the economic and industrial potential of an educated workforce. A federal program enabled 53,000 Canadian veterans to enter university between 1944 and 1951. This program directly affected articling accountants taking the Queen’s course.
The Department of Veteran Affairs paid a portion of an ex-serviceman’s fees and provided him with a monthly income – up to $60 per month for a single man. To comply with Veteran Affairs requirements, in 1945 the institute set a minimum wage for these students. They were to receive at least $40 per month with an increase of $10 per month each year. The annual increase enabled the government to progressively reduce its obligation to the student. While a veteran’s monthly income (including both government stipend and articling clerk’s salary) could not exceed $135 per month, this was an enormous improvement over the genteel poverty prescribed for articling students in earlier years.
Many students were entering the profession after the war, a phenomenon that encouraged provincial institutes to evaluate their educational standards and course content. In 1950, the Dominion Association considered forming a committee to discuss these issues. And once again, DACA raised the possibility of setting up a national course of instruction based on the Queen’s course.
The ICAA agreed that if all provincial institutes were represented on the committee, whether or not they were participating in the course, “this would arouse more interest in the course and be a means of having all Institutes eventually accept the course.”
In 1952, the Queen’s course became the Chartered Accountants’ course of instruction, and the Ontario Institute set new regulations the following year. When ICAA adopted the same regulations, council did not realize the potential havoc that would flow from a rule that each student could submit no more than one lesson per week. Because of this, a large number of Alberta students would technically not complete their lessons by the deadline. They would therefore be in jeopardy of being disqualified from either taking their exams or taking subsequent years’ courses, or both. Due to the “emergency nature” of the problem, council members called the students to inform them they would be allowed to take their exams this time but the new regulations would be “very strictly enforced” in 1954.
Council worried about a report from the Alberta Board of Examiners. The exam markers had “expressed concern with the poor quality of letters and reports in the examinations judged in terms of presentation, form, and grammatical construction.” Since the CA program did not include an English component, Alex Hamilton was asked to head a committee to consider what action to take.
The committee soon affirmed that, in their view, the ICAA did not require a high enough standard of English from its candidates. They recommended that a general English course be required for first year students, followed by an exam. Beginning in 1953, all students who were articling for five years were required to take the English course; no exceptions. Instructors were hired to lecture in Edmonton and Calgary. Students outside those cities took English the same way they took the Queen’s course – through correspondence. The first year, approximately 70 students took the course. Since it was an experimental program, those who failed the English exam were not required to retake the course.
That same year, the Board of Examiners raised another disturbing fact. Alberta students had received a very low percentage of passes in 1953 in the Intermediate Exam (28 per cent). President Andrew Stewart of the university expressed dissatisfaction with the Alberta exam results over the previous several years and recommended that council do something. But the institute had already taken steps to improve the situation.
Students had long complained about the Queen’s correspondence course, grumbling in particular that assignments were returned to students long after they had been turned in. Emboldened by what they took to be the success of the English course, the Alberta Institute borrowed an idea from the Manitoba Institute. In the latter province, the institute used the course material from Queen’s, but marked the lessons themselves.
Thus came about one of the most important developments of the 1950s – the Alberta Institute’s decision to take administrative control of the Queen’s course within the province. The process began in 1954, when member Joseph Simonton prepared a report based on his investigation of the procedures being used in Manitoba and BC. His recommendation was simple: set up a lecture program for first-year students.
After deliberation, council decided it would be as easy to set up the program for the first three years of instruction. Accordingly, Alberta took charge of those years. The institute would use the material from the Queen’s course, but would arrange for instruction and marking within the province.
ICAA soon had a course to call its own. Classes were held on Saturdays and cost students $100 per year. This included their books and a subscription to the Canadian Chartered Accountant magazine, although in 1955 the policy changed so that students were required to pay $3 to receive the magazine. The $10 English course was billed separately. Students living outside Calgary and Edmonton would still learn accounting through correspondence. But most considered the new arrangement a vast improvement over the previous one.
To administer the courses, the institute hired a director in Calgary, who was paid $40 per month. The Calgary director, Ross Alger, later became the city’s mayor. The Edmonton director received a higher wage ($60 per month) because he was responsible for managing the students who lived in smaller cities and towns.
Students were required to turn in their lessons one week prior to the lecture on that subject. In 1955, 50-cent fines were imposed for late lessons. However, “the actual procedure of levying and collecting fines was up to the officials in Calgary and Edmonton.” As a result, fines were levied in Edmonton but not Calgary in 1955. It was therefore “agreed that if fines were imposed in the future, the first fines should be imposed early. Mr. Richards urged that no late lessons should be accepted unless a 50 cents remittance was attached.”
Lethbridge students greatly opposed the fines, arguing that they often received their assignments one or two days late and that the return of assignments could take up to four days longer than those received in Calgary or Edmonton. Acknowledging the justice of their complaint, council decided to make special concessions. To determine whether a lesson was late, the markers would check the lesson’s postmarked date.
Those who did not attend the lectures were required to explain their absence, their principals being notified after two absences. Council’s reasoning was that this would encourage the principals to take more responsibility for the educational component of their students’ training.
In 1955, council, which wanted the university to administer a formal examination as part of the CA program, tried to make the English course mandatory. While council may have believed this idea to be noble, the university would have nothing to do with it.
University president Dr. Andrew Stewart insisted that an exam should not be required, “because it would be an additional barrier for entrance to the profession.” In his opinion, English courses were to help students pass exams in other subjects. Thus, the university was not prepared to provide an examination in English, and examinations were under the sole control of the university. Instead, Stewart suggested that a term test be given at the end of a series of lessons in English – a test that would be prepared and marked by the instructor.
The university’s refusal to cooperate with a compulsory exam gave council little choice. English did not become a formal requirement. Instead, council suggested employing the “persuasive power” of council, the Education Committee and the principals themselves on students who did poorly in English tests. Formal examination or not, council maintained that if a student received low marks in English it was an indication that “such a student needed remedial training and possibly was not a suitable person to proceed with professional training at all.” So the institute required the instructors to administer one-hour term tests. The university had suggested this measure to eliminate doubt as to whether students were doing the work on their own or copying it out of textbooks.
The matter of English usage rankled for many years. In 1958, the institute presented a brief to the Cameron Royal Commission on Education. According to the Alberta Institute, there was a crying need for more instruction in English usage, and for better and more extensive training in handwriting in public schools. In addition, there should be vocational training to guide high school students into taking the senior matriculation course; this would create a larger pool of suitable candidates for accounting and the other professions. According to the institute’s annual report, this submission was well received.
Extending the Lecture Program
Despite its setback with the university over an English requirement, council concluded that its first year with a provincial training program had been a notable success. Accordingly, council extended the lecture program to four years for the 1955-56 school year.
In that year 190 students took the ICAA’s course of instruction, 40 more than expected. Simonton reported that the Calgary lecture program went better than the previous year, especially in regard to late lessons and attendance. Herbert Nield added, “The fourth year lectures were unusually well received, particularly Mr. Hagerman’s lectures on cost accounting.”
By contrast, Haughton Thomson reported serious problems in Edmonton with the fourth-year course. It seemed that half the class had submitted all of their lessons at the last lecture rather than, as prescribed, one before each lecture. Many were on the verge of being suspended. As they have since the beginning of school, students gave imaginative excuses for incomplete homework – one of which was the need to attend a Grey Cup game.
For the first three years, the courses went smoothly. However, council still debated which law and economics material to offer. They also wanted to bring more information to the students about professional ethics and the institute’s history and development. But Alberta’s articling students spoke with their seats on this issue.
They only filled 16 seats in Calgary, when Kenneth Morrison gave a lecture about ethics, by-laws and the history of the profession. They filled another 15 seats in Edmonton, when Winslow Hamilton gave a similar lecture. Thus, of the 57 students who took the UFE that year, a slim majority had attended these lectures. Although the effort was deemed worthwhile, council was deeply disappointed with the poor turnout.
In general, though, council was pleased with the results of its training program. But they hoped it would soon be time for universities to take over the education of chartered accountants.
In 1955, the University of Alberta had suggested a four-year bachelor of commerce program in accounting, with one year of post-graduate articles. Council, however, believed that practical experience was indispensable.
Alex Cairns was a powerful figure at the U of A. Registrar for the university and secretary of the Board of Examiners, he maintained that one year’s practical experience would be sufficient. Council no doubt wondered how a non-CA could make that judgment. In their view, three years was “if not absolutely essential, highly desirable for the development of the student himself.” According to council minutes, “no one supported the principle of reduced experience with or without specialized accounting training at the University level. It was further pointed out that additional university training and possible consequent reduction in the term of articles, would make University students less useful and less attractive to practising offices because offices would not want to article students for only two years.”
Eric Connelly suggested that the university’s bachelor of commerce program and the ICAA’s CA course could eventually be combined, as they already were in BC. Not yet, however.
The university agreed that the institute should continue with its lecture and marking program, at least for the time being. However, the university raised two serious concerns. First was that the ICAA’s instructors were “grossly underpaid.” Second was that accounting students were paying the entire cost of their education. This stood in contrast to the situation in other professions, whose students could use university faculty and facilities. By relying on institute-sponsored professional training, accountants were forgoing “a very considerable subsidy toward [their] training from the public.”
Council took these comments very seriously. However, it would take time to find a balance between the practical requirements of the profession and the university’s proposed accounting program.
Advertising, Again
Newspaper advertising was still a primary vehicle for promotion, and image was important to the institute. As the head of the Public Relations Committee, Eric Connelly received a $500 budget in 1951, and was asked to contact someone with advertising expertise. Having done so, Connelly suggested, “for effectiveness, advertising should be carried out over a longer period of time.” The following year, council set aside $1,400 for a newspaper campaign. The plan was to include 10 insertions in each of Alberta’s daily newspapers.
Not only was the institute experimenting with advertising; so were members, and with mixed reactions. Some questioned the ethics of an Edmonton firm that had advertised on the radio. Considering that past conflicts over advertising had sometimes been vituperative, council’s reaction was surprisingly subdued. This “use of advertising is new and different but not necessarily unethical,” they ruled.
Neither did council complain when, in 1953, John White placed an ad that included his photograph in the Edmonton Journal. To the contrary, that was the year council decided to include photos and short bios of all the final candidates when the exam results were published in the newspapers. Clearly, times were changing.
Changing times
In fact, the changes Canadians experienced in those days were so sweeping that they are hard to even imagine today. Television overwhelmed radio as a mass medium, and air travel became relatively common. Easy long-distance telephone calls helped stitch the country together. Other amazing infrastructure began to develop. These included the Trans-Canada Highway and the St. Lawrence Seaway, which would open up the economies of central Canada to global trade and lower the cost of exports from the west. These years were a period of astonishing economic growth and social change.
For years to come, the Alberta accounting profession would be affected by the outcome of rumblings in the Middle East during the 1950s. Middle Eastern oil producers were developing political and economic strength. As we shall see, this would combine with a number of twists of fate and policy to create energy and tax policy, compliance with which would strain Alberta’s accounting community. One global crisis in particular had long-term implications for Alberta’s political and business communities.
The episode began when Egyptian President Nasser seized the assets of the Anglo-French Suez Canal Co., which had constructed the canal in 1869 and operated it from that time forward. Britain, France and Israel plotted to take military action against Egypt, and the Suez Crisis was born.
The United States, Arab countries, the Communist bloc and individual nations around the world fiercely opposed the actions of the two colonial powers and their Middle Eastern ally. Canada proposed (and the UN supported) the creation of an international peacekeeping force “to secure and supervise the cessation of hostilities.” This move turned Canada into a force for world peace and earned a Nobel Peace Prize for Lester Pearson, who later became a Liberal prime minister.
The geopolitics that began with the Suez incident would decisively affect crude oil policy within Canada a few years later, when the Diefenbaker government announced the National Oil Policy. In the meantime, Alberta would invest in developing the natural gas business.
“The era of the accountancy generalist came to an end when clients began to make demands for special skills not every accountant would be able to offer. One of the first came with the rising scope and complexity of taxation [after the Second World War]....The tax jungle grew fast and thick. Taxes were not only complex in themselves; new taxes, or amendments, arrived in an ever-flowing stream....The accountant, if a generalist, was as likely to get lost in the jungle as his client.” – Edgar Andrew Collard, 1983
Chapter Seven — Birth of the Modern Era: 1957-63
In the spring of 1956 came a phenomenon unlike anything else in Canada’s public life. For the entire month of May, the House of Commons was in an uproar over the proper routing for a natural gas pipeline. Parliamentary rancor went on until the early hours of the morning.
Unofficially known as the Great Pipeline Debate the affair helped drive from office the St. Laurent Liberals. John George Diefenbaker ’s Progressive Conservatives replaced them.
Strange as it may seem today, the issue behind the uproar was whether the TransCanada pipeline should be routed to Ontario markets through the United States or through the rugged Canadian Shield. The nationalists – in this instance, the Conservatives with their “northern vision” – argued that natural gas was too important a strategic commodity. The government must not risk transporting it through foreign soil.
So much natural gas was bottled up within Alberta that it sold for pennies per thousand cubic feet. To make the business economic, pipelines were desperately needed. But reserves development, regulatory concerns (expressed by both Canadian and US agencies), Parliament’s territoriality issue and haggling among pipeline project consortia meant delay after delay in construction approval.
Those obstacles overcome, in 1957 Westcoast Transmission and TransCanada PipeLines both completed their final welds and, respectively, began shipping gas to markets west and east of Alberta. Together with Alberta Gas Trunkline, they formed the nucleus of Canada’s export pipeline infrastructure: from Alberta westward to the lower mainland of BC and the US Pacific Northwest, and eastward through Saskatchewan to Manitoba, Ontario Quebec and adjacent areas of the United States. For political reasons, export pipelines would purchase their gas supplies from shippers on the trunkline at connection points on the Alberta border. The construction of gas pipelines enabled Alberta to begin reaching maturity as a petroleum-producing province.
Demographics, Technology and Organization
In the late 1950s, three developments of quite a different nature began to change Alberta’s accounting profession. They were, in no particular order, demographic, technological and organizational. All three can be illustrated from developments that took place in the year 1958. Together with changes to CA education and increasing specialization, they helped give birth to the profession’s modern era.
Demographics: For the first time, two women joined the institute’s female contingent in a single year. Of these two women, Ada Saunderson and Marj Little, the latter married a CA – thereby becoming a partner in Alberta’s first married CA team. Clearly, times were changing.
In addition to these women and pioneer Dorothy Reid, other female members now included Winnifred Dolsen (Saskatchewan, 1949; Alberta, 1957) and Shirley Walker (1953). Although these women accounted for much less than one per cent of total membership, they were the edge of a wedge. By the end of the century, women would make up 50 per cent of new admissions. Yet, as we shall discuss elsewhere, attaining full equality with their male peers would require change in many areas.
Technology: In 1958, Provincial Auditor Keith Huckvale began the Alberta government’s first serious study into using computers. When the province began exploring the advantages of a computerized payment system, there was no question where the system would be located. Still in effect was a provision of the Treasury Department Amendment Act (1924) requiring that cheques be written in the Audit Office. It therefore followed that this office would have control of the government’s computers. Those huge, primitive machines were the advance guard of a technological revolution that no one could have imagined.
Alberta’s Data Processing Centre was originally created and operated under the control of the provincial auditor. Bill Rogers, Bob Gehmlich, Milt Fair, Dean Cooper and Ken Smith (all CAs in the Audit Office) worked with 11 others representing various government departments. This team helped pioneer uses for the new equipment, which went into operation in 1962.
The six major systems first used on the government computers included financial programs plus systems for motor vehicle registration and the issuing of drivers’ licences. Almost from the beginning, the government’s Data Processing Centre operated 24 hours a day, seven days a week. In time, it came to handle such applications as billings for Direct Distance Dialing for Alberta Government Telephones, payments and premium billing for Alberta Health Plan, Medicare and other government bureaus. From 1962 to 1975, this branch of the Audit Office handled virtually all data processing for the government and grew to employ some 500 staff. The centre was then transferred to the Department of Government Services, with Bob Gehmlich in charge.
Computer memory was hugely expensive in those days. To conserve this resource, programmers wrote code that would let the last two digits of the four-digit year code represent the entire year. This would cause alarm in the pre-millennium world four decades later. Incredibly, lines of computer programming written during those early days were still enmeshed in working computer programs. One outcome was the “millennium bug,” a computer problem that businesses and governments worldwide would eventually pay hundreds of billions of dollars to fix.
Organization: The late fifties was an era of mergers and combinations within the profession, and a period of expansion into new fields. For example, at a meeting of partners on April 15, 1958, P.S. Ross & Sons agreed to merge with George A. Touche & Co, of Chicago. So doing would begin the creation of an accounting giant, Touche Ross & Co.
International accounting firms evolved early in the profession’s history – to a large extent, because business has long needed out-of-country audits. P.S. Ross & Sons was already an international firm, with offices in Canada, the United Kingdom and the United States. But, said the man who then filled the chair of the firm’s management committee, Guy Hoult: “The fact remains that we are relatively weak for a national firm outside of Montreal.” A combination with the US firm, which also had Canadian offices, would make sense. The merged entity had better coverage in Canada, and a strong international presence.
In a separate development, the following year Francis Winspear’s firm merged with a number of other Canadian practices to form Winspear, Higgins, Stevenson and Doane, with a strong presence in every part of the country. Shortly thereafter, further negotiations gave the firm a presence in two dozen other countries.
There were many announcements of regional and national mergers during the 1950s, and there have been countless others in the decades since. Because the world economy was becoming quite complex, larger firms were developing specialties in international trade, for example. They began taking on other business – information systems; computer auditing; mergers and acquisitions advice; and management consulting.
By the end of the century, the firms being combined were sometimes breathtaking in terms of both size and influence. After several iterations of change – which included a merger of Deloitte, Haskins and Sells with Winspear, Higgins, Stevenson and Company, – Touche Ross had morphed into one of the world’s five largest accounting firms, Deloitte Touche Tohmatsu. The other four include PricewaterhouseCoopers (PWC), Ernst & Young, KPMG and Arthur Andersen. And their businesses have become so diversified that non-accountants are an increasing presence. Specialization is the order of the day.
There are natural synergies between accounting and other business services. As these firms demonstrate, accounting partnerships can become huge. One reason is that rules within the profession have not greatly restricted the business services that accounting firms can provide. The staple diet of most early practices, audit has progressively become a less important part of the accounting firm’s business.
Compare this state of affairs to that of a sister profession. Bar associations are the major English-language governing bodies for lawyers. And they have traditionally ruled that legal firms must not engage in multi-disciplinary practices. As a result, law firms tended to remain regional until the end of the century, when a period of consolidation set in.
Sidebar: An Enduring Legacy
Photo caption:
Elvin Arnold Christenson, FCA
ICAA President, 1962-63
CICA President, 1976-77
In a number of places, this history has recounted parts of Elvin Christenson’s career. As we have seen, during the Second World War he actually managed and operated a CA office in Edmonton as a student. The Alberta Institute’s council pretended to look the other way, provided he didn’t fail any exams. If he did, council agreed, they would have to shut down the Edmonton office he managed.
Elvin Christenson became a CA in 1944. Five years later, he teamed up with Calgary-based Joe Simonton to form a two-city, two-office practice, Christenson, Simonton & Co. Simonton departed in 1957, and the firm became Christenson, Morrison & Co, which was one of the largest CA firms in Alberta by 1966, with 80 on staff 80. A merger in that year created Thorne, Gunn, Helliwell and Christenson; another in 1974 made his firm part of Thorne Riddell & Co., then the largest public accounting firm in Canada. The firm became part of KPMG LLP in 19xy.
Christenson was a member and chair of the Credit Union Deposit Guarantee Corporation, which oversaw the restructuring of Alberta's credit unions after financial collapse in the mid-1980s. He was also a member of the Audit Committee for the Province of Alberta (when?). In May 1996, he retired from the provincial government's Health Disciplines Board after 13 years' service as chair.
Christenson served as ICAA president in 1962-63. During this time, he introduced the "Past President's Dinner" for all past presidents and their spouses. The event has since become the annual FCA Dinner. In 1968, he was founding chairman of the Pacioli Dining Club, a black-tie event for Edmonton CAs over 40 who meet once a year to share in "the highest order of facilities, food, and drink." Similar events now take place in Calgary, Toronto and other Canadian centres.
Christenson served as CICA president in 1976-77. During his tenure, Christenson warned publicly of the dire consequence of government overspending. A voice in the wilderness, he had to wait two decades for most Canadian governments to trim their deficits.
A farm boy whose mother ran a boarding house in Edmonton so she could afford to send her two children to high school, he has been a strong believer in education all his life. He was the first chair of the Chartered Accountants’ Education Foundation. And although his own firm joined one of the world’s accounting giants, he has always been a strong advocate for the sole practitioner. As he once declared, “Large firms should lend a helping hand to the small ones, or the small firms will be taken over by a few large, fiercely competitive firms. If that happens, we’ll stop being a profession. We’ll become an industry, God forbid.”
According to the firm he helped found, KPMG LLP, “We are proud to have Elvin Christenson recognized for his many contributions to the ICAA. His legacy to Alberta’s accounting community will continue to endure.”
KPMG LLP Chartered Accountants
Governance
The process that led to the highly diversified accounting firm goes back many years, and it includes a major change in the governance of the profession. But the signs of these changes were already apparent as the 1950s drew to a close. “The chartered accountant is no longer a dusty fellow who adds up figures,” observed CICA president John Wilson in 1960. “He is an economist and management consultant.” Nor was the profession’s changing character lost on the media. According to the Edmonton Journal, “The chartered accountant of tomorrow may well be a neat young man in a dark blue suit whose polished briefcase holds solutions to a dozen of his community’s major business problems.”
But this anticipates later events. With rising membership and an increasingly complex profession, the Alberta Institute faced several important issues in 1957. Council’s workload had increased and three seasoned members (John McClary, Herb Nield and Clarence Richards) were facing the end of their terms according to the provisions of By-law 16, which limited council members to six-year terms.
Accordingly, council decided to increase the number of council members from nine to 12. In the discussion of this point at the annual meeting, the members present learned that Alberta’s nine-member council was the second smallest in Canada. The number of council members had been established in 1927, when Alberta’s membership was only 94. Accordingly, the 1958 annual meeting elected the institute’s first 12-person council.
The by-laws governing council terms went through a solid evolution during the late 1950s. By-law 16, which enabled those interested to serve for six years, made it relatively easy for a council member to become president during his term. This was now problematic, as council explained when they proposed a change to the by-law in question: “The result was embarrassment for all and especially for the few individuals who under the by-laws did not have time to get that far.”
To ensure that members did not think they would automatically ascend to the top job after being elected to council, this by-law was amended in 1957 to provide instead for a five-year term. This would give elected members a reasonable term to serve on council while providing for slightly more rapid turnover. In 1960, the by-law was again refined to provide that, if the vice-president had served five years, he would be eligible for re-election as president rather than forced to retire. This would enable him to serve a term as president.
Although the larger council increased the institute’s costs slightly, the new structure spread the work out among more people. Committees took on more responsibility, to take the load off council. Even so, the institute’s volunteer structure increasingly appeared inadequate. Alberta had Canada’s fourth largest institute – after Ontario, Quebec and British Columbia. Council began to consider establishing a full-time institute office and staff.
Several by-law amendments had simplified the administration of the institute and its admission practices. For example, Canadian citizenship was no longer required for membership or articles. It had been difficult for council to administer the citizenship regulations fairly. Taking its lead from other institutes, ICAA abolished citizenship requirements in 1957.
The age limit for articled clerks was also removed. During the days of lower academic requirements and four to five years of articles (a period that stretched from 1916 to shortly after the Second World War), the institute had also required that a student be at least 17 years old. The Alberta Institute argued that now it was unlikely for a person to obtain senior matriculation prior to his 17th birthday. But even if he did, “he would be an unusually bright type, and should not be discouraged from taking articles.” This was also consistent with the practice at the institutes in New Brunswick, Nova Scotia, Ontario and Quebec. Those provinces did not have age limits for articling students.
Reciprocity with Britain went into reverse with an amendment to By-law 64. Effective January 1, 1958, accountants from the United Kingdom were to be assessed by the university and the Experience Appraisal Board rather than be automatically admitted to the Alberta Institute. Accounting and auditing had developed independently in the United Kingdom and Canada, council pointed out. Training in the two countries was therefore not necessarily equivalent. In addition, the United Kingdom institutes did not automatically admit Alberta members. So why, they asked, should ICAA admit theirs? Another of Canada’s ties to Britain thus unravelled.
Given the historical ties between British and Canadian accounting bodies, it is noteworthy that reciprocity between the two countries remained an issue as the century wound down. In the late 1990s, the UK’s Department of Industry denied licensing status for Canadian CAs because British ACAAs were not eligible for reciprocity in this country. By 1999, a number of Canadian institutes had either implemented or threatened to implement by-laws that would deny reciprocity to British CAs.
A by-law amendment of quite a different type made chartered accountancy more attractive to bachelor of commerce graduates. This amendment simultaneously reduced the years required to article after graduation and gave university students practical experience. The way it worked was simplicity itself. Half of the practical experience obtained between graduating from high school and leaving university would be counted toward articling. Therefore, it was possible for university graduates to write the UFE just two years after graduating, rather than three.
The institute wished to put more compulsion on students to finish the course of instruction “properly.” For the first time, the three aspects of the training program were tied together: articles, exams and the course of instruction. Council resolved that, if a student were suspended from a particular course, he would not be able to pursue his articles. This led to a tightening of the screws during the 1958-59 school year. Students who fell behind in their exams or courses would now be suspended. “Any time spent under these circumstances is not recognized by the Institute as satisfactory practical experience,” council declared. Clearly, to become a member it was not nearly enough merely to spend time in the office of a practising CA, as had occurred with some frequency in earlier years.
Semi-centennial
The institute celebrated its 50th anniversary in 1960. That year’s annual report noted quite quotably that “Without forgetting the bounteous natural gifts which have been bestowed upon Alberta and which have contributed so much to its economic growth, members can well take pride in what has been achieved by the Institute, in this half century, and the stature which our profession has attained in this Province.”
A serious failure of communication showed itself at the annual meeting’s dinner and dance that year when the orchestra did not appear. Leaping to the occasion, Gerry Pearson and his wife, Margaret, went to the piano to play dance music for other members and their spouses. Urgently summoned, a drummer and an outside pianist eventually arrived. The festivities continued.
The Alberta Institute celebrated its semi-centennial by again hosting the national institute’s annual conference. A committee of Edmonton members under the chairmanship of Gib Gee planned the gala event, which (in keeping with a long tradition) again took place in Banff.
Education
Educating students remained the most important and demanding aspect of the ICAA’s activities. Since the 1957-58 school year, all five years of the instruction course were now handled in Alberta. While most of the administrative problems associated with the education program were resolved, two still remained.
The first was manpower. It was becoming increasingly difficult to persuade enough members to conduct lectures and mark exams. The program went into near crisis after 1958, when 361 students were taking the courses of instruction. In that year approximately 100 persons were involved in lecturing, marking and administering the courses. The following year, only 65 people helped administer the program for a much larger contingent: 423 registered students.
The institute also faced the challenge of financing the educational program. Because of the addition of the fifth-year course and a decision to increase pay for those who marked the exams, the training program began to show a deficit. The effect of this deficit, of course, was to transfer the financial burden to the entire membership. The institute’s 1957 annual report discussed council’s recommendation that markers get an increase in pay, and pondered the question of “who should bear this additional financial burden – the students, the practising members, the resident members, or the membership as a whole.”
Initially, the institute helped finance the course of instruction with a $5 “subsidy” paid for each articled student from the principal’s membership fees or by the registered student himself. Alberta discontinued the subsidy with the 1959-60 year.
The events leading up to the subsidy went back several years. They were closely tied to the institute’s decision to administer the Queen’s course. The institute found itself very seriously in the education business, but with almost phantom resources. The program had hired two directors, and young accountants and other students were paid to mark exams. Classes needed to be organized, teachers and lecturers found. Volunteers did a great deal of the work.
In 1956, the institute expanded the review classes so that all Calgary and Edmonton students taking exams could attend. Council assisted Intermediate students who lived outside Edmonton and Calgary to come to Edmonton for a two-day review program with the instructors who had been marking their work during the year. In addition, professors J.D. Campbell and Denis Goodale conducted review programs for UFE candidates – programs the students obviously appreciated, since they wanted more.
According to the 1958 annual report, review classes had been discontinued because of the costs involved and “the questionable nature of the results that can be achieved in the brief time it is practical to devote to such classes.” Council also felt that the institute should not take from the principals too much of the responsibility for training the students.
Despite these challenges, there was a general feeling that “the instructional program is now more effective and satisfactory than the system based entirely upon correspondence instruction.” The students in Calgary and Edmonton seemed to enjoy the weekly contact they had with their instructors and peers. Those outside these cities, who were taking the instruction course by correspondence, also realized some benefits. They were now receiving their marks more quickly, and many had the option of taking classes put on by practising chartered accountants in their own communities. Council encouraged principals to get involved in the courses by lecturing and marking papers.
Although the program was considered more effective, the institute saw no significant improvement in exam results. For the 1957 uniform exams, the percentage of passes in Alberta in the Intermediate Exam and the UFE was approximately 40 per cent – lower than most of the other institutes.
The ICAA constantly reviewed the instructional program, but generally believed it to be the most “practical approach” the institute could take to meet its responsibility to those entering the profession. During the 1958-59 school year, there was a change in the way the courses were conducted. Those who marked the exams had always spent a great deal of time going over the students’ assignments. “This was a monotonous chore, and appeared to be something of a wasted effort, since the assignments consisted largely of a reproduction of material covered in the textbook and lesson material...,” according to the 1959 annual report.
Starting with the 1958-59 school year, the assignments were checked only occasionally. Instead, students were given a short test each week, based on the weekly lessons. During the 1961-62 year, the weekly tests were discontinued for the last four years of the courses; more emphasis was placed on term exams. Students were suspended from their articles and the course of instruction if their scores failed to meet the standard.
In the late 1950s the institute completely re-organized its ties with the university. Council examined all assessments made by the university. The Experience Appraisal Board made appraisals with a particular eye to an applicant’s suitability for high professional standards. Council was satisfied with the assessments made but maintained an attitude of “constant vigilance.”
One of the dominant features of the latter 1950s was another bout of activism in upgrading standards of training. During the 1959-60 year, a new ICAA committee began to address the institute’s role in respect to training standards in practising offices. According to the report subsequently prepared by the Committee on Standards of Training in Practising Offices, “The institute was particularly concerned about the minimum standards of practical experience received by students in small firms outside major business centres.”
John Bowles chaired the committee, which in 1962 issued a report that recommended an inspection system. This would require a new by-law, which was duly passed. But as we shall see, it took years to complete the process.
Continuing Education
While training standards were critical, so was continuing education. Under the appellative “professional development,” continuing education would soon become an extremely important focus for Canada’s CA institutes.
The institutes had long been holding seminars, workshops and conferences for their members, of course. But the 1950s saw the beginnings of an explosive demand for such sessions – demand that was tied to society’s growing emphasis on higher education. But CICA became aware of this growing phenomenon through the efforts of its Co-operation Committee. This committee had been created in the mid-1950s to enable all of the CA institutes to work together and with other accounting bodies. In the category of other bodies, of particular note was the Society of Industrial and Cost Accountants, which had historic ties with the Canadian Institute.
According to the minutes of the committee’s report to CICA’s 1959 annual meeting, “it had soon become clear...that the CICA’s position in regard to continuing education would have to be clarified before any co-operation with the S.I.C.A or other accounting groups could be achieved.” The committee had therefore appointed a Continuing Education Sub-committee to focus on this issue. The sub-committee found that large numbers of accountants believed the Canadian Institute should be involved in continuing education.
The members acknowledged the need for professional development. However, they were not sympathetic to a frequent complaint from recently qualified CAs, who said they sometimes found themselves unprepared for their duties when they took posts with industry. At a CICA council meeting in 1959 Continuing Education Sub-committee chairman Charles Mackechnie took the floor. He suggested that these accountants “naturally tend to blame the profession for this situation, whereas in many cases their major deficiency is a lack of maturity, and the judgment which comes with it, which can only be gained through greater experience.” That said, Mackechnie opined that young men would perhaps remain in the profession longer if they had the opportunity to further their development through continuing education.
The American Institute had already initiated a long-term professional development program and the United Kingdom was investigating the idea. In addition, the Society of Industrial and Cost Accountants had already embarked on a training campaign. CAs were enrolling in these programs, thereby taking part in the professional seminars of a competing organization.
The institute did not begin holding technical sessions without debate. One argument was that most members “were quick to pay lip service” when it came to holding refresher courses and technical sessions, but had given little support to these programs in the past. The prevailing notion, though, was that this attitude needed to change. The profession was now becoming larger and more specialized, and it was becoming increasingly difficult to stay abreast of professional developments, particularly tax law. Accordingly, CICA passed the appropriate resolutions and began financing a formal program of continuing education.
Of course, provincial institutes like ICAA had been arranging continuing education programs at one level or another for years. For example, in 1957 the Alberta Institute had expanded its offerings of technical sessions. However, continuing education now began to gain momentum.
The Alberta Institute’s Continuing Education Committee and the University of Alberta’s extension department soon made arrangements to hold a seminar for members. Chaired by Herbert Hartley, course dates were November 7-11, 1960; the Banff School of Fine Arts was the venue. Topics included “Management Reporting,” “Problems of a Small Practice” and “Income Tax.” Those in attendance received the program well. The following year, 33 members attended the second such event. Topics included “Estate Planning,” “Ethics” and “Financing a Business.”
Membership issues
The control and development of the profession was an important issue. In Alberta, control was now divided among the Alberta council, the university and the Experience Appraisal Board.
Council had always assumed it had the power to assess the standing of those who applied for membership to the Alberta Institute on the basis of membership in another institute. But after careful scrutiny of the by-laws, in 1957 council found itself obliged to accept any application for membership from a member of another Canadian institute. The members considered it imperative to amend the by-laws to regain the right of review. While national reciprocity was important, it must not be blind.
Council has never lost sight of the profession’s educational requirements, which have always been such an important aspect of entering the profession. As we have seen, from the institute’s earliest days it has been clear that education would determine the direction the profession would take.
Alberta therefore welcomed CICA’s establishment in 1957 of a long-range educational planning committee, headed by Clem King. ICAA vice-president Joe Simonton represented the Alberta Institute. Among the recommendations in the committee’s report was the notion that, by 1970, the minimum educational requirement to become a chartered accountant should be a university degree. Although this stirred controversy within the profession, many members of the Alberta Institute agreed with this recommendation. The committee also prepared a suggested syllabus for students that would be used in 1970.
The University of Alberta extended the bachelor of commerce program from three to four years in September 1960, the same year the School of Commerce became a faculty. The general educational content was increased and became more diversified. For example, personnel, finance, production and marketing were added to the accounting and economics concentrations already offered.
Professional Conduct
The Alberta council dealt with many ethical matters during the 1957-58 year. Four members were reprimanded and one, Thomas J. Rafter, was expelled. (Rafter was reinstated in 1961, but resigned three years later.) Council recognized that, with increasing membership, there would be additional disciplinary cases.
One way to keep disciplinary problems to a minimum was to increase the institute’s focus on ethics. The institute had previously held lectures on professional ethics for final candidates. But in the fall of 1956, the Calgary and Edmonton Chartered Accountants Clubs sponsored special programs instead. Gordon Hutchison and Winslow Hamilton were the guest speakers.
At the national level, CICA wanted to create standard Rules of Professional Conduct (a uniform code of ethics), to be extensively reviewed and analyzed by all the provincial institutes. In 1958-59, a CICA committee chaired by Alexander Ballantyne of Montreal began circulating this code. In part, it said, “It has been recognized throughout Canada that no satisfactory revision of the rules in any province would be possible without concurrent action by all Institutes.”
With leadership from Bob Waller, council reviewed this draft plus proposed new codes for the Ontario and Quebec institutes. Soon after, Alberta and British Columbia sent in their own submissions. Given the sometimes-confounding intricacies of ethical and moral discourse, CICA created the national code of ethics with relative haste. All the provincial institutes adopted the code at approximately the same time – in the Alberta Institute’s case, at the 1962 annual meeting.
Public Relations
Although members seemed to favour requiring a university education as a requirement for CA status, the institute’s public relations campaign still focused on recruiting articled clerks from high school. Alberta members devoted their time to promote the profession during high school Career Days and, for example, showed the film The CA in Canada. Calgary members assisted high school counselors in giving preliminary tests to interested students. Committee members and others interviewed those who scored well.
Beginning in 1959, the institute awarded four scholarships of $125 each to outstanding students in Grade 12 who scored well on their senior matriculation exams and became articled clerks enrolled in the five-year program. Several members also took part in radio and television programs discussing chartered accountancy as a profession.
A new brochure entitled “Reading Time, 15 Minutes,” was published for distribution to high school students. In 1961 it was replaced by the less colourfully named pamphlet, “A Career as a Chartered Accountant.” Also in that year, the first issue of the ICAA newsletter was prepared and distributed. It was designed “to keep the members informed and aware of matters of interest.” Published quarterly, the newsletter was edited by Jack Baker. Unimaginatively named Newsletter, it has gone through a number of transformations in the ensuing decades. Since 1974, it has been called CA Monthly Statement.
CAs from Other Provinces
The problem of CAs moving to other provinces without registering with the local institute had become a serious matter nationwide. “Strictly speaking, these individuals are, by definition, not chartered accountants at all, since they are not members of the local institutes, although by virtue of their affiliation with the Canadian institute, and by courtesy, they have often been extended the privileges of membership without the responsibilities.”
This problem was common in Alberta, with its influxes of people from other provinces and countries. Many CAs from other provinces did not join the institute, yet still claimed to be CAs. Under Alberta law, they were (at least technically) not. And some, usually for economic reasons, refused to join the provincial institute.
Alberta sponsored a resolution at the Canadian Institute’s council to try to resolve this question, without much effect. In addition, the ICAA encouraged members of other institutes who resided in Alberta to join the provincial organization. This would, after all, enable them to participate in professional activities. However, there was an economic disincentive to join that was surprisingly hard to shake.
Holding a membership in more than one institute meant having to pay additional fees. Members did not want to give up their membership in the province in which they qualified because to do so would mean they had to surrender their certificate and lose contact with that institute. Even though joining the institute in the province where the member resided carried many advantages, for some members (especially those working outside public practice) the additional cost was a serious obstacle. It was not until 1980 that all provinces agreed to revise their fee structures to help encourage members to join their institute.
Regulatory Legislation
For Canadian CAs, legislation to regulate the profession became a pressing issue in the late 1950s. Certified Public Accountants and Certified General Accountants were pushing to improve their status within the business world. During the 1958-59 legislative year, the Certified Public Accountants’ Association of Alberta applied to become incorporated. The association wanted recognition as a second organization of accountants in public practice.
The Alberta Institute vigorously opposed this new bill. The institute’s view was that “a double standard of professional competency in the public accounting field would thereby be created which would be contrary to the public interest and that the special avenues for admission to our Institute through the assessment routines of the General Faculty Council of the University and the Accountants’ Experience Appraisal Board, which are unique to this Province, afford suitable means for all persons with the necessary competence to gain professional status by joining our Institute.” The legislation died, however. And the government announced a study into the matter of the accounting profession.
Relations with other accounting bodies were sometimes tense. In 1958, for example, the ICAA supported a court action against a man who advertised himself and conducted a private practice as a Certified Public Accountant. The CPAs, you will recall, date back to an organization which Chester Walters created in 1920, and which received an Ontario charter in 1936. The case against this alleged CPA went to the appellate division of the Supreme Court of Alberta, which decided that such conduct was contrary to the Alberta Chartered Accountants Act.
The Certified Public Accountants supplicated the province again during the 1959-60 legislative year. And yet again, a proposed CPA bill was defeated – in this instance, by vote in the Private Bills Committee. But the government moved on the issue the following year, when the legislature amended Section 17 of the act.
The effect of this change was to permit other accounting groups to use professional designations, but to restrict to the Alberta Institute the right to issue the CA, FCA and ACA designations. The brands were intact, but the institute’s dominance over the profession had taken a modest hit.
The institute continued to promote the idea of professional regulation, and was nearly successful in the early 1960s. Recalled Elvin Christenson, “we felt we had government support to the idea that only CAs were competent to express opinions on financial statements. The secretary in the provincial government, Russ Patrick, reported back to us that Premier Manning had now agreed to pass regulatory legislation. Manning had been somewhat piqued by a newspaper article emanating from yet another accounting group, the Accredited Public Accountants, who wanted a bill of their own. Manning had reached the conclusion that it was time to bring an end to all this nonsense.”
What seemed like a done deal fell apart when Manning shuffled his cabinet and appointed Ambrose Halowach as provincial secretary. According to Christenson, Halowach “didn’t understand the complexities or the need for this legislation,” and progress stopped. Said Provincial Auditor Keith Huckvale, who worked on the legislation, “the secretary had a deputy who saw fit to advise his ministers that, if they brought the CA bill up, the APAs and the CGAs and everybody would start pestering them.”
In 1961, CICA established the Committee on Regulatory Legislation and Relations with other Canadian Accounting Bodies. The intent was to keep the provinces aware of developments in intra-professional relations. While this group was gathering intelligence, negotiations at a higher level were changing the course of the accounting profession.
The elimination of the CPAs as CA rivals came with blinding speed. In June 1962, the Ontario Institute absorbed the Association of Certified Public Accountants. Thereafter, the CPAs were absorbed into the CA system.
For this to happen, individual institutes still had to respond. Haughton Thomson headed the Alberta Institute committee on regulatory legislation. “I remember when Ontario went ahead and amalgamated with the CPAs,” he later recalled. “This cut the rug right out from under us, because we were trying to do something here and all of a sudden without knowing what was going on, Ontario went ahead and made their merger.” Still committed to reciprocity, the institute passed the essential by-law in 1962. This rule provided that CPAs who had joined the Ontario Institute could apply for reciprocal membership in the Alberta Institute.
In his comments on this proposal, ICAA president Elvin Christenson told the annual meeting that admitting the handful of Alberta CPAs would be a sign of good faith. He also believed it could help him convince Alberta’s Cabinet about the need for regulatory legislation. “Council went along with this plan and we did admit the CPAs,” Christenson later said retrospectively. “Not a thing changed once we had done that. We were back to square one.” Different accounting organizations would continue to redesign the accounting profession – each according to the collective interests of its members. The CA institutes had clearly established, however, that theirs were the premier standards.
“To satisfy a growing need by its members for individual purpose or sense of mission, the profession must see its responsibility as one of developing accounting as an important tool in the approach to solving society’s major problems.” Task Force 2000, Summary Report.
Chapter Eight — Centennial Decade: 1963-72
The years surrounding Canada’s 1967 Centennial anniversary saw a number of important professional developments. The western world in particular was enjoying a period of continuing prosperity – in part because the US and a few allies were waging an expensive, destructive and ultimately humiliating war in Vietnam. Canadian foreign policy was quite different from that of the US. The country affectionately dubbed itself the Peaceable Kingdom, maintained normal diplomatic relations with Cuba despite American opposition and permitted US draft-dodgers to settle without question.
Canada’s workforce was now better educated. Ever-larger numbers of young men and (increasingly) women were attending university. And Canadian nationalism was very strong.
The 1960s were very good to Alberta, which had become an extremely prosperous and self-confident province. While both of Alberta’s major cities benefited from the boom, they did so in different ways. Edmonton was the seat of government, and it had become the operations centre for the growing oil industry. The city, which was close to the province’s largest oilfields, developed machine shops, instrumentation expertise and fabrication facilities to serve oilfield development and production. Refineries and petrochemical plants were located in nearby Strathcona County and Fort Saskatchewan.
By contrast, Calgary was the home of other kinds of entrepreneurs – the engineers, geologists and managers who swarmed into the oil and gas deal making. The city continued to be home to far more major head offices than its rival, Edmonton, and it also hosted more regional headquarters for national and international corporations. Because of the audit work that head office operations required, Calgary had Alberta’s largest concentration of CAs. Also, of course, Calgary had capitalized on its ranching heritage. The greatest symbol of this was the Calgary Stampede, launched in 1912.
These factors – a booming, freebooting oil and cow town with a large concentration of CAs – led to the staging of what may have been the greatest conference spectacular Canada has ever seen.
The Great Train Ride
The date was September 8, 1969. The occasion was the CICA conference in Banff – once again in the historic Banff Springs Hotel. The weather was perfect: warm and sunny. Conference registration was large – 652 CICA members and 579 guests (“ladies,” as they were described in the records). During a late morning business session on the first day of the conference, all hell broke loose. With six-guns blazing, a group of cowboys stormed into the meeting shouting, “Okay folks, let’s break it up and head to the depot. The train’s a-leavin’.” Not quite sure what awaited them, the group left for the station.
What greeted them was no ordinary train. Three modern diesel engines pulled 12 coaches, three baggage cars, and two private cars – all of them vintage railway cars that Canadian Pacific Railway had assembled from across Canada. At a cost of $7.50 each, 889 members and spouses from the CICA conference had registered for the Great Train Ride, but many others clambered aboard. According to Ed Roberts, who chaired the entertainment committee for the national convention, “We just couldn’t leave them behind.” Unknown to Roberts, there were still other stowaways on board. These included a honeymooning couple from California, who had supposedly boarded by accident.
By the time the train lurched east to Calgary at 1 p.m., more than 1,000 individuals were aboard a train with capacity seating for 826. Every coach had an institute member in period dress to serve as a conductor, and each had a prominent Calgarian as a coachman. Other volunteer staff included 12 Chinese Canadians in pigtails and coolie dress, one of whom carried over his shoulder a bamboo stick from the end of which hung a ripe, plucked chicken. These men served as coach attendants, handing out box lunches. Also in period costume was an Anglican minister, Reverend Ed Wallace, whose job was to perform remarriage ceremonies.
Religion took a back seat to the Rotary Club wives who had dressed up as ladies of the night, however. After appropriate flirtation, they handed out cards that said “Meet me in Room 303 in the Wainwright Hotel.” Also on board were three newsvendors, who tried to sell skin magazines to obviously embarrassed husbands.
Each of the three baggage cars sported a bar and a band, ranging from Dixieland to Western. The revelers danced with enthusiasm – until the train began to approach Morley Flats. As they approached, they saw a great pall of black smoke rising into the air; boxcars on a siding were in flames. As the train slowed down, the real danger appeared: 96 armed and mounted Stoney warriors in full paint. The train stalled, and the Indians attacked. A few armed men fought back from the train with cap guns, but to no avail. The Indians captured a dozen of the women, galloping off with them to their nearby teepee village.
Ed Roberts put together a rescue party that included Reverend Ed Wallace, Merv Graves (a Calgary CA who was then CICA president) and Dip De Paoli (dressed in a vintage policeman’s uniform). Reverend Wallace assured the passengers: “We’ll get them back!” and the rescuers left the train bearing a white flag. Recalled Roberts 30 years later, “We didn’t even get to the teepees. The Indians charged again, so we ran for the train shouting ‘Let’s go!’”
The train left the hapless women at the Indian camp. Less than gallantly, a Quebec CA whose wife had been kidnapped shouted, “This is the best thing that ever happened! I’ve been trying to get rid of her for years!” (The women were taken by car to meet the others at Calgary’s Heritage Park.)
The train proceeded without incident to the foothills town of Cochrane, where it encountered a peculiar scene. A real-life Mountie appeared to be questioning eight Hutterites – four men and four women. If you looked closely, though, you could see that he was questioning eight men – all well-known characters from nearby Calgary. They had only dressed as Hutterites (an Anabaptist sect of farmers with numerous colonies in Alberta); half of them were in drag. And each had had a few drinks from a flask while they waited for the train, but before the officer arrived.
When the Mountie asked this odd-looking party to accompany him to the nearby RCMP office, they said they couldn’t. Live goose in hand, Holland Cameron berated the Mountie: “Listen here, officer, I’m the manager of Birks Jewelry in Calgary, and I can assure you we are waiting for the train.”
“But the train hasn’t stopped here for years!”
“Well, it will today!” At roughly that moment, the train came into view and, to the officer’s astonishment, stopped to pick up his suspects. They boarded with live geese and ducks and stale vegetables, which they tried to sell to the passengers.
The train stopped at a park near downtown Calgary. There, it discharged its passengers into waiting buses, which took them to Heritage Park. An open-air museum, Heritage Park features a small Alberta town, which it created by moving vintage buildings, homes, a carousel and other early twentieth century artifacts to a site beside the city’s reservoir.
The entertainment was remarkable. The Calgary Exhibition and Stampede put on a rodeo, and the Young Canadians and other acts performed continually at the Canmore Opera House. From the local military base, the band of the King’s Own Calgary Rifles marched through the town and played in the bandstand. And the Rotary Club hosted a barbecue in a field near the Wainwright Hotel. To the dismay of some of the lust-struck passengers from the train, the hotel’s lobby carried a sign saying the health department had closed down Room 303.
Tragically, a robbery in Heritage Park’s bank led to a public shootout. As the shocked bystanders watched, the James Gang were shot dead in the street. Fortunately, the undertaker in his top hat soon came along with a wheelbarrow. He dumped the two corpses, still twitching, into his barrow and tried to balance a potted lily on his load before rolling them down the street to the mortuary.
According to entertainment chairman Ed Roberts, he and his co-conspirator, Stu Barker, assembled committees totalling more than 100 volunteers to stage this extravaganza, which was inspired by the legendary 1948 Grey Cup ride from Calgary to Toronto. Barker, who was not even a CA, was a volunteer director of the Calgary Stampede, and thus able to solicit cooperation from that organization. But according to Roberts, “getting the cooperation of the CPR in putting that crazy train on the main line was an incredible coup.”
Apart from making the train and the vintage cars available – “something they would never do again” – the CPR’s regional superintendent had arranged for the boxcars to be burned at Morley Flats. The company already had a practice of leaving old boxcars at the Morley siding, where Band members took them apart to salvage the steel. For this event, they arranged to have the cars doused in diesel fuel and ignited before the train arrived.
News that the accountants were doing something quite unusual got out before the Great Train Ride even began, and six reporters were among the passengers. The event went coast-to-coast on CBC’s TV news that night. Other local stations also covered it, and both national and US print media picked up the story. “What made it incredible,” said Roberts, “was that it was so counter to the reputation CAs have of being quiet and diffident. Not true! They got right into it and had a great time.”
Much of the show staged for that conference was historically inaccurate. Aboriginals did not attack trains in Canada, for instance, and there were no shootouts in the streets of Alberta or the other western provinces. Moreover, many of these shenanigans would soon be considered both socially and environmentally inappropriate. In that era these were not considerations, however. And the Great Train Ride probably still holds honours as the most elaborate conference prank in Canadian history.
For Ed Roberts, it led to a new volunteer career. He was soon elected to the board of the Calgary Exhibition and Stampede, where he became the director responsible for the Grandstand Show, one of the key components of the annual Stampede. Later still, he became chair of the Ceremonies Committee for the 1988 Olympic Winter Games.
The Elusive Art of Accounting
The Great Train Ride occurred late in a decade in which accountants saw serious progress in accounting practice and theory. A noteworthy event came in 1966, when Howard Ross captured many critical issues in his book The Elusive Art of Accounting. A scion of Montreal’s Ross accounting dynasty, he was chancellor of McGill University; a senior partner of Touche, Ross, Bailey and Smart; and a past president of the CICA. Focusing on ideas presented in this book, during the 1966-67 academic year Ross delivered the first Clem L. King Memorial Lectures at both the University of Alberta and the newly established University of Calgary.
King, who had been admitted to the Alberta Institute in 1940 after winning the gold medal for the first countrywide UFE, joined DACA as an employee seven years later. He became CICA’s research director, and was one of the profession’s leaders at the time of his death in 1965. CICA established a memorial fund for King in response to an outpouring of grief when he died. The sums collected – to a large degree, provided by the firm of Deloitte Plender Haskins & Sells (now part of Deloitte & Touche) – helped fund the lecture series. The memorial lecture program ended after a few years, when the funding ran out.
In The Elusive Art of Accounting, Howard Ross acknowledged that management accounting and financial accounting had become different entities, with different purposes. “In our large public corporations, ownership and management have become entirely divorced. There are thus two groups to consider with quite different requirements, and it has become evident that one type of reporting cannot satisfactorily meet the needs of both....The idea that accounting for management and accounting for owners are two distinct problems, calling for quite different techniques, dawned on the business and accounting world slowly, uncertainly and cloudily – and not before much time had been wasted and confusion generated.”
Ross saw accounting as the language of business, and sought clarity in communicating financial information. He took much of the mystery out of Generally Accepted Accounting Principles. “The word ‘principles’ may have certain philosophic overtones,” he said. “But in accounting [principles] are in point of fact simply sound and safe rules drawn from the best commercial practice....It is a thesis of this book that these principles never will be codified and that this does not matter.” This thesis notwithstanding, accounting principles have to a large extent been codified.
An illustration of these codifications can be found in the work of a relatively small group of accountants, most from Alberta. During the ten years surrounding Canada’s 1967 Centennial celebrations, these men laid out the essentials of full cost accounting for the petroleum industry. Alberta was producing most of Canada’s oil and gas, so it made sense that this piece of accounting history should be written in the province. And it made equal sense that ICAA members should do the work. Mostly headquartered in Calgary, oil and gas company clients required better practices. Much of the pressure for better practices came from within the companies, through the CAs who generally managed their financial affairs. The auditors of these companies, of course, shared these goals.
The basic idea behind full costing is that the petroleum industry should capitalize and amortize its capital costs, much as the business owner might capitalize and amortize a manufacturing facility. As we shall see, this was a surprisingly difficult idea to develop.
Full Cost Accounting
Around 1960, the US-based firm of Arthur Andersen published a booklet setting out their partners’ views in support of full cost accounting. In so doing, that firm described in some detail the applications of this system. This contributed to Canada’s further development of full costing for the oil industry.
In 1963, Professor W.B. Coutts of the University of Toronto released Accounting Problems in the Oil and Gas Industry. This publication was the outcome of a project that began in Calgary. A CA study group had asked Coutts to review the practices in use and the reasons for each of them. As the book’s foreword explains, “the practices now being used are so diverse and produce such different results that attempts at intelligent comparisons of the financial position and results between some of the companies are virtually impossible. In addition, there seems to be a general feeling among those associated with the industry that none of the existing approaches is entirely satisfactory.”
CICA’s Committee on Accounting and Auditing Research had established the study group, chaired by Vern Morrison, to examine divergent oil and gas accounting practices. This was one of the first reports to recommend a full cost approach to petroleum accounting.
A number of Canadian oil and gas companies had already begun to adopt the full cost method of accounting for exploration and development expenditures. Others now made the move. “Companies outside the oil industry have adhered closely to the concept of full cost accounting,” Central Del Rio Oils explained in its 1964 annual report, “but oil companies have departed from that concept in one important respect, by deducting from cash profit, in lump sums, the widely varying costs of lands abandoned, dry holes drilled and geological and geophysical work carried out during each year. That practice often produces inflation of net profit in a year of poor revenues, when land abandonments have been minimal or little expenditure has been made on exploration in search of new reserves. If both of these conditions apply, the result may be quite misleading. Conversely, in a year of good revenues, with substantial land abandonments or large expenditures on exploration, or both, net profit may be unrealistically low. Therefore, the net profit figures in many oil company financial statements have little meaning.”
The trend to full cost accounting had clearly begun, but different companies were using different approaches. A petroleum industry organization, the Petroleum Accountants Society of Western Canada, established a committee to address the lack of uniformity. Chairman Graham Bennett and most committee members were CAs. Their 1965 report was titled “Study of Full Cost Accounting.”
“The success of a company engaged in exploration for and production of oil and gas,” it says, “lies primarily in its ability to discover oil and gas reserves. In this quest for oil and gas, a company invests monies in many different ventures in widespread areas. It does this with the full expectation that many of these individual ventures will be fruitless and will eventually be abandoned. It recognizes, however, that success in the other areas must recoup all monies spent in order to provide an eventual profit. Because of this, proponents of full cost accounting believe that the relationship of reserves found to the total cost of finding those reserves should be disclosed in the accounts of the company by capitalizing all exploration costs. The cost of drilling dry holes and the cost of other nonproductive exploration activities are a necessary part of the total or full cost of discovering and developing the reserves.” That is the basic rationale behind full cost accounting.
A member of the Petroleum Accountants Society task force published another important paper in the Canadian Chartered Accountant in 1965. By describing the work of the task force and the problems of applying depletion and depreciation theory to oil and gas, Graham Lebourveau helped the industry develop a standard that applied to both exploration and development.
The idea is simple. “Since the quantity of recoverable oil or gas in place is the major factor in determining its value,” he wrote, “it follows that the only accurate method of calculating depreciation is on a unit-of-production basis. This involves estimating the number of barrels of oil or the number of cubic feet of gas that can be recovered from a particular location, and dividing the result into the cost of the property. A unit cost is thus established which can be applied to the quantity of gas or oil produced during the period to give the depletion charges.”
For many reasons, putting that simple theory into practice was quite difficult. When a manufacturing company depreciates a widget-making machine, for example, it usually does so with clear expectations about how many years of useful life to expect from that contraption. By contrast, to amortize such equipment as an oilwell’s gathering pipelines over the estimated reserves can involve considerable uncertainty.
As the task force developed these ideas, its members argued that full cost accounting had much to recommend it. A lot of other accountants agreed. Full cost accounting soon became standard among Canadian oil companies (although not among “the majors” – the international oil companies that generally followed American or British rules.)
While full cost accounting was being established, it was still not a fully developed system. The basic principles were clear, but the practice suffered from lack of uniformity. Different companies developed different systems.
The move to full cost accounting received another important boost in 1971, when a second article appeared in the Canadian Chartered Accountant. “Full Costing for Petroleum Exploration,” had quite an impact on the sector. Three Alberta CAs – John Bowles, John Rooney and Bob Waller, the author of Oil Accounting – wrote this commentary to explain how and why the approach had developed. In so doing, they helped codify the practice and explain the theory.
A task force comprised of representatives from major CA firms and financial executives from petroleum companies and other interested parties developed definitive rules for the application of full cost accounting in 1985-86. In 1986, the Canadian Institute brought the process nearer to completion by issuing an accounting guideline for applying the full cost method. CICA issued a revision to this document in 1990.
Among many suggestions, the CICA guidelines recommended that conventional oil and gas acquisition, exploration and development costs be capitalized, country-by-country. Each country would be a cost centre, and costs accumulated within each of those centres would be depleted and depreciated. The guideline recommended the unit of production method for depletion and depreciation based on the relationship between oil and gas produced in a period to proved reserves. It also recommended procedures for determining the limit of costs to be capitalized, the “ceiling test,” and accounting for properties sold.
Institute Traditions
Of course, the Alberta Institute was very much aware of the development of full cost accounting, but it was not an ICAA project. Although the institute was concerned about the nature of accounting practice and theory, the organization was more concerned about education and professional development. In almost every way imaginable, the period 1963-72 was one of dramatic change and internal growth.
Before we consider those developments, however, it is worth noting the origin of two CA traditions that continue to this day. In 1965, Malcolm McCannel, who had been ICAA president in 1922 and DACA president in 1941 (and whom we have frequently met in these pages) received one of the institute’s first life memberships. Henry Norman, who had been in the first group of individuals to be admitted to membership by exam, received the other. This tradition of honouring lifetime achievement continued in 1968, when Jimmie Henderson and Harry Hoard received life memberships for 50 years of membership and distinguished service. (In 1975, the ICAA council reduced to 40 the years of membership required before a CA could become a life member.)
Also in 1968, a group of Edmonton CAs formed the Pacioli Dining Society. Elvin Christenson had picked up the idea while attending a similar function in England during the mid-1960s. From Edmonton, the dining club concept eventually spread to Calgary, Lethbridge, Montreal and Toronto.
To attend the black-tie affair, CAs had to be at least 40 years old, and they were asked not to sit at the same table as a business partner or associate. During dinner it was customary to offer the ICAA president “suggestions” as to how the institute could be operated to bring it up to the standard of the “good old days.” However, it was not considered polite for the president to reply.
The institute president does not have to pay for the festivities, since it is important for him to attend and take abuse. When the southern division of the club was organized in 1974, the original members of the Edmonton Pacioli Club travelled to Calgary to assure the success of the new venture. Malcolm Tweddle, spokesman for the “Pacioli Old Boys,” reminded members what Pacioli stands for. The reader will remember that, in 1494, the Franciscan monk had codified the principles of double entry bookkeeping, thus securing for himself a place in history as the father of accounting.
At the 1978 Edmonton Pacioli Club’s meeting, Elvin Christenson was honoured with the first “Has Been” award. This referred to his presidencies of the CICA, the ICAA and many other organizations. Participants teased him for his experience during the Second World War, when he worked as a CA student managing the Edmonton office of a Calgary-based firm.
Three Fellows in One
Photo Caption:
Raymond George Harris, FCA
ICAA President, 1966-67
CICA President, 1980-81
The designation FCA, which recognizes meritorious service to chartered accountancy, is a considerable honour. For Ray Harris, that honour came an three times, at the time an unprecedented event. His FCA designations came from the CA institutes of Alberta (1968), Ontario (1976) and Saskatchewan (1980). Today, three other CAs – one of whom is Alberta Institute member Don Gass – share this honour.
A competitive spirit, Harris began racking up honours before his formal career even began: he won bronze and silver medals in two of the three exams then required to become a CA. Besides terms in the presidencies of the Alberta and Canadian institutes, he served as vice-president of the Canadian Academic Accounting Association during that organization’s early years. He is generally credited with drumming up support from accounting firms and CA institutes for that organization during its start-up years.
Education was Harris’s special focus during his years of service to the profession – a focus that began when he taught Saturday morning classes to Edmonton students studying the Queen’s course in accounting. As chairman of CICA’s Special Committee on Required Professional Development, he helped prepare the 1976 Harris Report, a controversial document that advocated mandatory professional development for all Canadian CAs. There was a storm of protest at the time, but professional development is now mandatory throughout most of Canada.
Harris was vitally concerned about theory, but practice was equally important. As he began his term as CICA president, he applauded the profession’s move to compulsory practice inspection. “We are leaders among the professions in this regard,” he told CICA’s annual conference in 1980. “Our concern for high public accounting standards must be vigorously maintained. We must demonstrate to the public that our practices equal our principles in every respect. Such a perception is as important to us as it was to Caesar’s wife.”
At age 18, Ray Harris began his articles with Winspear Hamilton Anderson & Co. He qualified at age 24 and remained with that firm throughout most of his accounting career. Harris held many prominent positions during the partnership’s development into the dynamic national firm now known as Deloitte & Touche LLP. He was Partner-in-Charge of the Edmonton office (1962-69); National Administrative Partner (1969-79); National Executive Partner (1979-80); Managing Partner, National Office (1980-82); and Executive Director, Office of the Chief Executive (1982-90).
Following his retirement from Deloitte & Touche in 1992, Harris became a sought-after consultant on international projects. His assignments included serving in Beijing from 1993-96, as leader of a consulting team advising the Minister of Finance of the People's Republic of China on a World Bank-financed project. In Jakarta, he served as an accounting specialist on a World Bank mission to review a project designed to strengthen Indonesia’s accounting profession. And in Nanjing, China, he was accounting team leader of a project to restructure a regional Chinese electricity authority.
According to his firm, Harris demonstrated commitment – “the trademark of all good leadership” – in great measure. “We were fortunate to have Ray Harris as an integral part of our team for many years; his leadership helped us build our strong foundations. He had a stellar career.”
Deloitte & Touche LLP Chartered Accountants
Growing Pains
Now, let us turn from these dignified, professional traditions to the period of change under review. These were years of severe growing pains. According to the institute’s 1970 annual report, “It is evident that the total membership must be responsive to the complex and rapidly changing conditions both within and outside the profession and that the special needs of each segment of the profession must be recognized and acted upon.” An apparently obvious resolve, this remark captured a number of difficulties that were arising as the institute worked to cope with the changing times.
As always, membership grew; it topped 1,000 for the first time in 1963. But along with the growth in numbers came new demographic changes. Two in particular are worthy of note.
First, members in public practice continued to decline as a fraction of total membership. By 1971, members in industry and government made up just over half of total membership. Fifty-one per cent (787) worked in industry and government; the other 758 worked in public practice. This change in the complexion of membership reflected bigness in both government and business, increasing complexity in tax law and the proved value of management accounting for the operation of large organizations.
There was an irony in this, since accounting had begun as a profession based on public practice – which is to say, CA partnerships offering services to a variety of clients. The profession was so dominated by public practice accountants in the early days that, for example, in 1918 the institute had ratified a by-law requiring at least two-thirds of council to consist of public practitioners. This demographic change also created a difficulty for the institute. Members in industry, government and education were less inclined to become involved in ICAA activities than those in public practice. This presented a quandary: how best to serve a group of professionals who might be inadequately represented in institute governance.
This change in institute membership called for a measured response. Council struck committees to study organizational structure. They were concerned not only with determining how best to provide educational services, but also how to better communicate with members and the public.
The second major change in the institute’s demographics – that is, how to service the growing membership in the smaller centres – was less complex. The issue originated as the number of accountants in the province continued to grow, rapidly. While the largest concentrations were still in Alberta’s two main cities, numbers in smaller cities and towns were also on the rise. Edmonton and Calgary continued to dominate government and commerce in the province, but smaller communities were also growing – and with them, the need for accounting services.
CAs from the smaller centres raised a complaint that was hardly new: two cities dominated council and therefore the policy-making agenda. While simple democracy dictated that this was unlikely to change, council recognized a need to respond.
One approach was to adopt a by-law requiring that two of the 12 council members be residents of places other than Edmonton or Calgary. In addition, council began to hold meetings outside Alberta’s two major cities. While the idea of geographic representation seemed like a good idea at the time, it did not last very long. In 1971 the institute Planning Committee recommended dropping the regional requirement. “It cannot be rationalized at present,” they argued, “as most of the communication between the members and the Institute is directed to the Institute office rather than to regionally elected representatives.”
More important than these efforts, however, the institute began to take accounting education into smaller centres. Both lecture programs for students and continuing education sessions for chartered accountants would soon be held in Grand Prairie, Red Deer and Lethbridge.
Later that decade, to encourage growth in Alberta’s smaller communities actually became a matter of public policy. David Holt was one of many CAs who moved their practices to rural Alberta as part of the provincial government’s “opportunity towns” program. A 1976 Edmonton Journal article quoted Holt, who practised in Vermilion, as saying “at first it took quite a while to get started but then business picked up rapidly. I really can’t complain. In fact, I already need more office space.” By the time Holt set up his practice, more than one-third of Alberta’s practicing offices were located outside Calgary and Edmonton.
Education
In 1966, Victor William (Vic) Dzurko became the institute’s director of education. Thirty years of age when he began working for the institute, Dzurko had become a CA after a three-year career in professional hockey, followed by a bachelor’s degree from the University of Alberta and articles with Price Waterhouse. He was appointed executive director of the ICAA the following year, when he also received his master’s degree in business administration. As we shall see, Dzurko’s appointment corresponded to an intense period of educational activity. He was first a powerful force in the institute’s educational programs, then in the construction of a thoroughly modern institute.
Without detracting from the achievements of the Education Committee, a contemporary reading of committee minutes is sometimes amusing. At one of his first meetings, for example, Dzurko “demonstrated the use of an overhead projector as a teaching aid.” Impressed, the committee “asked Mr. Dzurko to investigate the best method of obtaining such overhead projectors for classroom use.” Thus was the institute introduced to an important advance in educational technology.
As we have seen, Canada’s accounting institutes were competing directly with publicly-funded education. This was having direct consequences for the institutes – for example, in 1966 the Alberta Institute paid $20 per lecture for regular lecturers, but $30 to those who were professional teachers whose livelihood was made by teaching. This was necessary so the institute could meet the going rate for such teachers.
The institutes’ role as competitors to public schooling would change as a result of the national decision to make a university degree mandatory for the chartered accountant, but this would take time. The “1970 Proposal,” as it became known, sparked debate from Atlantic to Pacific. There was a lot of opposition, since perhaps 80 per cent of the CAs who voted did not have university degrees themselves. A common view was, “I articled for five years; why shouldn’t everyone else?” One by one, however, the provincial institutes adopted the idea. Beginning September 1, 1970 only students with recognized baccalaureate degrees could register as students-in-accounts.
The 1960s were the period of transition between the two systems of training. During those years the profession had to deal with questions in respect to what academic qualifications the prospective student should have, plus the method of delivering the necessary theoretical instruction to students. These were not simple issues.
This fundamental change in the profession dates back to 1959, when a CICA sub-committee recommended a university degree as an entrance requirement. “I think the predominant mood in the profession was that this change was coming,” said Eric Geddes, who was chairman of Alberta’s Education Committee when the institute approved this principle. “If our young men were going to take their place in the business world and become problem solvers, they had to have a university education.”
Geddes’ remarks very much reflect the temper of the day. For the first time, Canadians commonly believed that you had to go to university to get ahead. And as the first baby boomers began preparing for post-secondary schooling, the provinces responded by creating and funding new universities, technical institutes and community colleges. The University of Calgary became independent of the University of Alberta in 1966. The University of Lethbridge opened its doors the following year, and the province created Athabasca University for correspondence education five years later.
Although support for the 1970 Proposal was not universal, some of its most avid supporters were impatient to get on with it. Elvin Christenson, who was on council at the time, remembered that “in 1960 and 1961, we were all shocked to find that it would take all the way until 1970 before one could expect this university degree requirement to be in place.”
The caution shown in waiting a full decade before making university mandatory turned out to be essential. The Alberta Institute struck committees to consider, for example, the rule’s implications for educational standards and training. And CICA’s Interprovincial Education Committee began to develop a framework of educational standards. This culminated in the issuance of the national institute’s Body of Knowledge and Uniform Final Examination Syllabus in 1964. Once this document received institute approval, prospective CAs were expected to master roughly 50 per cent more information than before.
In this environment, Canada’s accounting institutes faced a dilemma. It was becoming widely apparent that the venerable Queen’s course was out-of-date, and all accountants in the not-too-distant future would be university-trained. Yet neither Queen’s, CICA nor any other organization was willing to commit the time or money needed to revamp for the interim a course essentially designed for the high school graduate.
It made little sense for Queen’s to do so. Like other Canadian universities, Queen’s was caught up in expansion – expansion that included planning and developing an academic accounting program.
A major overhaul made less sense for CICA, since education was a matter of provincial jurisdiction. In any case, the Interprovincial Education Committee was heavily involved in developing core materials for the profession. On the face of it, an overhaul of the Queen’s course made little sense for Canada’s provincial accounting institutes, since the course would likely be phased out when the 1970 Proposal took effect.
While there clearly needed to be a better way to educate students than the aged, creaking Queen’s course, the momentum to make the needed changes at first did not exist. Finally, Canada’s most westerly provinces found the solution.
In one of the Alberta Institute’s Perspectives historical pamphlets, Eric Geddes picks up the story. “The Queen’s course had failed to change with the times,” he said. “We began to question the rightness of the material we were getting from Queen’s. That thought led us to the conclusion that we could probably deliver the course through lectures and material we ourselves produced.”
This decision made, Geddes and his fellow ICAA member, Ray Harris, approached the British Columbia Institute. “We found, as we always did, that BC was on the same wavelength as us,” said Geddes. “BC was a kindred spirit, and we had both reached the same conclusion about the Queen’s course.” The two provinces pooled their resources and began to develop a new course – the copyrighted Western Canada CA Course of Instruction.
The new program was based on 16 “subject areas” rather than on course years. Because of the concentration on subject areas, the comprehensive Intermediate Exams became irrelevant. Following a study by CICA’s Interprovincial Education Committee, Alberta and BC dropped these long-standing exams in 1968; they introduced subject area exams instead. The Universities Coordinating Council agreed to administer these exams, which the student needed to pass after the course of instruction and before he or she could write the UFE. As we shall see, most other provinces followed.
The Alberta Institute was well satisfied with the new program, but almost from the beginning wanted the course to be used across the land. “The course of instruction as presently constituted in the Province of Alberta may well be the highest standard of any province,” Len Watkinson – then the institute’s director of studies – had informed council and the Education Committee in 1965. “But regardless of provincial rights this should now be a national course of instruction as students sit national uniform examinations and practice their profession nationally. Regardless of any apparent reasons for not instituting such a course, it would appear to us to be mandatory for the successful operation of the educational aspects of our profession.”
In time, efforts to have the program adopted nationally were successful throughout English-speaking Canada. By 1967 all four western provinces were using the new curriculum; Alberta’s John Rooney was elected to head an executive committee with members from the four provinces. Newfoundland adopted the course in 1968 and the three Maritime Provinces followed in 1969.
The Western Canada CA Course helped establish the Alberta Institute as an innovator in education. But as the following table shows, a marked deterioration in UFE pass rates accompanied the implementation of the course.
Alberta’s Uniform Final Exam Pass Rates
1963 1964 1965 1966 1967 1968 1969 1970 1971 1972
Pass Rate (%) N/A 62 67 59 49 40 39 34 55 66
There was more than a superficial link between the new course and declining pass rates. The test scores of repeat candidates affect every year’s results, of course, as does the innate difficulty of the exam itself. But, as institute president Lorne Baxter explained in 1971, “The fact that some other provinces who use the same course of instruction, offered in a similar manner, using similar type of instructors, have substantially more success than has Alberta, has led to the conclusion that we are presenting more unqualified candidates to the final examinations than the other provinces.”
Based on this thinking, council took specific measures to improve test results. For example, examiners were asked to raise their standards and allow only well-qualified students to take the UFE. The institute also upgraded its standards in the prerequisite subject area exams and, in 1971, offered a four-day course in examination writing techniques. Improvement quickly followed.
That said, it is worth noting that results did not begin to recover until the first full year in which the university degree was mandatory for new students. In 1971 candidates who passed on their first attempt increased from 37 to 61 per cent. Of those with bachelor of commerce degrees, 70 per cent passed, compared with 45 per cent the year before. The discipline and learning of university education had apparently combined with the institute’s corrective measures. The outcome: better test scores after an appalling four-year decline.
Transitional Instruction
Whatever the case, university schooling had become a big focus for the institute. The Western Canada CA Course was virtually complete in 1965, when the institute received an intriguing enquiry from the dean of the University’s Faculty of Business Administration and Commerce, Dr. Hu Harries.
Harries wondered whether the university and the institute might not find a way to allow University of Alberta students to complete professional training while obtaining the B.Comm. degree. In December, the two organizations responded by appointing a “Committee of Six” to study the matter. The Alberta Institute’s representatives were Ray Harris, George Berge and John Rooney. The University’s representatives were Chairman Arnold Saffel, Lorne Leitch and Andrew Thompson.
Six months later, the committee received council’s blessing to make formal recommendations to the Faculty of Commerce, whose approval was required before the proposal could receive university-level approval. For a student to complete training while earning a degree, the committee made three recommendations. First, “there should be a compulsory one-year attendance at the University.” Second, “the regular facilities of the university’s existing summer school should be employed to full advantage and an intersession study period during the months of May and June introduced.” And third, “an intersession program could be accomplished according to the following plan: May and June intersession, two courses; summer school, one course; winter session, one course.”
By taking on a heavy load of work and study, an articled student could thus complete the CA requirements after one year of full attendance and four years of summer school and intersession. The Faculty Council deferred approval, noting that arranging these “intersession” and summer school programs would take time to implement.
The indefatigable Vic Dzurko reported that he had discussed the development of summer school courses in economics, computer science, and mathematics and statistics with U. of A. professors, all of whom were positive about the plan. While the Economics Department’s Dr. Walter Gainer thought “a good quality of instruction could be provided if the pay was at a premium over normal summer school rates,” Bill McMinn of the Computing Science Department was “very enthused that the accounting profession was considering teaching Computing Science to their students.”
After hearing this report, Education Committee chairman John Rooney cautioned, “We must proceed with great care since Alberta [is] the only Institute planning to offer courses in Mathematics and Computer Science.” Two other members, Bill McMullen and Roy Leard, added that “...A limited knowledge especially in outside areas such as statistics could be dangerous....It is only the large firms that are developing and relying on statistical methods for use in accounting.” In general, the committee agreed that “the lab sessions [should] relate the application of these subjects to accounting and auditing.”
The institute agreed that this program would be initiated in Edmonton in 1967, “with the view that Calgary participate in the future.” This decision led to a furor when students from Calgary had to go to the capital city for the first-ever summer school. Dzurko reported that “Calgary practitioners were very dissatisfied with the lack of equalization in course fees for students residing outside of Edmonton.” Although members of the committee felt their decision had involved a long-range view “which effectively provided equalization in the long run,” the students were concerned about cash now. After lengthy deliberation, the committee recommended (and council agreed) “that residence fees for anybody attending Summer School [in 1967 only] be paid out of course fees.”
These were the early beginnings of the Alberta Institute’s summer school: four-week courses designed to replace the overburdened lecture series. The program enabled students to cover every area of the UFE syllabus, which was now, of course, based on CICA’s extensive Body of Knowledge.
Although the first year of summer school classes was deemed a success, the institute realized that too much information was being crammed into the session. In the program’s second year, 1968, students could choose whether to take two or three courses. After that, however, they could take no more than two.
The fledgling University of Calgary did not at first have the staff or facilities to serve as a venue for the institute’s summer school. By 1971 it did, however, and the institute’s summer school began to be offered in both of Alberta’s major cities.
Student Education Migrates Away
In 1970, the last year in which students could register for articles without a university degree, nearly half of the 227 new registrants were high school matriculants. But somewhat surprising was a substantial increase in the number of non-business graduates entering the profession. More than one-third of the institute’s new university-trained students came without B.Comm. degrees – up from nine per cent five years before. The following year the Education Committee responded to this trend by proposing an ultimately unsuccessful by-law change that would disqualify candidates without commerce or MBA degrees from registering for articles. Students who had studied everything from humanities to science were welcomed into accounting careers.
If students from other fields were increasing the diversity of academic backgrounds among accountants, increasing specialization within the profession was coming from another direction. By 1972, the universities of Alberta and Calgary had both established masters programs in business administration. Clearly, the momentum for accounting education was with the universities.
While they served an important purpose, the Alberta Institute’s new student courses had essentially been stop-gap measures. Predicated on the idea that the institutes had primary responsibility for the CA’s formal education, the Western Canada CA Course and the institute-sponsored summer schools were primarily of value to those who had registered for articles before a university degree was required. Once large cadres of students with university degrees began taking articles to complete their training, it made more and more sense to leave formal education to the universities.
In Alberta, this step was nonetheless contentious. The institute struck a committee to review the ICAA’s involvement in student education, and that committee recommended vacating the field. Effective January 1, 1973, new students registering with the institute were required to take specified university, rather than institute, courses. The issue remained contentious. More than a decade later, the institute began teaching student courses again, citing inadequate content in university programs.
Professional Development
In 1964 Gerry Pearson, the chairman of ICAA’s Continuing Education Committee, remarked that the professional development of members would become an even greater responsibility for the institute after the 1970 Proposal went into effect. His observation was prescient, but it also captured the spirit that was beginning to guide the institute’s continuing education activity. To a large extent through the institute’s educational efforts, the profession would leap forward during the sixties.
The institute had already expanded the continuing education program and was offering courses in regions of the province other than Edmonton and Calgary. Topics included general insurance; tax planning; financing a small business; pension plans and their integration with the Canada Pension Plan; and flowcharting (one of the new audit techniques). Late in the year, the committee surveyed institute members to get a better feel for their educational needs.
They received 458 replies to the questionnaire, including 271 from members who had already taken at least one continuing education course. Tabulating the results gave them the grist from which they milled a sophisticated professional development program. Among their conclusions came this remark: “The favorable response to the questions concerning intensive courses...was quite surprising....The questionnaire was well worded in that it spelled out that these courses would involve a great deal of study and preparation over one or two years concluded by examinations, and still approximately half of the members replying to the questionnaires indicated that they would be interested in such a course.”
Of particular interest to the committee was that 260 respondents would be interested in such a course in advanced management accounting, and 222 in advanced taxation. Armed with what they took to be an extremely positive response to professional development, the committee planned a program of seven seminars. These would be held in Banff, Edmonton and Calgary. The first session, which dealt with the Royal Commission on Taxation, was a notable success.
The background is this: In 1962, Prime Minister Diefenbaker had established the so-called Carter Commission under Ontario CA Kenneth Carter. Its purpose was to examine and recommend improvements to the entire federal taxation system. Since interest in the undertaking was quite high among accountants, the 1966 continuing education seminar was well attended even though the Royal Commission’s full, six-volume report was yet to be released.
While the Carter Commission seminar was a success, the turnout for the other 1966 sessions was poor. The committee cancelled two, and only 108 of Alberta’s 1,043 resident members attended the other four. Although disappointed, council expressed determination on the matter of continuing education: It “is a vital part of our profession and deserves the serious attention of every member.”
The following year, the Alberta Institute’s financial statements tell quite a different story. There was a nearly twofold increase in continuing education course revenues. This reflected improved member participation. Nearly 16 per cent of resident members took the institute’s continuing education seminars. And for the 1968 fiscal year, continuing education revenues again more than doubled the amount budgeted.
Impressive though these results may sound, it is important to put the numbers in context. The institute’s gross continuing education revenue for 1968 was well over expectations, to be sure – but they were slightly more than $18,000. For the institute’s fiscal year 2000, gross revenues from continuing education were $1.3 million – up from $600,000 in 1997. As we shall see, the introduction of mandatory continuing professional education was largely responsible for this end-of-the-century push.
The institute’s 1966 review of tax practice was well received and, of course, the Carter Commission seminars well attended. As the profession eagerly awaited the formal release of the Carter Commission report, the Education Committee’s Bill Stephen told his peers that arrangements were under control: “Seminars are scheduled for early May.” However, he later reported preliminary difficulties in getting full registration for the Edmonton session.
The continuing education surprise, however, was the institute’s first computer course for members. The previous year’s membership survey had indicated a strong demand for an in-depth course in computer science, and similar requests had come from the province’s CA clubs. But the sub-committee was wary. They had, after all, been burned just two years before, when the demand promised by questionnaire respondents did not show up in the real world of course registrations. So while they publicized such a course to be held in September 1967, they prepared to bail out if the course did not generate enough pre-registration. The 10-day course would cost $100 – an amount that included texts and course material but not room and board.
According to the annual report for that year, the response “exceeded expectations.” Members were clearly beginning to glimpse the implications of this technology. According to institute president John Rawlinson, who reported that electronic data processing and advanced auditing techniques were now included in students’ courses of instruction, “This knowledge explosion in like manner affects our existing membership and emphasizes the vital importance of ensuring that each member makes a conscious effort to keep up to date with the important new developments taking place in the profession.”
The number of participants taking professional development courses continued to grow. In 1968, 27 per cent of resident members attended the courses. This included 126 members in computer courses – either the Alberta Institute’s pioneering course or the one developed somewhat later by CICA. Offered in Edmonton, Calgary and Grande Prairie, one-day CICA courses entitled “Accountants’ Fees” and “Improving the Administration of your Office” were so successful that the institute decided to provide CICA’s latest offerings – “Analytical Auditing,” “Accountants’ Working Papers” and “Managing the Accounting Practise” – in the coming year. And when Dr. Rodney Schneck, associate professor of behavioural science at the University of Alberta, gave an “experimental” series of talks on organizational behaviour in Edmonton, the response from members was enthusiastic. He was asked to offer the same lectures in Calgary, and obliged.
The following year, the number of continuing education participants rose again. Like much of the activity of previous years, the increase was greatly influenced by the activities of the Carter Commission. In 1969, the federal government released a White Paper based on the Commission’s recommendations and the institute sponsored a seminar presented by Finance Minister Edgar Benson. Of the 467 members who attended continuing education programs, roughly half attended that session.
While interest and participation in continuing education fluctuated each year, by the early 1970s the institute’s role in professional development was firmly entrenched. And as we have seen, it seemed clear that student education could be entrusted to the universities. The institute’s educational focus had undergone a fundamental shift.
Standards of Training
Although articling had been a critical part of a student’s training from the beginning, not until the late 1950s had the profession seriously considered whether all CAs were equally good at preparing their students for accounting careers. But by the mid-60s the institute’s Standards of Training committee had begun to bring order into professional training.
The institute divided the work between northern and southern committees in 1964, with each group responsible for inspecting training practices in its respective geographical area. While the committees had only reviewed 25 firms by 1966, the members had developed the systems and the confidence to complete the necessary reviews.
The approach the committee used was painstaking. It involved “a preliminary letter...together with a questionnaire, which the office to be reviewed will complete in detail....The letter will ask for a date upon which a review of the office can be made by two investigators from the Committee. If a trouble spot develops, it is understood that a Committee of Past Presidents may be asked to investigate the office and make their recommendation without reference to any of the work done by the preceding investigating group.”
By 1968, the two-man teams had reviewed all the offices that employed students. All but eight had received Certificates of Compliance indicating committee approval; most of the difficulties had been in smaller centres where practitioners had little or no day-to-day contact with other ICAA members. Non-compliant offices received conditional certificates and institute assistance in correcting their deficiencies.
The Advancing Committee Structure
No history of this period can pretend to capture the enormous amount of institute activity that had accompanied the profession’s growth. By year-end 1972 the institute had 1857 members – an increase of 95 per cent in ten years. A near doubling of membership had a double impact on the institute.
First, it meant the organization had more membership and student needs to meet. Thus, institute staff grew quickly – especially in 1967, under the energetic leadership of Vic Dzurko. Joan Weston was hired as student registrar; Donna Page as member registrar and office accountant; Charmaine Cockburn as office secretary. Garry Davidge, who earned the institute’s gold medal in 1966, became Dzurko’s executive assistant the following year.
The hiring of additional staff meant the need for more office space. Since 1951, institute offices had been located at McTavish Business College, which owner Allan McTavish had closed when he retired in 1967. The institute moved to the Revillon building, which it soon outgrew. The ICAA acquired offices in Edmonton’s Empire Building in 1970.
The second major impact of growing membership was a larger base from which to draw talent for the volunteer committees that helped set policy and governance for the profession. Institute operations in 1972 were reflected in the activity of 27 committees and seven sub-committees. This followed a restructuring of the committee system, in the interests of simplifying the organization.
Most of the committees have changed in the decades since this organization went into effect, and different approaches to governance have been tried. However, the institute’s basic structure – sub-committees reporting to committees, which reported to council and were assisted by professional staff – served the institute well until the mid-1990s.
It is also worth noting that the institute had become heavily involved in the provision of services. Prior to the 1960s, the institute was mainly concerned with the education and training of students and the maintenance of standards among members. As the institute matured, however, its committees developed a menu of offerings that ranged from group insurance to a fee mediation service to, notably, a Practice Development Program funded out of general revenues.
It is obviously neither possible nor germane to review the activities of all these committees. However, it is instructive to look again at the committee that helped give the profession a public face.
Public Relations
Eric Geddes, an ICAA president whom we have met before in this history, perceived a new attitude toward public relations in the 1960s – one he attributed to larger numbers of relatively young Canadians among the institute’s members. “The profession had previously been under the strong influence of a breed of man who was an older, very conservative individual, usually from England,” he suggested. “Anything that you did to draw attention to yourself was looked upon askance by these members. It was almost like we were members of the secret service!”
Geddes’ notion was clearly too great a simplification. As we have seen, the Alberta Institute had been wrestling with public relations since the 1930s, and has often been a forward thinker in the matter. If the institute enjoyed greater success in the 1960s, it was more likely because of the advantages of growing institute membership combined with the greater sophistication of Canadian society.
The institute hired John Francis for public relations counsel. J.D. Francis and Associates took on such responsibilities as issuing news releases, preparing brochures and organizing career nights and presentation ceremonies. More importantly, however, Francis delivered highly knowledgeable commentary on public relations skills to the Public Relations Committee, beginning with a skilled briefing in October 1964. Among his other revelations, Francis explained the news needs of editors, tactfully suggesting that daily newspapers are generally not interested in the material (board elections, for example) often covered in institute press releases. As a result of these discussions, the committee concluded, “the furtherance of public image will create its own publicity.”
The activities of the Public Relations Committee focused on three tasks: student recruitment, enlisting member support for PR projects, and increasing direct contact with the media. Student recruitment remained part of the public relations ambit even after council struck a Career Information Committee in 1971. There was some disagreement, however, as to whether Career Education should be placed with the Education Committee or with the Public Relations Committee.
Throughout the 1960s, council expressed its concern about a long-standing fear. Although there was strong demand for new CAs, high school students did not seem interested in accounting careers. So the institute stepped up its use of aptitude tests, invested more time in meeting student counselors and continued to give talks in high schools. But talking to university students was becoming ever more important, and the committee resolved “to make every effort to unearth opportunities to speak to faculties other than Commerce on careers in our profession.”
New recruitment material included “Your Career as a CA,” developed by CICA, which targeted high school students. When the Public Relations Committee examined the document in 1964, they found it “quite acceptable” and had the Alberta pamphlet revised. Later in the decade, the Alberta Institute developed the brochure “Chartered Accountancy and You,” aimed at the university crowd.
But the most important of the new recruitment packages was a film called Men of Account, which CICA began to develop in 1966. In a favourable review of the script for this production, the Public Relations Committee’s Bruce Mitchell nonetheless expressed concern that “there did not seem to be any direct reference to monetary reward upon attaining a CA and on into the future....We think there should certainly be a very direct message given to the audience....This should probably also include the fact that students during their training receive a reasonable salary for their level of experience.”
Stressing the committee’s opinion that actors should be used in the film, Mitchell observed that “it is much easier for the accountant to write the script for the professional [actor], rather than have the professional attempt to teach the CA to act.”
A major delay occurred, however, because of financial troubles at CICA. The national council endured heated debate in June 1966, when CICA proposed an annual fee increase of $7.50. The institute cited increased staff needs, inflationary trends, professional development courses and other major projects, including production of the recruitment film.
The arguments over this increase were the Canadian experience in miniature. Western Canada and Newfoundland supported the increase, while Nova Scotia pleaded poverty. Ontario (whose membership and resources dwarfed those of other institutes) argued that $30,000 could be shaved from the public relations budget, for example, if that area were left to the provinces. And Quebec argued that its provincial institute was “unique, with one-half of the membership being French-speaking and one-half [of the membership] being in areas other than public practice. The fee increase will have to be approved by the members of the Quebec institute, and unfortunately the Canadian Institute does not mean much to many of the members, particularly those who are French-speaking, because they feel that they do not get much return from the Canadian Institute.”
In the end, the English-speaking provincial institutes agreed to a $5 increase effective the following May, while Quebec asked for time to consult its members. When the increase in fees arrived in 1967, CICA proceeded with production of the film. The Alberta Institute arranged for it to be screened at educational institutions, career fairs and service clubs throughout the province.
In 1968, the Public Relations Committee mooted the notion of an advertising campaign to improve the profession’s image. This met with an immediate, negative response from members.
In a long, thoughtful letter on the topic, Derek Walker, a member, concluded that the “loss of business to charlatans and the difficulty in attracting and holding students are the factors that have led to the deduction that our image has become tarnished in the eyes of the public....Advertising will do little, if anything, to alleviate these particular problems.” Walker suggested that the profession could improve its image by taking a lesson from the College of Physicians and Surgeons and encouraging specialization. While this approach would encounter many problems, “assuming that we are as competent as the medical profession, solutions would be found.”
Walker’s concerns notwithstanding, the period 1963-72 was one in which the influence of CAs continued to increase in disproportionate measure to the size of Alberta’s population. While Alberta grew by about one-third to 1.75 million souls, the number of accountants (which had more than quadrupled between 1950 and 1962) nearly doubled again. More importantly, by the end of this period accountants were widely regarded as skilled professionals. This had a snowballing effect on the institute’s public relations efforts.
The Royal Commission on Taxation had a high profile during the early part of this period, and reporters learned quickly that institute members were knowledgeable sources of comment. When Ottawa produced a budget with implications for personal or corporate income tax, the institute was quick to respond. The institute’s first budget-related public relations coup took place in 1964, when CAs Ray Harris and Gerry Pearson took part in what later became known as “Operation Budget Night.” On March 29 they flew to Calgary to pick up copies of Mitchell Sharp’s budget from the Bank of Canada as soon as it was released, then hightailed it to a news conference at Edmonton’s municipal airport. By the early 1970s, the institute arranged budget night news conferences to comment on both federal and provincial budgets.
The Public Relations Committee reported on its media achievements with pride. After budget night 1970, for example, “Most [Edmonton] radio stations carried a 2-5 minute news item featuring...Chartered Accountants. As well, some coverage was obtained from local television stations.” In Calgary, on the other hand, publicity for the institute’s Diamond Jubilee “was tremendous.”
The institute now understood that cooperating with the media paid off. Press, radio and television often asked members for their views on technical matters, and members began appearing as guests on television and radio more frequently. Others contributed articles to the Edmonton Journal and the Calgary Albertan – articles that the institute viewed as valuable contributions to the profession’s image. When the Alberta Business Journal asked the institute to provide a regular column, the age-old problem of finding suitable material arose. Institute members submitted only four articles, so the committee began sending articles from the Canadian Chartered Accountant instead.
The profession’s growing public profile was one indicator of its increasing sophistication. Another was the commotion surrounding an initiative known as Task Force 2000.
Task Force 2000
In April 1969, CICA commissioned Task Force 2000 to examine the future role of the CA and to recommend plans for the profession’s development. Coordinating the work of 200 CAs, the task force “attempted to involve the largest number of CAs in an examination of their present and future roles.” The task force set up regional core groups, including one in each of Calgary and Edmonton, to develop “situation analyses” in specific areas.
To appreciate the importance of this debate, the reader must realize that in the 1960s CICA was still a weak organization. This was consistent with the profession’s development. As we have seen, the Dominion Association of Chartered Accountants had changed its name to the Canadian Institute of Chartered Accountants at mid-century. But CICA was an institute (rather than an association) in name only. It could only develop national standards because the provincial institutes had delegated to it the authority to do so. CICA was very much a creature of the provinces. An illustration of provincial power (and of CICA’s need for deft diplomacy) can be seen in the debate over a fee increase, which we discussed earlier.
To a considerable extent, the task force reflected the 1960s activism that was then calling far and wide for social change. At one point, their report echoes a historically important Canadian grievance: “The CICA must have authority and control over its resources if it is to effectively serve its members and provide strong leadership for the accounting profession in Canada.” Oddly, this passage uses the rhetoric of provincial rights to advance arguments for a stronger centre.
One feature of the report was a review of economic and social trends. In keeping with the mood of the times, the report reflected a mentality focused on scarcity, notwithstanding 30 years of unparalleled economic growth. For example, “Our economy is developing towards a world economy, with growing multinational trade; the gap between the developed and emerging nations grows larger and is exacerbated by the appearance of a post-industrial world. The world faces problems of decreasing living space, food supply and deterioration of the environment.”
Within the report’s heavy reading were analyses of how these and other trends would challenge the profession; notable among these were thoughts on the potential impact of computers on the profession. “The computer has been a major component in all processes of industrial and social change,” they reported. “More computers are linked with communication facilities and the interactive process between the computer and human being has already required that we learn to manage cybernetic systems – those in which a process is accomplished with man/machine combinations, and in which both the man and the machine share in the decision-making activities.”
Computers were still primitive, but the task force recognized their potential. In a discussion of the “information explosion” these tools were making possible, they suggested that computers would create demand for accountants. After all, accountants have a “historical role in financial information and concern with measuring the use of resources.” Others on the computer team would include economists, behavioural scientists, mathematicians, engineers and computer scientists.
The task force argued that accounting was becoming a profession whose national responsibilities, obligations and opportunities were becoming ever more important. And they proposed sweeping changes to the way the profession was structured.
The core of their recommendations was for the profession to “adopt as a long-term objective the broadening of its roles, and for the short run to concentrate its efforts on developing the structures and processes it requires for the future. It would work with other accounting associations in the coordination of efforts and pooling of resources where possible, and a merger of forces would be brought about in the course of time, as the accounting associations recognized their community of interest.”
Once the report arrived, the Canadian Institute struck a special committee (Alberta’s member was David Bentley) to study its recommendations. After an exhaustive review, the committee supported only three task force proposals. One was the creation of an Accounting Research Foundation and the simultaneous downgrading of the national Auditing and Accounting Research Committee to the Accounting Principles Committee. Another was the development of an information system for the profession. The third was that CICA “strengthen its relationship with other accounting bodies by encouraging a pooling of financial and human resources” in the proposed new foundation.
Though significant, these developments fell far short of those called for in the Task Force 2000 manifesto. Recommendations included, for example, a CICA Education Council with full responsibility for student education and training. An equally centrist recommendation was the idea that the national organization should award the CA designation. Still another: that CICA collect all fees from members.
Citing Canada’s legal structures and traditions, the special committee praised the task force highly, but rejected much of their approach. In the committee’s view it would have created a stronger national organization at the expense of the provincial institutes. “We agree that the present importance of national activities demands a strong, and therefore independent, national body...but we do not see this as [requiring] a weakening of our provincial role.”
Jurisdictional issues notwithstanding, CICA was on course for a stronger mandate. A national executive sub-committee investigated further, and proposed a new organization based on a division of powers. In its report, the group defined some powers as national in nature, others as provincial. Still others crossed federal and provincial boundaries. Provincial and national committees held negotiations that sometimes seemed endless. But after changes in both national and provincial by-laws, the new CICA structure went into effect in 1972.
Each provincial institute and the Canadian Institute would choose two members to serve on CICA’s council. However, a clever system of proportional voting would ensure that an alliance including Ontario, Quebec and the Canadian Institute could not automatically control a major national decision. Such an alliance would still require a vote from one of the eight smaller institutes.
In the new structure, Ontario and CICA members would have four votes each, while Quebec representatives would each have three. Alberta, BC and Manitoba would each have two, while representatives of the other institutes would have a single vote apiece. Thus, the smaller provincial institutes would hold exactly half the total vote.
In the fashion of Canadian compromise at its best, this strengthened the national organization without compromising provincial integrity or permitting the two large provinces to control the central decision-making apparatus. By the same token, however, no decision could be made without support from the Canadian Institute, Ontario or Quebec.
The following year, this clever voting structure found itself facing a peculiar problem. Several years after Britain reorganized Bermuda as a self-ruling colony, its accounting institute had applied to become a CICA member. In 1973, members of the Bermuda Institute were formally welcomed into Canada’s much stronger national organization. CICA’s perfectly balanced voting structure had to change.
To deal with this question, the Bermuda Institute member appointed to CICA’s Board of Governors was to refrain from voting on issues that, in the opinion of the chair, affected professional practice in Canada only. (A CICA-appointed member on the Bermuda Institute Council had the same type of restriction.)
One of the happy consequences of the Bermuda connection, of course, was that some trips and conferences in that paradise became fully tax-deductible.
Accounting Regulation
Despite the profession’s newfound maturity, problems lurked. Task Force 2000 identified one of these – the tedious issue of what to do with a profession that had fragmented into competing organizations.
Rather simplistically, the task force had recommended a single organization – one that would include CAs and members of the Society of Industrial Accountants and the Certified General Accountants Association of Canada. CICA’s special committee rejected this idea, arguing that consolidating the major organizations would “leave a vacuum in the technical accounting function,” which yet another organization might arise to fill. In the end, to answer the question of which accountant had what authority was a complex undertaking. It required negotiation among the institutes, diplomacy between CAs and competing organizations, and lobbying at the provincial level.
All three of the competing professional bodies were incorporated under Alberta law. The first, of course, was the Alberta Institute. Another, the Society of Industrial Accountants of Alberta, had been organized in the legislature under a private member’s bill in 1944.
The third was the Certified General Accountants Association of Alberta (CGAAA). Incorporated in 1961 under Alberta’s Societies Act, it was affiliated with the Certified General Accountants Association of Canada (CGAAC), which had been federally incorporated under another name in 1913. In a letter to the Alberta Institute dated in 1971, Provincial Auditor Keith Huckvale had expressed a number of concerns. For example, “a few years from now...a substantial number of persons in Alberta [will] have received their practical training and experience in the offices of our practising members, but [will] hold certificates from the Certified General Accountants’ Association of Canada....Such a situation will inevitably lead to representations by the CGA members for recognition of their association as a body having professional status equal to that of the Institute of Chartered Accountants of Alberta. The Institute’s position may be difficult to defend.”
Huckvale’s letter got to the heart of a more general issue. The institute was determined to maintain its status as Alberta’s premier accounting body.
The amount of activity within the profession was great. Besides these recognized bodies, groups of accountants would occasionally organize into special interest and even rival organizations, like the Institute of Accredited Accountants. Augmenting this melee of professional organizations was a non-organized army of bookkeepers and tax preparers.
Thus, one of the institute’s big challenges was to increase order in this potentially chaotic world. Countless negotiations with the Social Credit government had yielded no fruit, but now the Progressive Conservatives were in power. Council considered “making members who are Ministers of the Crown, honourary members of Council.” Perhaps this new government would be more inclined to hear the institute’s case.
Professional Matters
On May 26, 1972 the solicitor for the Certified General Accountants Association of Alberta wrote to his peer at the Alberta Institute, asking whether the institute would be “interested in meeting with representatives of the CGAs and possibly other accounting associations in hopes of resolving some of the differences and problems in the field of accounting and auditing.” The matter was left to the new council, which would soon take office.
The institute’s minutes do not record how the new council directed its lawyers to respond, but events would soon transpire to suggest that meetings between the two organizations had been quite collegial. The occasion was a provincial government discussion paper titled Policy Governing Future Legislation for the Professions & Occupations, which provided the framework for a legislative committee hearing.
This all-party committee considered briefs from organizations as diverse as the College of Physicians and Surgeons and the Edmonton Watchmakers Association. At the hearing, the Alberta Institute made headlines by proposing a single professional body and uniform standards of competence. The institute argued that “as the most senior professional accounting association in Alberta, we must now assume the responsibility of any governing powers new legislation may delegate.” This proposal split Alberta’s accounting community in two. In a brief of its own, the 500-member CGAAA in effect supported the ICAA proposal.
This pitted Alberta’s two accounting heavyweights against two smaller organizations. The tiny Institute of Accredited Accountants, which then had 126 members but was later absorbed by the CGA organization, opposed the idea at the hearing itself. Alberta’s other accounting body, the 300-member Society of Industrial Accountants of Alberta, did not address the question at the hearing, but later submitted a letter on the matter to the legislative committee’s chairman, Catherine Chichak.
Society president Bill Rodden wrote that his organization had been “surprised” by the proposal. The legislative committee “should be aware that the Institute of Chartered Accountants has sought exclusive rights in the fields of public accounting and public auditing in the recent past,” he said, “and was refused such rights by the legislature for the reason that availability of accounting services in all areas of the North could not be assured by the Institute of Chartered Accountants (concentration in major centres is a reality).”
As the legislative hearing ended, Catherine Chichak announced that her committee would probably recommend a Professions and Occupations Council to the spring session of the legislature. Chichak later withdrew the idea.
In a later submission to the Chichak Committee, as it was known, the Alberta Institute proposed an “umbrella act” similar to one that had recently been enacted in Quebec. “It is our understanding,” the ICAA submission read, “that an umbrella act would be an overall statute encompassing certain broad principles and objectives that would be applicable to all self-governing professions with specific statutes to be enacted relating to each profession and its specific function and operation.” In the end, however, the Chichak Committee did not accomplish a great deal. Professional regulation issues percolated within the province for nearly 15 more years.
The seriousness with which many in the accounting community took the issue of professional competition among the larger accounting organizations can be illustrated by three other developments from this period.
There was widespread discussion about ways to unify the profession. For example, in 1973 the presidents of the provincial societies of Industrial Accountants began meeting with their counterparts in the provincial associations of Certified General Accountants to “explore the feasibility and desirability of a merger between these two bodies.” While these discussions continued for many months, they did not lead to consolidation.
For its part, CICA struck a Regulatory Legislation Committee in 1973 to study both the matter of regulatory legislation and relationships with other accounting bodies. When the committee reported back in early 1975, its basic conclusion was, in effect, that “the public interest” demanded that only CAs should practise public accountancy. They generously proposed “bridging” provisions that “will give appropriate recognition to the education and experience achievements of members of other Canadian accounting groups who wish to become students of the Institutes.” For Alberta, at least, that was where the issue rested for more than a decade. There was no resolution in sight.
Progress was being made elsewhere, but slowly. For example, the National Assembly adopted Quebec’s umbrella act (Bill 264, the Chartered Accountants Act) in July 1973. When that act passed third reading, the provincial Minister of Industry and Commerce recommended its adoption under the formal understanding that CAs, CMAs and CGAs combine to form a single organization.
While Quebec’s professional organizations had an act they could live with, they still could not live together. They opposed this proposal, and in the end the province continued to have three major professional accounting organizations.
It is worth noting an important change of a linguistic nature from this period. The Quiet Revolution of 1960-66, which saw the province greatly modernized, also gave control of most provincial institutions to the French-speaking majority. This planted the seeds of a movement to formally change the Quebec Institute’s name. In 1974, the Quebec organization’s official name became l’Ordre des comptables agréés du Québec.
“We are on the threshold of change, change in the way we govern ourselves, change in our relationships with other accounting bodies, change in the way in which we practice, in fact change in almost every element that comprises the CA environment.” – 1981 Annual Report
Chapter Nine — Economic Turbulence: 1973-86
Ironically, the years in which petroleum made the biggest impact on Alberta politics included the decade in which the province was forced to diversify away from an extremely heavy dependence on the crude oil price cycle. The period that began in the early 1970s was an adrenaline rush in the geopolitics of petroleum. It was also a period of high inflation – an economic phenomenon that raised troubling problems for accounting.
One cause of inflation was the war in Southeast Asia – a war that the US partly financed by increasing money supply. Another cause was a rapid rise in oil prices. Because of heavy dependence on oil as a source of primary energy, increases in world prices had a much greater impact on consumer price inflation than they do today. Canada’s inflation rate peaked at 12 per cent in 1981.
For accountants, continual price increases of this magnitude raised troubling practical and theoretical questions. By reducing the real value of the dollar over time, inflation made it difficult to compare financial results. As they sought common principles to deal with the problem, the profession argued the relative merits of historical cost accounting, price-adjusted historical cost accounting, and current value accounting. Inflation-adjusted cost accounting was accepted for a while, but in the end no new principles became generally accepted. This was because the problem essentially went away. It did not leave without causing a great deal of concern, however.
The intensity of the debate surrounding inflation-adjusted accounting can be seen in a 1975 interview of Elvin Christenson, Bill Detlefsen, Gordon Woodman and Vic Dzurko reported in the Edmonton Journal. The four institute members agreed that the CA profession should not rush “wildly” into inflation accounting, abandoning old standards.
As the CA Monthly Statement described the event, the four CAs stressed that, despite what the media happily termed “double-digit inflation” and the resulting paper profits indicated on financial statements, the historic cost method should be maintained. “Implementing major changes too quickly, they argued, could aggravate problems if rapidly increasing inflation proves a short-term situation. They added, however, that there is no reason why corporations cannot provide adjusted statistics as supplementary information to assist governments, shareholders and investors in their decision-making.”
There was anything but unanimity on the topic. The following year, noted CA Lyman MacInnis wrote in an Ontario Institute publication, Check Mark: “There are compelling reasons for the accounting profession to move immediately to the adoption of some form of accounting for inflation. The level of business earnings is grossly overstated in all public reports leading to considerable misunderstanding about the well-being of Canadian business.”
During those years the economy suffered from economic stagnation and high inflation (commonly called “stagflation”). Everyone felt the pinch. For example, effective April 1, 1974 ICAA membership fees rose from $110 to $150 – about one third. And the worst years of inflation were yet to come.
This membership fee increase consisted of a $15 increase for the Alberta Institute and $25 for the Canadian Institute. The CICA increase was partly due to general inflation. More importantly, however, the fee increase can be attributed to CICA’s greatly enlarged and expanded research function – expected to cost $700,000 for the 1974-75 year. The new program included the publication of more CICA Handbook material, research, and accounting and audit technique studies.
The first edition of the CICA Handbook of accounting standards came out in 1967. This fat volume, which consolidated material previously issued in bulletins, became so widely respected that both provincial and federal legislation refer to CICA Handbook principles and guidelines.
Price Shocks
For the first time in its history, in the early 1980s the institute took a public stand on a controversial political issue. To understand why this unusual event took place, it is important first to conjure up the climate of the times.
An intense period of energy politics coincided with this inflationary period. It began in 1971 with the election to government of Peter Lougheed’s Progressive Conservatives. His government challenged the feds under a banner that claimed to defend the province’s ownership of natural resources. The first scrap in this battle occurred when the province unilaterally tore up contracts with the oil companies and imposed substantially higher royalties.
World events intensified the urgency of this debate with the era’s first oil price shock. The 1973 Arab/Israeli Yom Kippur War triggered hostility toward the West by the Organization of Petroleum Exporting Countries’ Arab members. As a political and economic tactic, they imposed oil embargoes on the countries supporting Israel – in practical terms, the United States and Western Europe. In addition, they introduced production cutbacks and began setting oil prices unilaterally. After the embargoes were lifted, the organization continued to manipulate the global energy market through production controls. These measures turned OPEC into a cartel capable of strongly influencing prices; the non-communist world had little alternative but to pay OPEC prices for imports.
The combined OPEC crisis and Alberta’s unilateral moves on royalties created an untenable situation for the federal government. Following an ill-fated national energy conference in January 1974, Alberta announced a new natural gas royalty regime with a supplemental 65 per cent royalty on price increments over the "base" price. On April 1, the province introduced a 65 per cent surroyalty on oil.
These moves demanded a response from the federal government. Ottawa was unwilling to forgo revenues from a maturing oil industry after having provided most of the tax incentives (dry hole, depletion and other write-offs) when the industry was in its developmental phase. So the federal government’s 1974 Budget disallowed the deduction of provincial oil and gas royalties for income tax purposes. Political tension became political crisis.
The second price shock came in 1979-80, when the Iranian Revolution combined with panic in the oil markets to send prices into the stratosphere. There was a widely held view by now that oil prices would always stay high, and that Alberta would always boom.
The third price shock burst this bubble. It resulted from both economic and geopolitical factors. The principal economic factors were energy conservation, the substitution of cheaper energy forms like coal for oil and increasing non-OPEC oil production. On the geopolitical side, it was partly a move by Saudi Arabia to gain market share more in line with its reserves and productive capacity.
Conjecture also has it that the collapse of oil prices was part of a grander plan by the US to bring the USSR to its economic knees. Whether the CIA or some other cloak-and-dagger organization had a hand in it or not, the dramatic decline in oil prices deprived the Soviet Bloc of hard currency earnings. These came 85 per cent from oil and gas exports. Whatever the causes, in a single tumultuous month (January 1986) prices dropped more than two thirds, to below US$10 per barrel. Before the market began to stabilize, trades actually took place below US$5 per barrel.
During the 1970s, a series of negotiations between Ottawa and the oil-producing provinces kept Canadian prices below world prices. Prices rose during this period, but most of the increases went to governments. For Alberta, which had a small population and a profitable resource base, this generated government revenues beyond the province’s needs. To deal with this wealth, Premier Lougheed created the Alberta Heritage Savings Trust Fund – a provincial piggy bank, as his government liked to explain it. Savings for a rainy day.
This fund grew quickly. Initially, the province put 30 per cent of resource revenues into it. When energy prices declined, the province’s contribution dropped to 15 per cent and was then eliminated. In time, earnings from the fund were appropriated to general revenue. Because the fund was created as a tool of government, its political masters found ways to use it for political ends. This meant that those in charge of the books needed to find ways to record spending on parks, for example, that were consistent with the Heritage Fund’s mandate as a store of value. One of the instruments used was the “deemed asset.” In the early 1990s, the institute took exception to the use of this idea, and others, in “Fiscal Facts One,” a formal submission to the provincial treasurer. The institute later made another, similar, formal submission to the province. Not surprisingly, this was called “Fiscal Facts Two.”
The National Energy Program
Another impact of the oil price shocks on Alberta accountants came in the form of the federal government’s National Energy Program. Announced in the 1980 Budget, this document was an accountant’s nightmare (or dream) come true.
It imposed taxes that would give the federal government de facto royalties from provincial petroleum resources – namely, the Petroleum and Gas Revenue Tax and the Incremental Oil Revenue Tax. It provided a system of grants designed to encourage activity by companies whose shareholders were Canadian at the expense of those who weren’t. Those grants also encouraged exploration and development on federal land at the expense of activity in the producing provinces. Oil and gas prices continued to be regulated. The complex pricing system for crude oil included provisions for different oil prices for production of different vintages.
Such policy required an enormous amount of accounting expertise. For accountants in government, it created the need for large bureaucracies. For accountants in the oil industry, it created “paper burden.” For accountants in public practice, it created billable hours.
A sense of the intensity of feeling within Alberta came from council itself. For the first time in its history, in 1981 the institute made a formal statement on a public issue. The institute’s 159-word statement called for the federal and Alberta governments to renew negotiations for the creation of an energy policy “that fairly recognizes the needs and rights of all Canadians.”
Council charged that the National Energy Program would “discriminate against companies operating in and individuals who reside in Alberta, militate against the development of a policy which could make Canada energy self-sufficient, threaten the fabric of our nation and create economic hardship throughout Canada.” The unanimous resolution added, “The development of Alberta’s natural resources is essential for the long-term prosperity not only of Alberta but of Canada.”
Sidebar: Grace under Pressure
Photo caption:
William Dawson Grace, FCA
ICAA President, 1973-74
CICA President, 1984-85
Of his first job as a qualified CA, Bill Grace said, “I’m probably the shortest-lived assessor the Department of National Revenue has on record. I had two or three weeks of training and I stayed for about two weeks afterwards. There was a big book in the office and every morning we were supposed to sign ourselves in by 8:15. After it was taken away, if you were late you had to report to the director. I hated it.” The year was 1960, and Grace had already earned a bachelor’s degree in English and History from the University of Alberta. He articled with Peat Marwick Mitchell (now KPMG LLP), taking the Queen’s University CA course by correspondence.
From this less than illustrious beginning, Grace carved out an illustrious career in business. Since 1966 he has served in many high-profile positions. These included service as senior vice-president and CFO of Chieftain Development, of R. Angus Alberta Limited, and of Canadian Utilities Limited and its subsidiaries.
Grace served on the Alberta Institute’s council from 1969 to 1974, ending with a term as president. Following several years on the CICA Task Force on Specialization, he began a term as CICA president in 1984. During his CICA presidency, Grace helped consolidate that organization’s Board of Governors and Coordinating Council.
“Unless people speak out about things that concern them,” Grace said as he began his term in the CICA presidency, “nothing will happen. I know I can’t do all that much in one presidential term, but I figure maybe someone will pick up the concern behind something I say and carry it a little further. That’s the way things get changed.”
Grace has been outspoken on the idea that the profession sometimes needs to take on political issues. For example, in the early 1980s he began advocating the return of Crown corporations to the private sector. Long before a groundswell of public opinion began supporting privatization, Grace told an Edmonton service club that he “would like to see one swift and simple answer to the control and accountability of most Crown corporations. Return...to the private sector, by the sale of shares, all those enterprises in which government involvement is not necessary. And I suggest that’s the majority of them.” Also before his time, Grace advocated simpler income tax.
Grace served as chief operating officer for the liquidation of the Canadian Commercial Bank, which is discussed elsewhere in this volume. With assets of approximately $2.3 billion, the CCB liquidation was the largest in Canadian history.
In 1988, Grace joined Pricewaterhouse as the managing partner of the consulting group and later as managing partner of the Edmonton office. While at Pricewaterhouse, he was engaged by the Province of Alberta and TELUS Corporation to chair the management committee with a mandate to divest NovAtel Communications. He retired from PwC in 1994.
According to the firm, “we have consistently been impressed by his general business acumen, his professionalism (and dedication to our profession), his commitment to a strong Canada, both in the business and his community, and his sense of humour. We thank him for being a great partner of ours. Our association with Bill Grace benefited both our clients and our people.”
PricewaterhouseCoopers LLP Chartered Accountants
Government Accounts
This period saw the provincial government’s accounting systems increase greatly in sophistication – to a very large extent through the efforts of Bill Rogers. Rogers had begun working for the government in 1948 when he joined the staff of the provincial auditor as an articling student. He later served on CICA committees dealing with audit guidelines for computers and co-authored the CICA publication Computer Control Guidelines.
The year after succeeding Keith Huckvale, who retired in 1972, Rogers attended the first Conference of Legislative Auditors, a conference arranged for the exchange of ideas, methods and experiences among public sector auditors. Rogers’ participation was one of a number of factors that helped the province redefine the job of the provincial auditor. More important still was the role played by the Alberta Institute.
The story began with a meeting between the provincial treasurer and ICAA president Harvey Bliss in January 1973. Bliss learned that Premier Lougheed “would be most appreciative of a report by the Institute on the duties and terms of reference of a provincial auditor.” Council quickly set up an ad hoc committee to comply with this request. In August, Mssrs. Elvin Christenson, John Rawlinson and Lorne Baxter were prepared to present their report to council for approval – until Christenson’s name was drawn to attend the Masters Golf Tournament in Georgia. He sweated buckets over the decision, but eventually opted to let his colleagues make the presentation to council.
After several drafts and much discussion, the committee made five recommendations. First, the role of provincial auditor should be changed by transferring pre-audit and financial management responsibility to Treasury or other departments, and by expanding the post-audit function to that normally associated with an auditor general. Second, the legislature should have a public accounts committee to strengthen its control over the public purse. In addition, a new act should establish the office of the auditor general. Fourth, the auditor general must be professionally qualified and assured of professional independence and freedom from political influence and bias. And finally, the office should have the right to use any chartered accountant or firm of CAs as an official nominee.
Council was told that the report had “aided substantially in formulating the views of the government of Alberta leading up to new legislation affecting the role of the Provincial Auditor in our province.” And so it had: Rogers fully supported these ideas, and they were incorporated into two pieces of legislation.
The first was an amendment to the Treasury Act, proclaimed in 1975. This legislation transferred the Data Processing Centre to the Department of Government Services. In charge was Bob Gehmlich, an ICAA member. Following this transfer of staff and responsibilities, the Office of the Auditor General consisted of two divisions. One of these, Revenue Audit, was responsible for financial statement audits and the compilation of public accounts. The other, Pre-audit, was responsible for the processing of payment vouchers and the production of cheques.
Following these changes, Provincial Treasurer Merv Leitch introduced the Auditor General Act (1977) into the legislature. An ad hoc ICAA committee – chaired by Gordon Woodman, with other members including John Rawlinson, Fred Barth, David Bentley, Harvey Bliss and Lorne Baxter – had also reviewed this act. When the legislation was proclaimed, Rogers’ Revenue Audit Division became the core of the new, even slimmer Office of the Auditor General.
The Auditor General Act had an immense impact on the management of Alberta’s accounts. Under its terms, the pre-audit section of the Audit Office went to Treasury, along with the responsibility for preparing public accounts. This took financial operations entirely away from the Audit Office. Another provision of the act made the auditor general an officer of the legislature, guaranteeing the independence of that position.
The act also provided for the provincial assembly to strike a Select Standing Committee on the Office of the Auditor General. This committee reviews the annual estimates of revenue and expenditure for the Audit Office and submits them to the treasurer for inclusion in the estimates. The Select Standing Committee also appoints an auditor for the Office of the Auditor General.
An important development for public accounting firms came from a provision that enabled the auditor general to engage any person to act as his agent. This allowed Rogers and his successors to hire CA firms to audit Crown companies, agencies, and other arms of government.
The new act also established an Audit Committee, consisting of selected individuals from outside government, to review the auditor general's report before it is issued. Over the years three ICAA members (Janice Rennie, Haughton Thomson, and Bill Stephen) have chaired this committee.
In addition, the Auditor General Act laid out a comprehensive reporting mandate for the auditor general, giving that position much greater authority than the provincial auditor had enjoyed. The auditor general’s mandate covered matters relating to collections and disbursements of public money, and to safeguarding public assets. Under the new mandate, the auditor general could report on "management control systems designed to ensure economy and efficiency” within the government. A further section provided that he or she should report on "the existence of and compliance with appropriate and reasonable procedures to measure effectiveness."
Prior to the early 1980s, CICA had not yet codified generally accepted standards of accounting and auditing for public sector auditors. This changed when CICA began to issue standards for government accounts. Better disclosure, financial statement presentation, financial administration and performance measurement were among the outcomes.
Pronouncements from CICA’s newly organized Public Sector Accounting Board also aided the auditors general and responsible officials in the Treasury Department. Publications and conferences emanating from the Canadian Comprehensive Auditing Foundation were also helpful in developing uniform practices within government.
The Right to Practice
In 1974 the institute struck the Public Practice Committee under the chairmanship of John Collins. This committee’s mandate was to determine and service the needs of members in public practice and to assist and guide the practice advisor.
The practice advisor service had been expanded in the early 1970s, and in 1974 the institute hired George Eykelbosh as its first full-time practice advisor. Members were invited to contact Eykelbosh to help them with problems free of charge. Renamed the CA Monthly Statement the same year, the newsletter began including a question and answer column from Eykelbosh. It touched on some of the topics raised during his visits with practitioners.
Eykelbosh left the institute’s employ later that year, and his replacement did not arrive for three years. John Douglas was appointed director of public practice activities in 1977, a position he held for 18 months. In the October 1977 issue of the newsletter, Douglas began a regular column about how to keep a practice ticking. “It’s a balancing act that faces even the most organized and technically proficient practitioner. Both administrative and technical skills must always be in perfect harmony. Neglect of either of these skills in a practice for even a short period of time can be detrimental.”
Because his visits were confidential, Douglas was not required to report breaches of professional conduct he uncovered. However, he did have to report suspected fraud or gross negligence to a standing committee of council which would then decide whether to turn the matter over to the conduct and discipline committee. This rule was to ensure confidentiality and to help maintain institute/member rapport; it applied to all CAs holding ICAA staff positions.
If institute staff came across breaches of the rules of professional conduct, however, this confidentiality rule did not apply. A staff member was asked to point out to the member or student the apparent breach of the rules, and periodically to report to the conduct and discipline committee on a no-name basis. The committee would then have the right to request further information.
When Gil Ramsey became ICAA president in 1977, he questioned whether the CA designation should automatically allow a person to practice public accounting. “Should public practice be a right or a conferred benefit? If we are truly concerned about public interest then possibly it should not be a right.” Ramsey said internal licensing would give the ICAA powers to set standards and control its members who practice public accounting. “Internal licensing may well be a necessary first step to regulatory legislation. There is no question that the public deserves regulatory legislation.”
Council struck a special committee to look into the need for an internal licensing program for CAs in public practice. In 1978, the committee recommended registration of all practice offices and mandatory reviews of all practice units in Alberta. “The only practical method of ensuring a continuing appropriate level of professional standards in the rendering of public accounting services is through mandatory office reviews, with appropriate provisions for reporting of deficiencies and imposing sanctions,” said committee chairman John Collins. All practicing offices that received more than $1,000 per year in fees were required to register beginning in 1979.
Council approved a mandatory practice review program in February 1980. The membership approved this idea at the June annual meeting, 167 to eight. Quebec and Newfoundland had already adopted mandatory review programs; Alberta, Ontario, Saskatchewan and British Columbia followed at about the same time.
While the Alberta Institute’s Standards of Training Committee no longer existed, its terms of reference lived on in the Practice Review Committee. Designed to ensure that all practicing offices maintained an appropriate level of professional standards, the practice review program was mainly educational. Its intent was to help practitioners improve and upgrade their office standards.
Rather than receiving a pass or fail, offices were assessed into one of four categories: no corrective recommendations; corrective recommendations; corrective recommendations with early follow-up due to the magnitude of the problem; or referral to the conduct and discipline committee. All offices (more than 400) were to be reviewed within a three-year period. Approximately 70 offices were reviewed the first year.
Initially, Dick Schulli served as director of practice review, and Tom Halford was staff reviewer. Halford replaced Schulli the following year, however, and served in that position when the reviews officially began in May 1981. Halford began to include a column in the CA Monthly Statement describing common problems uncovered during practice reviews.
Three full-time reviewers were used the following year. Of the 128 offices reviewed, 78 per cent were found to have complied with the standards of the profession. The others were given recommendations for improvement and scheduled for follow-up.
Some years later, council appointed an ad hoc committee on Practice Review; Roy Leard was the chair. When the ad hoc committee delivered its report in 1985, practice review had been in operation for nearly four years. Committee representatives had visited almost all of Alberta’s 500 offices.
Council approved essentially all of the Leard report recommendations. This greatly strengthened practice review, which the report called “a cornerstone of a self-governing profession.” Under the amended regime, the Practice Review Committee reviewed offices based on a four-year cycle. This would reduce the costs of practice review and allow the use of fewer practice review staff, which in turn which would lead to more consistency and experience.
After the visit, the reviewer would recommend one or more of three decisions to the Practice Review Committee: first, the practitioner complies with the profession’s standards; second, a return visit is required; third, the institute should place restrictions on the practitioner’s ability to train students. A committee opinion that the office did not comply with professional standards would only be given after several follow-up visits, “and should normally result in a referral to the Conduct and Discipline Committee.”
Institute Operations
The institute organization grew with increasing membership. In 1974, an ad hoc Committee on Accommodations reviewed a number of issues relating to the institute’s physical address. Assuming that membership would increase by seven per cent per year, the committee forecast that there would be 2,600 members in 1977 and 3,000 in 1980. (As it turned out, membership topped 3,000 in 1978.)
The ad hoc committee investigated the Alberta Institute’s office space and concluded that another 1,000 square feet were needed. Accordingly, Vic Dzurko exercised an option on 1,000 square feet adjacent to the institute’s existing Empire Building offices. This increased total office space to 3,400 square feet, and monthly rentals to $1,600 plus operating expenses.
The ad hoc committee also considered whether the institute should move from Edmonton to Calgary. While Calgary had more members and students than Edmonton, they concluded that “there appeared to be no other reason” to relocate the office. Instead, they proposed that the institute consider “the establishment of an Institute office in Calgary whenever a decision is made to have more than one professional staff member performing a particular function.”
Based on another committee recommendation, members and students in Calgary, Grande Prairie, Lethbridge, Medicine Hat and Red Deer were soon able to call the ICAA office toll-free. Those outside these cities were now welcome to call the office collect.
The institute soon had full-time staff in education, public relations and public practice activities. There were also full-time education, information and practice advisory programs, and a coordinator for members and student education programs. Vic Dzurko continued to be the institute’s very popular, highly respected executive director.
In 1977, Dzurko was the guest of honour at the Edmonton CA Club’s first ever “roast.” With patience and good humour, Dzurko listened to accusations that, for example, he was “a legend in his own mind.” He got a bit of his own back at the close of festivities, however, when he presented each of his tormenters with a t-shirt bearing the words, “I got VD tonight.”
To deal with the continually increasing workload, the size of council increased from 12 to 15 members, effective June 1980. To ensure that the views and needs of the public were taken into account, non-CA members of the public began to be represented on institute committees. As we shall see, it would not be long before public representatives would become a permanent part of council’s structure.
Expansion in the Empire Building continued far more quickly than anyone could have imagined at the beginning of the 1970s. By year-end 1980, the institute was crowded into 6,374 square feet, and another ad hoc committee on Accommodations had begun investigating the institute’s pressing need for new facilities. Chaired by Ron McKague, the committee concluded that the institute needed 9,500 square feet immediately, and would need an additional 3,000 square feet within five years.
This would supply 30 staff offices and a variety of reception, conference and meeting rooms, an air-conditioned room for computers, plus other rooms for storage. After considering five options to lease, council agreed to move to the Toronto Dominion Tower in the Edmonton Centre in 1983.
For the first five years, rent before operating costs would be $926,250. This was a period of high inflation, however, and it was common practice to use discounted projections to express costs after inflation in present dollars. The ad hoc committee therefore added helpfully that, if discounted at 12 per cent, the real cost would be $634,684.
Computing Power and CA Specialization
At the end of 1979, council’s executive minutes reported a discussion of “office mechanization.” The point of discussion was whether it would be “desirable for the Institute to purchase, or lease, a word processing unit with two keyboards and a printer to handle the Institute’s ‘text’ and ‘member record’ needs.” The executive did not feel competent to make this decision. “Caution was needed before making major changes in this area...if necessary, a consultant may have to be engaged to assess the project.”
After receiving a four-page staff proposal from Rob Sproule, the institute acquired two Wang word processors and a printer the following year. The initial cost of installation was $44,400. Thus was the institute introduced to the primitive microcomputer. To put this acquisition in perspective, it cost the equivalent of $102,500 in 1999 currency. To replace this equipment with turn-of-the-century personal computers and a bubble-jet printer would cost about $2,500, and that amount would bring quality improvements and far greater power into the bargain.
While the institute’s first word processors had little power and limited applications, computing potential was already clear. In a 1981 presentation to the University of Calgary’s CA graduating class, CICA president Ray Harris said that computers would have a major impact on the accounting profession. “During the next 20 years,” he said, “on-line minicomputers will become an integral part of our business and our home lives and they will handle communications as well as record-keeping.”
The institute itself illustrates that the intervening years have entirely confirmed Harris’s prognostication. As we shall see, by the end of the century the Alberta Institute required far more computing power than could be provided by two small word processors. This process began in 1982, when a new institute employee, Director of Finance and Administration Patty Russill (now Glover), introduced computerized accounting systems. She later became executive director of the Western CA Services Association, which provides insurance services to chartered accountants in Western Canada.
Specialists and Generalists
In his presentation at the university, CICA president Harris had suggested that the development of “minicomputers with links to video-communications” would provide CAs with more information than they could absorb. This, he suggested, would force individual professionals to specialize.
This issue had been gaining currency within the profession for some time. For example, it was the topic of discussion at the institute’s first members’ dinner, held on March 13, 1980. The guest speaker was Provincial Treasurer Lou Hyndman, who focused on the trend toward specialization in the profession. However, Hyndman argued, “The generalist’s approach will still be needed in the next decade. Maybe there should even be firms consisting of chartered accountants, engineers and lawyers to solve the complex problems of the 1980s.”
Professional development
The institute was still quite focused on professional development. The Professional Development Committee had begun holding a concentrated Professional Development Week at the Banff Centre beginning 1971, and it soon proved to be enormously popular. More money was being invested in education in the economy as a whole and CAs – faced with an increasingly technical and complex profession – needed to spend their share. Thus, the institute was ready to respond as a strong demand for professional development courses arose. Alberta’s CAs were particularly enamored of the one-week courses held at the Banff Centre. Because of the pressure of enrolment, in 1975 the committee began holding two of these one-week courses.
An internal survey from 1977 illustrates how wildly popular professional development had become. Nearly half (1,266) of the institute’s members returned their voluntary professional development reporting forms. Of the 792 public practitioners who responded, each had completed an average of 62 hours of professional development training that year, mainly in taxation. The remaining 474 respondents were from business, industry and government; on average, they had each completed 40 hours.
The most popular courses had to do with tax law, which continued to be a rapidly changing field. So complex had tax become, in fact, that the final subject area exam in taxation became an open-book exam in 1975. Students could take a non-annotated copy of the Income Tax Act into the final. They were no longer expected to know the act from memory.
The institute continued to develop leading edge courses. Six computer-related offerings from 1975 included “Computer Controls,” “Computer Auditing,” “Computer Applications,” “Data Centre Liaison,” “Computer Resource Management” and “Principles of EDP Management”, and were not available elsewhere in Alberta. In a classic example of wishful thinking, the CA Monthly Statement reported of these courses, “the techniques covered will not be outdated by developments in computer hardware or software.”
As always, the technology of education continued to evolve. During 1983 the institute began offering video-assisted training, including a video rental program. The videotape-training program was meant to provide all levels of staff with high-quality, cost-effective training. Each program included a leader’s guide and participant workbooks, and the tapes ran from 40 to 90 minutes with interruptions for exercises.
Videotape was not really a new technology, of course. In the first of its meetings in 1971, the Career Information Committee had voted to provide partial funding for a film on chartered accountancy. The minutes of the discussion introduced a new word, “video-tape,” into the institute’s lexicon: “This film can be done in three ways: video-tape, black and white or color. Unless we wish to purchase this film after production it will probably be done on video-tape and therefore be of little use to us.”
But in 12 years, a great deal had changed. Obviously caught up in the excitement of the new technology, the June 1983 issue of the CA Monthly Statement asked, rhetorically, “Remember the hula hoop, the yo-yo, the skateboard and the pet rock craze? Well today it’s video. Usually when you mention video to someone it conjures up images of Pac Man or Space Invaders, but there is a non-recreational side to video which is also sweeping the country and, judging by its impact, it’s here to stay.” The newsletter informed members that a simple video recorder and playback machine with a 19-inch TV could be purchased for less than $1,500 (about twice that amount in 1999 dollars, without adjustments for quality improvements). As part of the training program, the institute had invested $2,500 in a video camera.
Recruitment
After university graduation had become an entrance requirement, the ICAA shifted its recruitment program. Rather than primarily holding booths at high school fairs and Career Days, the institute continued to build relationships with high school guidance counselors and invited them to informal functions. For several years the Career Information Committee hosted a reception for Alberta guidance counselors at their annual conference. The institute also developed the 1972 recruitment film Money Minders, starring Patty Russill and Bill Halford. Other Canadian institutes also screened this film.
Through ICAA participation in small business fairs every fall the public learned about the CA profession and the types of services CAs provide. Beginning in 1975 the ICAA and CICA encouraged members to participate in Junior Achievement Programs, which provided high school students with business knowledge.
The institute continued to develop brochures for public distribution. One from this period, which explained the details of the CA training program, was entitled, “Why Does Career Start With CA?” Others included the “Talk Full Service with a Chartered Accountant” brochure, which described what a CA is and does. Another, entitled “Chartered Accountants – What Makes Them Special,” addressed public confusion about the differences between the various accounting designations.
Yet another brochure, “Conversations About Being a Chartered Accountant” was developed by the Career Information Committee in 1978-79 to encourage secondary and post-secondary students to pursue CA careers. The booklet answered questions typically asked by prospective students and used a question and answer format based on actual recorded sessions between CAs and students.
In 1981 Andy Farvolden and Marie Onerheim were among the Alberta CAs featured in the film Goodbye, Mr. Dickens. Focusing on the desirability of a career as a CA, the film was created for use in high schools and universities and community cable television. It was available in two lengths: 20 and 26 minutes. The former was “ideal for a brief presentation;” the latter, for occasions when there were no strict time limitations. With the assistance of the Communications Committee, ACCESS TV network produced 13 half-hour programs called Net Worth. This series focused on financial planning.
Generation Gap
Around 1970, the institute began to hold “rap” sessions with the “alienated” university students of the day. During those years, both parents and the media were deeply concerned about the so-called “generation gap.” This was the media name for an apparent failure of communication between adults raised during the Depression and the War on the one hand, and young adults who had only known post-war prosperity. University students in particular voiced concern about social issues, and many affected a disdain for “the establishment.”
In an effort to make accountants seem “more human” to this audience, the institute introduced a new concept to recruitment: the “Beer Bash.” First held at the Universities of Alberta and Calgary in 1974, the two events attracted about 400 students. Having shown up to hear about a profession, the students were pleasantly surprised with the refreshments. More than 325 students attended the beer bashes held the following year. Most were commerce graduates, although other students also attended. They drank 125 dozen beer and watched the Money Minders film.
When the March 1975 newsletter reprinted one of the posters used to advertise the event, however, controversy began. The advertisement said “Get ‘A Head’ in Life! Find out about a career as a Chartered Accountant.” Bill Payne, a member, wrote a furious letter to the editor.
“I have recently received the CA Monthly Statement for March, 1975,” he wrote, “in which I note a practice which I consider objectionable and very unprofessional.” Referring to the beer bash poster, Payne wrote, “In attempting to present an image of being ‘human,’ the Institute has swung the pendulum to the extreme of giving the impression that there is a striking resemblance between lumberjacks and Chartered Accountants.”
Payne cited three reasons for the beer bashes being objectionable: First, “the connotation of ‘beer bash’ is not compatible with being a professional.” Second, “anyone lured to come on the advertised basis, and who would not have come on the merits of a purely educational approach, is not sufficiently interested to make a valid contribution to the profession.” And finally, “with the tremendous social problems being created by alcoholism, any professional group should be very wary of making even a token contribution to that social malaise.”
Payne did not stop there. “Perhaps if we would be more interested in such matters, and less concerned with such things as the size of type in the yellow pages of the telephone directory,” he concluded, “we would in fact become more ‘human’ by making the positive contributions to society which are befitting a group that is truly professional.” His criticisms were taken quite seriously. The following year’s university hospitality program took the form of a panel discussion in which students could ask questions of institute members.
While the return to the pre-beer bash format addressed Payne’s concerns, attendance at the institute’s recruitment events worsened. In 1979, the Career Information Committee hosted hospitality nights at three universities: the U of A, Calgary and Lethbridge. Total attendance was 200 – less than half the number at the 1974 beer bashes.
Payne’s reference to the Yellow Pages was particularly clear to the 35 Edmonton CAs who had received an admonition from council that said, “You are hereby warned that future bold-faced listing in the yellow pages could lead to formal investigation and penalty.” They and other members and firms – 55 in total – had heeded the council directive of October 2, 1974 by changing their listings to regular print.
Education
As we have seen, the institute expected to reduce its involvement in student education as universities took over their formal education. And as the 1970s progressed, the ICAA phased out the courses available at the universities, a process the organization expected to complete by 1976. However, transitional problems occurred.
In 1975, Alberta’s UFE pass rates declined below the national average. Council asked James Henderson, who had recently become the institute’s director of education, to investigate.
Presented in January 1977, his report found a correlation between university training and poorer UFE results.
Uniform Final Exam Pass Rates (per cent)
1967 1968 1969 1970 1971 1972 1973 1974 1975 1976
Alberta 49 40 39 34 55 66 57 58 46 43
National 54 52 50 50 53 56 50 54 55 53
For example, by 1974 seven of 15 subjects were taught at the universities; the following year Alberta’s UFE results dropped nine points below the national average. By 1975, the institute was accepting 11 subjects taught at the universities; the following year, Alberta’s results declined another point. Henderson’s report explained the result partly by reference to the university system: “The universities’ standards for a degree are not intended to be the same as the standards for passing the UFE.”
Before receiving the Henderson report, in 1976 an alarmed institute decided not to transfer additional courses to the universities. In addition, it approved a recommendation that, beginning in 1976, students would need more than a comprehensive university program. Students would also have to pass a program of four applied professional courses in the ICAA’s fall or summer school program.
After considering Henderson’s extensive report, the institute made other important changes. Before they could “challenge” the UFE, candidates needed to pass exams on these courses. Effective June 1977, the pass mark for each of these mandatory courses was 65 per cent – somewhat higher than the passing score for the UFE. The number of times they could individually take the UFE was limited to three. And students who graduated from the University of Calgary and registered after January 15, 1978 were required to complete an additional course in managerial or cost accounting.
Still not content, the institute launched another study of the CA training program. “Just about everyone has a pet peeve about the current training program that turns out chartered accountants and a number of things they would like to see changed,” said Fred Barth, Student Education Committee chairman in 1977. Admitting that some of the pet peeves were probably valid, he said, “we want to make sure that the rules that we have now are relevant and that they are not just rules for rules’ sake.”
As the institute struggled with the integration of university education into the CA training program, a small but significant technological development took place. Students writing the four-day UFE were allowed to use pocket calculators. “This makes it more comfortable for them because they regularly use these machines in their everyday work and not so they could make more calculations,” according to Barth. The calculators had to be small, noiseless, battery operated and non-programmable. The Board of Examiners would not accept calculator malfunction as an excuse for miscalculations.
Council was confident that the new student education standards would lead to better exam scores, and the numbers proved them right. From 1978 onward, Alberta students began to outpace other Canadian candidates. The results were stunning. By the middle of the 1980s, Albertans were 50 per cent more likely to pass the UFE than their counterparts in other provinces. The performance gap between Alberta and the rest of Canada remained extremely strong until 1991. As we shall explain shortly, there were a number of reasons for these remarkable results.
The requirement that CA students earn a university degree had imposed a potential bottleneck on the training process. And because of Alberta’s resources-related boom, the profession soon found itself partially bottled up.
Not Enough Students?
“The imposition of quotas [at Alberta universities] is starving the chartered accountancy profession in the province of ‘feedstock students,’” wrote John Tompkins in the June 16, 1978 issue of the Edmonton Sun. “The demand for students to enter chartered accountancy firms will double by 1981, but the numbers of available students will increase only slightly by comparison. The demand for properly trained students – to enter the province’s 237 chartered accountancy offices before taking up careers in private practice, industry or government – far exceeds supply.” According to institute president Bill Stephen, who was also quoted, “We must have a marketplace situation in the universities just as we do in business.”
To follow up on its earlier actions, the institute struck an ad hoc committee in 1978 to examine the supply of CA students. The committee’s conclusion: the future supply of Alberta university commerce graduates eligible to enter the CA training program was already short of demand, and the gap would widen every year.
In those years, Alberta’s economic growth was expected to continue on a rapid upward trajectory for many years. Student shortages would therefore result from a combination of strong demand and the decreased supply created by student quotas. Alberta’s universities had imposed these quotas on the number of students allowed to enter business and commerce because of financial constraints on the schools plus a shortage of qualified business professors.
During this period the institute took two steps to increase the supply of articling CA students, although it did little to improve the supply of qualified CAs. One was simply to register more students: registrations peaked at 550 in the year 1981 – almost double the numbers in the latter 1990s. In addition, registered students were required to complete three years of service rather than two. The argument was that CAs were expected to master significantly more than 15 years earlier, when the two-year minimum articling period had been set.
While these measures made a difference, when the report of the special committee finally appeared in 1982 its outlook was very glum. “In recent years Alberta Institute members have had to hire approximately 50 per cent of their students from out-of-the-province,” the members reported. “Unless major changes are made in recruiting practices, or Alberta universities graduate additional competent accounting majors, out-of-province hiring will have to increase to approximately 60 per cent of total needs by 1985 and to about 75 per cent by 1990.” In absolute numbers, this would mean out-of-province hiring of 500 students by 1985, 1,000 by 1990. “The situation is therefore critical.”
The institute sought comment on this report from members, students, universities, government and others with an interest in CA education. One of the major outcomes was the Accounting Education Foundation of Alberta (now the Chartered Accountants’ Education Foundation of Alberta), with Elvin Christenson as its first chair. Constituted under the Societies Act of Alberta, the foundation consisted of a 12-member board of governors working to “solicit, assemble and disperse” funds to improve the quality of accounting education throughout Alberta.
The foundation's "solicitation" of funds has consisted of a mandatory annual assessment on individual members. This was $50 per CA for several years, rose as high as $60, and at the time of writing has been $25 for several years. The foundation gradually moved to fund-raising efforts based on voluntary contributions. Key targets for fund-raising were life and retired members, 25th anniversary members, CA endowments and corporate philanthropy. Total funds raised since 1983 total approximately $3.5 million.
The Education Foundation funded the Centre for the Advancement of Professional Accounting Education (later the Chartered Accountants’ Centre) at the University of Alberta. Michael Gibbins was the centre’s first director.
Although coincidental, the creation of the Education Foundation coincided with a remarkable improvement in the UFE test scores of Albertans. The following table illustrates Alberta’s results, compared to the national average. As you can see, from 1984 onward the province’s scores were startling.
Uniform Final Exam Pass Rates (per cent)
1977 1978 1979 1980 1981 1982 1983 1984 1985 1986
Alberta 48 59 59 57 55 66 64 79 77 76
National 53 53 53 53 54 55 52 54 55 54
There were a number of reasons for this level of performance. For one, the universities were now teaching courses in all 15 of the core areas. They were also taking steps to improve their accounting faculties.
One noteworthy step in this process came in 1979, when the University of Alberta established the Francis G. Winspear chair of accounting. One of the first accounting professorships in Canada, the chair would enhance research, teaching and course developments relevant to the CA profession. Dr. Robert Sterling of Rice University accepted the chair for a two-year period beginning July 1980. (It would be more than a decade before the institute would fund a comparable chair, the Chartered Accountants Professorship, at the University of Calgary. The first person to occupy that post was Dr. Dan Thornton.)
Despite these improvements, the issue of keeping capable accounting staff in academic careers remained a problem, as evidenced by a 1987 letter from the U of A to its CA graduates. “There is an acute shortage of accounting educators,” said the university’s accounting department chairman, Dr. John Waterhouse. Waterhouse urged the CA grads to consider academia as an alternative to a career in public practice or industry, citing 187 funded permanent positions in Canada that were not filled.
The single most important reason why Alberta candidates now did so well with the UFE, however, was that the institute had created an effective screening process. The applied professional courses introduced in 1976 included taxation, audit procedures, audit concepts and techniques, and financial accounting and reporting. This program was expanded to include seven courses in 1981 – Tax 1 and 2, Financial Accounting 1 and 2 and Audit 1, 2 and 3 (Audit 3 was later dropped). In 1981 the institute also began to require a UFE prep program.
Before the student could even attempt the UFE, he or she had to pass the institute’s Level 1 exams. While they could challenge these exams without taking the institute courses, they could only do so if they had a B average or better in the related university exam.
This weeded students out very effectively – in fact, council eventually decided, a bit too effectively. Beginning in 1985, any student could challenge a subject area exam and the UFE prep course became optional. In addition, the required pass mark for subject area exams dropped to 60 per cent, the same pass mark required for the UFE.
While this last series of changes may seem like a lessening of standards, they really were not. The institute now had four years’ experience with seven courses and exams. Council was confident that this program worked, and that changing the system would not affect the rigour of institute training.
While CA candidates now received more and better training in accountancy from both Alberta’s universities and ICAA courses and testing, these developments do not entirely explain the surge in UFE pass rates in 1984. The economic turmoil and cost-cutting of the early 1980s also had a role to play. As their clients cut spending in response to the National Energy Program and the brief, bitter recession of 1982-83, accounting firms sharply reduced their complements of students. By eliminating marginal students, they increased the quality of those who remained. This also contributed to the powerful acceleration in UFE scores.
The Personal Public Relations Program
Robert Tuomi was appointed director of information in November 1976. A communications arts graduate from Confederation College, Tuomi received a bachelor of arts degree from Carleton University and had experience in public relations. The institute credited the work of Tuomi and his predecessor for the favourable rapport they had with the media. The ICAA was quite pleased with the coverage it regularly received during the federal and provincial budgets and during the institute’s new member presentation ceremonies. In the relatively short period Tuomi was employed by the ICAA, he was instrumental in developing the bankers’ seminar, business games for high school students and improved communications from the ICAA to members and students.
In its October 1975 issue, the CA Monthly Statement included an article entitled “The Personal P.R. Programme.” Bruce Smith, who was then public relations coordinator, wrote that the individual CA occupies a critical position in the development of the profession’s public image. “No matter how much time or money the Institute spends on public relations and information projects, a favourable image of the chartered accountancy profession cannot be created or maintained if the public does not see it reflected in the individual Chartered Accountant – the one they know, the one they see, the one they hear.”
This theme goes back many years, of course, but the institute now had more sophisticated communications vehicles (especially its newsletter) through which to present the message. Smith continued, “As every member has undoubtedly learned, each of us performs public relations for the profession by our conduct as Chartered Accountants and by our involvement, professional or otherwise, in the community.” Public Relations Committee chairman Jack Baker put it this way: the CA often “perceives that he is communicating with clients and the public. The client, however, does not share this perception and the general public has little knowledge of what a chartered accountant is.”
The institute soon received the report of a communications study that repeated the same conclusion: CAs are able to do more for the profession’s image than anyone else. In response to the report’s recommendations, council approved a major communications program, with three priorities. One was to better inform the business community on the function of CAs and the benefits of their services. Another was to develop a program to improve members’ interpersonal skills and to encourage more consultation between CAs and their clients and employers. The third was to interest secondary and post-secondary students in acquiring information regarding a CA career.
All of these goals echoed earlier initiatives, but they were based on more sophisticated analysis. The institute had hired a public relations agency, Accord Communications, to analyze the institute’s advertising program. The Accord report was titled Attitudes of Specific Publics Towards Chartered Accountants.
After surveying CAs, businessmen and the general public, the firm found that traditional advertising was not the solution to the profession’s communications problem. According to the report, “few businessmen or students understand the difference between various accounting designations; few can explain why chartered accountants are better qualified; fifty-eight per cent of business respondents feel accountants have to be asked about ‘other services’ which could be beneficial to businessmen; forty-nine per cent feel CAs are not knowledgeable about the client’s business.”
The Accord Communications research illustrated how wildly scattered were people’s perceptions of chartered accountants. For example, students at the University of Alberta offered a kaleidoscope of descriptors. According to some, CAs were “40 years old, balding, pot belly, nervous.” According to others, “Balding, 35, overweight...well-dressed, neat, married....Older man, 60-65, very stern.... Young, wears a well-pressed suit....Old, dull and boring....Young, thick glasses, grey suit, married with 2.5 children....Young, very organized....Well dressed, business person, very precise....Looks like anyone else....Very sharp, quick witted, young....Successful, dark suit and tie, lives in a good district, is not married.” Clearly, there was room to improve how outsiders perceived the profession.
Politics and Advertising
During the civic elections of 1977, five members of the institute were elected to political office. These were Dave Carpenter (who later became the mayor of Lethbridge); Gerrie Dey (an alderman in Camrose); John Olthuis (mayor of Lacombe); Ken Porter, a St. Albert school district trustee; and Ross Alger (mayor of Calgary). Alger’s successor in the Calgary mayor’s office was another CA, Rod Sykes.
Institute president Gil Ramsey wrote each of the 1977 office holders a congratulatory letter. “Involvement in civic government demonstrates to the public that chartered accountants are willing and able to accept their social responsibilities,” he told them. “This not only creates a favourable image for the profession but proves that its members have the needed leadership ability and desire.”
Not all CAs-turned-politicians were servants of the people or created a favourable image for the profession. John Gerald Olthuis went to jail for four years for stealing more than $300,000 from the Lacombe Foundation, which operated three senior citizen homes in Lacombe and nearby Eckville; he had been the foundation’s secretary-treasurer. Olthuis also received a concurrent two-year sentence for stealing from the estate of Alexander Ellis. He quickly became both an ex-politician and an ex-CA.
Even though Accord Communications had said traditional advertising would not help the CA’s image, advertising remained a key instrument in the institute’s toolkit. Notably, in March 1977 the institute began its first professionally developed, paid advertising program. Council approved an expenditure of $30,000 to design and develop the campaign, the purpose of which was not to garner business, but to enhance the CA’s image.
The decision to undertake this campaign was based on a membership survey conducted by the Public Relations Committee. The survey received responses from 45 per cent of members, 73 per cent of whom favoured advertising. The results of the survey were “most gratifying,” according to institute president Duane Wikant. “This comes at a time when there appears to be increasing confusion in the minds of the public as to the distinctions between various accounting bodies in our province. This confusion is further accentuated by the proliferation of accounting designations. The Institute has, so far, been unsuccessful in its efforts to convince the government of its responsibilities to legislate regulations for the practice of public accounting. Without this legislation the onus appears to be on us to inform the public about our training, standards and ethics.”
This time, the institute’s decision to advertise had far-reaching effects. Some 70 years after discussions within the institute began, private advertising was still a touchy subject. There was resistance to permitting individual firms to develop their own advertising, since most members still felt individual advertising was “not becoming of a CA.” In very important ways, however, this edifice was beginning to crumble.
One outcome of the Accord Communications report was a co-op advertising program, the theme of which was “Trust, Credibility and Protection.” Red Deer firms were the first to sponsor the co-op ads, from April to July 1981. Designed to inform the public about CA services, the campaign soon spread to Lethbridge, Red Deer, Grande Prairie, Camrose, Bow Island, Spruce Grove and Medicine Hat.
Most CA firms said the co-op ads gave a fair representation of CA skills and how these skills can help business. However, they believed that, if new ads were created, the institute might want to put more emphasis on management consultation. There also appeared to be support for private advertising, provided the institute developed the ads, “to ensure high standards.”
Another change in the advertising rules was quite significant. Effective in 1980, the institute provided guidelines for box ads in the Yellow Pages, which could not infringe Rules of Professional Conduct 217 and 301. The institute also eliminated restrictions on who in public practice could carry business cards. And in 1982, the advertising guideline permitted members and CA firms to include congratulatory ads in a client’s advertising promotion.
These developments suggested a shift in the profession’s perspective on advertising, but they also created difficulties. For example, in a period of increasing specialization Rule 217 still proclaimed, “A member shall not advertise, directly or indirectly, in any manner....which refers to him as a specialist in a particular service area or industry sector.” Even though specialization was increasingly the rule rather than the exception, many accountants still held to the old principle that claiming to be a specialist was derogatory to other accountants. After all, it implied that others were not capable of providing these services. Numerous complaints came to the Conduct and Discipline Committee about the use of this term.
In 1985 an ad hoc committee chaired by Andy Farvolden studied the Alberta Institute’s position on advertising. The five-member committee recommended a complete overhaul of the professional code as it related to advertising, solicitation and related matters. Council approved these recommendations, which allowed members to better compete in the increasingly competitive commercial environment. Other provinces soon followed Alberta’s lead. In 1989, the CICA began harmonizing advertising policies, and the Alberta concepts and words were picked up in the new harmonized rules and guidelines. The institute’s Morley Hirsch was a strong advocate for the more liberal, commercially-based Alberta rules.
While the Farvolden committee set wheels in motion that would greatly liberalize advertising by accounting firms, in 1985 council gave its approval for another survey focusing on the image of CAs in Alberta. Conducted by Francis, Williams, and Johnson (the firm created by John Francis, the institute’s first public relations advisor), the study laid the foundation for the next five years. An image advertising campaign launched in the fall portrayed CAs as Alberta’s foremost professional accountants. The campaign targeted business owners, managers and executives, and community leaders.
Income Tax Outreach
Tax clinics were introduced as a public service to help the average taxpayer comply with Canada’s increasingly complex tax legislation. The ICAA held three pilot tax clinics during 1973. From mid-March to mid-April ICAA members visited senior citizens homes, social agencies and the Canadian National Institute for the Blind in Edmonton and Calgary, helping to prepare tax returns for the “needy” at no charge.
The program was later expanded to post-secondary students and new immigrants. This meant more volunteer CAs were needed. Members were asked to spend about three hours a week during the evening preparing tax returns. “The service performed by these men, and the Institute, is appreciated,” wrote Birdie Archer in 1978 following one clinic held at Calgary’s Good Companions Senior Citizens’ Centre. “Many senior citizens benefited from this service and we’re most appreciative,” added Barbara McKrow from Calgary’s Hillhurst-Sunnyside Community Centre.
In 1973, approximately 1,200 people showed up to hear ICAA members discuss the new Income Tax Act. This occurred because the Public Relations Committee, the Tax Committee and local CA clubs organized public tax forums for the first time. Held in Edmonton, Calgary and smaller centres, the purpose of these forums was to help the general public understand new tax legislation. They were co-sponsored by daily newspapers, and received a fair amount of publicity. Participants were asked to anonymously fill out a questionnaire so the ICAA could see who was using this service. This would enable the institute to select the members best able to help future forum participants.
With the assistance of members Andrew Chu and Henry Kwok, in 1976 the Chinese Graduates Association of Alberta conducted a TV tax forum for Edmonton’s Chinese community. Broadcast on cable, the first segment discussed the Canadian tax system and how to complete a personal income tax return. During the second show, Chu and Kwok answered questions from the audience.
Calgary television station CFAC launched a nine-part tax advice series in January 1978 called TaxLine. Here two CAs spoke on a relevant subject and callers could ask questions. The ICAA published a tax tip booklet for the first time in 1981-82, filled with advice on how to prepare a tax return. Alberta’s daily newspapers distributed the 66-page publication; 8,300 copies were published in time for the 1984 return.
In the years since, public demand for free tax advice has continued to be strong. And the still growing Alberta Institute has played a big role in meeting that demand.
Member Participation and the BIG Committee
One of the drawbacks of the institute’s growth was the increasing anonymity of its members. By 1970, the institute had become so large (1,647 members) that most of the members did not know each other. As a result, many of those who wanted to become active in institute affairs were not quite sure how to do so. To resolve this problem, the institute began the practice of asking members whether they would be willing to volunteer for committee work or programs such as tax clinics or the Speaker’s Bureau. Although this approach gave members an entry into committee work, it also illustrated glaringly that more members wanted to participate than the institute could accommodate.
When the institute tabulated the 1974 questionnaire, for example, the result was a 14-page list containing 179 names – nearly 10 per cent of the institute’s entire membership. Barely half of these volunteers actually found themselves assigned to institute committees or projects the following year. The April 1976 issue of the CA Monthly Statement tried to reassure those members who had not yet been chosen: “If you have not been called up yet, be patient. Your turn will come.”
“Committee service provides a member with a unique opportunity to benefit himself, the profession and his fellow members,” the newsletter explained. “Because of this, several other factors are considered in deciding committee appointments, including personal stature, position, technical competence and a reputation for effort and accomplishment in Institute matters.” What this meant in practice perhaps did not live up to these lofty ideals. Council chose the committee chairmen; they, in turn, chose their committees partly by reference to the volunteer lists, partly through personal acquaintance.
Of 153 committee members during 1975, only 26 per cent were from industry and government; the others were from public practice. When only two members of council came from industry and government the following year, president Duane Wikant (himself from industry) worried publicly about the decline of representation on council and committees by members in industry and government. Just three years earlier, 40 per cent of council members had been from those sectors. “Unless this trend is arrested or reversed, we ‘Whooping Cranes’ of today will be the ‘Passenger Pigeons’ of tomorrow,” he said. In part, Wikant blamed the institute’s orientation toward public practice even though many members worked in other sectors.
To serve these sectors better, in 1976 the institute established the Business, Industry and Government (BIG) committee, chaired by Tom Eykelbosh. The mandate of this group was to identify the needs of members in industry and government, and to increase their interest and involvement in institute affairs. Committees were formed in 1976 to increase BIG member interest and involvement in the ICAA’s 1977 annual conference, increase representation on council by BIG members and develop seminars or other events that would appeal to BIG members.
In 1978, George Linder and Ron McKague helped form a national BIG committee, set up as a sub-committee of CICA’s Professional Development Committee. “We hope that the committee will be able to do a lot more than identify course needs. We’d like to see more emphasis at the national level on the needs of BIG members and we’re hoping that this sub-committee will be the start,” said McKague.
At the 1980 Banff conference, president Giles Meikle pointed to the apparently declining interest in institute activities among members not in public practice. “While some of this can be attributed to the considerable demands placed on the time of our members by the dynamism of the Alberta economy, it may well be symptomatic of a deeper problem. If our non-public practice members become apathetic toward the institute and its activities, the result could be a weakened profession; weakened not only by a reduction in numerical representation, but more importantly by the absence of an interchange of thought among the various elements of our profession.” Vowing to devote considerable time to this challenge, he reminded members that it would be a good time “to start thinking about what the Institute can do for you, and what you can do for the Institute.”
Member Services
As it has done since the start, the institute continued to develop member services. Beginning in the 1970s, the institute placed greater emphasis in this area, realizing that it would be expected to perform these tasks in the future. This brief history has not fully explained the origins of today’s many member services, and could not begin to record the many achievements (and failures) of institute efforts. Such a task would be impossible. But here are three examples of new institute services from the period under discussion.
In 1969, the institute began offering a free employment service, albeit one that was only a modest success. In 1975, for example, the program was responsible for only ten placements. The poor showing reflected lack of participation from both sides of the employment equation: only 39 applied for the 51 positions available. “It seems that members consider the Institute employment service only as a last resort when trying to find or fill positions – after costly ads, personnel agencies, etc.,” grumbled the March 1976 CA Monthly Statement. “Why not make the Institute service your first course of action and resort to more costly means only if necessary?”
The institute also created a fee mediation service for use when a client felt overcharged. After a year’s operation, members expressed concern that the only cases that could be dealt with were those in which both parties agreed to binding arbitration. Council introduced a conciliation mechanism that permitted a conciliator to communicate with both parties and help reach an agreement between member and client.
A new rule later went into effect. If a dispute entered the arbitration stage, clients were required to place an amount equal to 75 per cent of the balance of the amount in dispute in trust with their lawyer. This would be disbursed in accordance with the finding of the arbitration panel. During 1982, 17 complaints were received.
Another program for members was a referral service, which resolved the question of how the institute should deal with inquiries from the public asking for the names of qualified practitioners. Until 1980 the ICAA felt it was not appropriate to recommend any particular member or firm. Then the institute created the referral service, which members had the choice of opting into. Callers were given three names to choose from, and those names were then rotated. Callers also received a copy of the booklet Talk Full Service With a Chartered Accountant. During the first three weeks of operation, more than 100 practising offices registered with the service; the institute gave about 55 names to 20 callers.
The designated contact person at the firm was asked to provide up to a half hour of consultation free of charge to the prospective client to examine the problem and outline the service the firm could provide.
In 1983 the institute received a letter from a referral service client. “I took my problem to (unnamed) and was very pleased with the reception that I received....(Unnamed) was very helpful with his advice....and....I was able to get the business income tax filed on time....thank you for a great service offered to the public with no obligation or charge. Keep up the good work.”
Accountants’ Liability
In response to a growing need for professional liability insurance by small and medium-sized firms, in the early 1970s the CICA Professional Liability Insurance program was established to provide and supervise a national insurance program. One objective of this program was to ensure that the liability insurance premiums of Canadian firms were based on Canadian loss experience. The program quickly gained acceptance, with more than 80 per cent of eligible Canadian firms participating by 1978. The largest international firms continued to be insured mainly through the London insurance market.
In encouraging participation, the CA Monthly Statement said, “Part of being a professional is taking due care to avoid mistakes that can be damaging to your client or to yourself....But few are perfect. Even with the best of intentions, errors are sometimes made – the costs of which can be awe-inspiring.”
In 1978 Alberta set up an ad hoc committee chaired by John Collins to look into the need for a compulsory liability insurance program.
A CICA Professional Liability Insurance Committee supervised the national program of professional liability insurance. The program mainly appealed to small and medium-sized firms. About 58 per cent of eligible Canadian firms were insured. Few were part-time practitioners. In 1979, a study by J.H. Minet (Canada) Limited indicated that approximately 20 per cent of eligible practitioners (about 75 offices in Alberta) were not covered under the Liability Insurance Program. As we shall see, it would not be many years before liability insurance for CAs became a crisis issue.
Women’s Progress
As we have seen, women began to trickle into the Alberta Institute around 1950. The number remained small until the mid-1970s, when there were 38 female CAs in Alberta. But the number of women being admitted to the institute then rose to four per cent. The trickle soon became a stream, and finally a flood.
Although new members are now divided equally between the sexes, at the end of the century women comprised only about 20 per cent of ICAA members.
The progress women made coexisted with more traditional forms of women’s organizations. For example, the popularity of the Edmonton Wives’ Club (established in 1977) led to the formation of a similar group in Calgary three years later. The two clubs enable CA wives to learn, work and socialize together. Members gather around such common interests as public speaking, investments, computers, bridge and gourmet cooking.
As the numbers of female CAs increased, many clearly distinguished themselves in the UFE. The first woman to receive an Alberta top three finish in the exam was Bev Scobie, who placed third in 1975. Then, for a 12-year period women dominated the gold medal standings: between 1978 and 1989, women took top marks in Alberta every year but two. The January 1981 issue of the CA Monthly Statement reported sardonically that the previous year’s UFE results “offered few surprises. For the third year in a row a woman won the Alberta gold medal, underlining the need for male equality in the profession.”
Not all the news was good, of course. In 1984 the first woman was struck from the institute’s register for conduct unbecoming a CA.
In a study of the progress women have made in the profession, Mary McGurran reported discrimination against female accountants well into the 1980s. Women commonly received less pay than men in comparable jobs, for example, and clients would sometimes refuse to have a woman on an audit.
Calgary’s Petroleum Club refused to permit women as either members or lunchtime guests until 1989, after the second of two votes on the issue. By contrast, Calgary’s Ranchmen’s Club did permit female guests – provided they entered through a back door. (That organization formally removed the barriers to women becoming members in 1993.) On one occasion, McGurran recalled, she was the speaker at a function at the Ranchmen’s Club but was expected to use the rear entrance. She considered storming the front door, but decided against it. She reported with grim satisfaction, however, that “several enlightened male colleagues took the women’s entrance with me.”
As their numbers increased, women became involved in the governance of the profession. The first woman elected to council was Mary McGurran (1984), who later became the institute’s first female Fellow. The second to join council was Barb Carle-Thiessen (1986). After these women established a beachhead, the institute quickly became more responsive to the needs of female members. For example, in 1987 the institute reduced fees by half for CAs who were at home raising children. In 1996, Anne Rooney became the first woman to serve as president.
A Leader Lost
The news that Vic Dzurko had died on November 6, 1983 came as a shock. He died of a heart attack, while playing his beloved hockey. Only 47 at the time, Dzurko had been a powerful leader, and had effectively created a sophisticated organization out of a growing but still somewhat wobbly structure. According to the institute’s 1984 annual report, “his wisdom was sought by many and he gave it freely with the utmost of integrity and good judgment – two personal characteristics that earned him the highest respect with friends, peers and colleagues.”
In an obituary, the institute described Dzurko as “A man of the highest integrity and dedication to his family and profession....His vision and foresight over the years brought unsurpassed growth and achievement to the profession.” Dzurko left behind his wife, Helen, and four children.
When Dzurko became a Fellow of the Chartered Accountants in 1975, his citation emphasized “his excellent work on behalf of the Institute in its relationships with...the Government of Alberta and with other professional bodies.” The Accounting Education Foundation established a scholarship fund in Dzurko’s memory and name. In 1985, the institute established the Vic Dzurko Honour Roll to recognize students passing all ICAA exams and the UFE on the first attempt. (In 1991, the terms of the Dzurko Honour Roll were changed to recognize the institute’s top 10 UFE candidates.)
The changing of the guard occurred cautiously. Steve Glover, who had joined the institute as Director of Student Courses in 1979 and was named Director of Student Education a year later, was appointed acting Executive Director upon Dzurko’s passing. Following a national search, he became Executive Director the following year.
A Petition to Alberta
One of the institute’s biggest challenges was still the perennial question of provincial regulation of accounting practice, particularly the audit. This issue had reached an important milestone in March 1978, when an ICAA delegation met with Provincial Treasurer Merv Leitch to discuss a government decision to develop legislative policy for the regulation and control of professional standards. “The primary reason for such standards and regulations,” according to the government’s policy paper, “will be to protect the public against incompetence and fraud that would endanger the life, health, welfare, safety or property of citizens.”
Sensing that the time had finally come to regulate the public audit, council quickly began to prepare a formal submission. In June, President Bill Stephen sent Leitch a 38-page Petition to the Government of the Province of Alberta to Regulate Auditing in Alberta.
The following January, there was excitement within council when Stephen announced that the provincial cabinet’s Social Planning Committee had requested a meeting with the ICAA executive, which included Stephen, Jack McMahon, Giles Meikle, and Vic Dzurko. After an hour of discussion with the five members present of the seven-member cabinet committee, the executive felt that they had made progress. They believed the government members present “were in agreement that auditing should be restricted to chartered accountants but were unclear as to whether this might best be accomplished through the Chartered Accountants Act or through changes to individual statutes.”
The executive committee noted, but did not dwell upon, a question from the committee’s chairman, Provincial Treasurer Lou Hyndman. “Was there,” he asked, “any agreement between different accounting bodies as to which group should be doing which field of practice?” In the end, this question was critical.
Despite efforts to increase communication among the major accounting organizations, relations were very bad. For example, in 1979 the CGAs had launched a suit for defamation against ICAA president Bill Stephen. (In an interview with a reporter, Stephen had said the qualifications of accountants “vary widely”; this became “very wildly” in the press. The suit went nowhere.) In the same year, council considered taking the CMAs to court to have certain of their by-laws declared ultra vires.
Inter-organizational conflicts notwithstanding, when the Architects Act went before the legislature in 1979 – an act that would serve as a model for future acts governing the professions – the institute believed the time had come to prepare a new CA act. Reasonably confident of success, council began to prepare for that occasion by striking a committee to review all legislation that pertained to accounting and auditing. They also began to draft the main principles upon which the new CA act should be based.
In the ICAA view of the world, public auditing should be reserved for CAs. Since this would affect the livelihoods of both CGAs and CMAs (at the time, the latter were still known as RIAs), the ICAA proposal included provisions by which members of the rival organizations would have a “grandfathered” right to continue practising in areas that would eventually be reserved for CAs. Not surprisingly, the other two professional groups reviled the very idea.
Clearly frustrated, in 1981 Provincial Treasurer Lou Hyndman sent letters to the three main accounting groups. He asked them to agree on the key issues, and then make joint recommendations to the government.
Council soon found that the CGAs were not amenable to a deal, although the CMAs were. So the two groups cooked up a proposal by which there would be two accounting streams. One would include public accountants and would be under the control of the institute. The other accounting stream would include management accountants and would be under the purview of the CMA society. CGAs would be grandfathered into one organization or the other, depending on their employment or practice.
Not surprisingly, the CGAs soundly rejected the proposal. To help resolve the issue, Premier Lougheed soon transferred responsibility for Professions and Occupations to the solicitor general, Dr. Ian Reid. An MD by training, Reid was sympathetic to the aspirations of professional bodies. However, his early efforts to resolve the issue met resistance from yet another accounting group, the Registered Public Accountants. For several more years, the issue of accounting regulation would remain in limbo.
Financial Collapse
A defining feature of the 1980s was the severe weakening or fatal collapse of several of Alberta’s important financial institutions. This problem was not confined to Alberta – for instance, British Columbia’s Victoria Mortgage and Ontario’s Standard Life also declined and died. For a while, everything seemed to be sideswiped by the economic fire and recession of the early 1980s.
In Alberta, the severe recession of 1982 was made worse by the National Energy Program, and the oil price crash of 1986 stopped recovery. As a result, layoffs were widespread, and real estate prices crumbled. The survival of many financial and non-financial businesses was at stake, and the prospect of large-scale failures put otherwise sound institutions at risk.
The Alberta credit union movement was the first to face extreme financial distress. Other high-profile failures soon followed. By September 1985 two banks, the Canadian Commercial Bank and the Northland Bank, had failed. Then the Canada Deposit Insurance Corporation bailed out Northwest Trust. First Investors Corporation Ltd. and Associated Investors of Canada Ltd. failed when their registration under the Investment Contracts Act was cancelled on June 30, 1987. The Principal Group of Companies, their parent, was inextricably linked to these investment companies. When it failed, just two months later, Steve Allan was appointed receiver.
A real economic test for many in Alberta, this period was one of tremendous achievement for the province’s CAs, who worked with others to rehabilitate the salvageable parts of this financial mess. It was also a time of professional introspection and discomfiture, as CAs, regulators and others came under critical scrutiny. Such scrutiny was perhaps most visible in the report of the inquiry chaired by Willard Z. Estey into the bank failures. The 1989 Code Inquiry relating to the Principal Group provided another good window on the financial distress of the period.
Along with these two inquiries came the Macdonald Commission on the public audit. Dick Haskayne was the Alberta CA to contribute to this report. The commission’s report led to many positive business features for the protection of the public.
That Alberta’s CAs played important roles is indisputable. This was a time of frightening economic instability, and CAs occupied key roles in the reclamation of financial organizations. Several accepted positions of authority and trust in the credit unions and the failed banks to help repair the financial and economic damage ravaging the province. They occupied centre stage at the Code and Estey investigations, to which some CAs brought expert testimony. Others did not play such an auspicious part. Their roles in the failures were scrutinized with care, and some were found to be at fault. Whether the CAs in question played hero, villain or bit part, their performances illustrated the profession’s central role on the business stage.
While the public commissions made the headlines, the institute quietly investigated the actions of several CAs, some of whom were disciplined. For example, the registration of one CA, an officer in one of the financial institutions, was cancelled for unprofessional conduct. The auditor of a financial institution was suspended for failing to comply with certain generally accepted audit and accounting standards. Other CAs faced financial penalties.
One positive to come out of this period of financial crisis was the founding and financing of the Accounting and Auditing Development Fund, operating under the authority of an independent board of directors. The objective of this fund was to provide for the educational betterment of the profession. This it did by contributing major start-up financing for the Centre for Accounting Ethics at the University of Waterloo.
Several CAs made noteworthy contributions to resolving the financial debacle by providing their skill and leadership in the ultimately successful effort of reviving financial confidence in the Alberta scene. For instance, Elvin Christenson, Thomas Mundy and Harry Buddle were among the many who worked to restore the financial viability of Alberta’s credit unions. Christenson was appointed chairman of the board of the Credit Union Stabilization Corporation during the period when the crisis was full-blown. Mundy had been hired as a senior officer of the corporation somewhat earlier. Buddle came in later to become CEO of the salvageable Edmonton operating units. In its new incarnation, it was called Capital City Savings and Credit Union Ltd.
The board and employees of the Credit Union Stabilization Corporation had to make key policy decisions. They had to take quick action in terms of relationships with past managements, borrowers, auditors and the government. This required practical wisdom and skill in financial triage – eliminating failed units while nursing the redeemable parts of the system back to health. They had to bring extensive technical skill to bear on the recapitalization of the strongest credit unions and the management of those assets in jeopardy.
There was a stirring controversy about matters of substance and disclosure among chartered accountants themselves. In simplified terms, the corporation sought a “fresh start,” free of accumulated financial baggage. The proposed technique was to offset the accumulated deficits in the troubled credit unions against amounts associated with preferred shares that the credit unions issued to the province.
In time it became clear that the many actions and decisions of those involved had helped build a strong foundation for the credit union movement. A strong indication that this had taken place occurred when the credit unions began repaying the province for the support they had received.
Alberta’s CAs also significantly contributed to the restoration of confidence in the province during the difficult and extended process of sorting out the failed banks. Price Waterhouse (now PricewaterhouseCoopers LLP.) was the court-appointed liquidator for the Canadian Commercial Bank. Bill Grace, a past president of both the Alberta Institute and CICA, became the chief operating officer of this bank-in-liquidation. Touche Ross & Company (now Deloitte & Touche LLP.) and John Curran undertook similar responsibilities in relation to the Northland Bank. The mission of these CAs and the others involved in the liquidations was to use their considerable financial insight and skill to salvage what was left of the failures.
Never a truly scientific or precise exercise, the valuation approach to pledged assets played a key part in the final resolution of the failed banks’ predicament. This was so important because the failed banks had made loans based on assets that turned out to be worth less (sometimes far less) than the related loans. The capital supporting the banks’ depositors had thus evaporated.
Sidebar: Business Success
It is tempting to think of the 1980s as a crucible in which Alberta’s key industries were forged into sterner stuff. Sounder companies absorbed weaker ones, and those that survived were more resilient for the experience. As managers and as entrepreneurs, during those tempestuous years CAs were often effective chiefs in Alberta’s business community. Among these, Dick Haskayne and John Ferguson were outstanding examples.
Haskayne trained as a CA, but did not particularly enjoy accounting. “My badge, the CA designation, has always been important to me. I’ve always been proud of it. But I didn’t want to account for numbers. I wanted to be one of the people who make those numbers happen.” In Haskayne’s view, CA training is an excellent way to prepare for a career in business. “Your years in articling are a unique experience. They give you tremendous insights into business, into what kinds of organizations work and what kind of organizations don’t, provided you’re willing to study them and pay attention to more than the financial facts.”
Haskayne certainly seems to have paid attention. Since the tempestuous 1980s, he has been the president, chief executive officer or chair of some of Canada’s largest corporations. These have included Hudson’s Bay Oil and Gas, Home Oil, Interhome Energy (a combination of Home Oil and Interprovincial Pipeline), NOVA Corporation, TransCanada PipeLines, TransAlta Corporation and MacMillan Bloedel. He has also served as a director for other large corporations – Weyerhaeuser Company, Canadian Imperial Bank of Commerce, Alberta Energy Company, Crestar Energy and Fording Coal. He was chair of the University of Calgary’s Board of Governors for two terms, from 1990-96.
Haskayne has been recognized widely by the society he served. An Officer of the Order of Canada, he has received honourary degrees from the universities of Alberta and Calgary. In tribute to his achievements, the Alberta Institute helped sponsor the Richard Haskayne FCA Graduating Scholarship for Finance, a $2,000 purse awarded annually at both the University of Alberta and the University of Calgary.
If Haskayne’s success came through climbing the corporate ladder, John Ferguson’s came through entrepreneurial flair. Ferguson articled with Eric Geddes, who became “a good personal friend and mentor” – and the auditor of Princeton Developments, a company Ferguson formed when he was 34, in 1975. By that time Ferguson had experience in both real estate development and oil and gas, and preferred the former.
Ferguson quickly established Princeton as a real estate presence in Edmonton, where it is based, and expanded to other cities. Its developments included office buildings, business parks, shopping centres and residential construction projects. During its first quarter century in business, the company was also active in Calgary, Saskatoon (where it became the largest developer), Vancouver, Victoria and Yellowknife.
According to Ferguson, “the training and discipline you experience when you’re articling give you a broad background – which includes the discipline not to follow the herd. The understanding of business deals it gives you is the best training that any businessman can get.” As a businessman, he hired ICAA gold medal winners Bob Elliott and Janice Rennie, for example. “I have surrounded myself with exceptional CAs – I’m a big believer in that.”
Ferguson’s business activities during the 1980s illustrate his acumen in action. In 1980, he “knew something was going to go wrong. I just didn’t know what. Interest rates were high and so was inflation. Returns were low relative to the cost of money.” So he sold 20 per cent of Princeton to a pension fund, thereby eliminating corporate debt. This put the company in good shape for the harsh recession of 1982-83, which worsened the already bad downturn in Alberta’s real estate market. Ferguson demonstrated a similar prescience in 1989, when the North American economy was very strong. This time, he sold 35 per cent of Princeton Developments to a consortium of pension funds – making the company very liquid as the entire continent’s real estate market went into a lasting slump. “The resulting opportunities were excellent,” he deadpanned.
Like Dick Haskayne, Ferguson found that his business successes brought invitations to senior corporate boards. As this book went to press, he was chairman of Princeton Developments and TransAlta Corporation. He was also on the boards of Suncor Energy, Royal Bank of Canada, RBC Insurance Holdings, Air BC and Barbican Properties. Like Haskayne, he has served as the chair of one of the province’s large universities – in his case, the University of Alberta.
Ferguson and Haskayne are two of many Alberta CAs who have been successes outside public practice. In somewhat different ways, both attest to the value of CA training as preparation for non-accounting careers.
“The traditional audit is, at best, a mature market; more likely a shrinking market. The audits being done are performed more efficiently, with improved technology and a shift in staff mix, using either experienced CAs or technicians.” – Denis Harvey, 1994.
Chapter Ten — Turn of the Century: 1987-2000
If the 1980s were a period of economic turmoil, they had a positive impact on Alberta in a very peculiar way. This in turn was helpful to Alberta’s CAs.
As University of Calgary economist Robert Mansell has pointed out, down times for the oil industry have become periods of business formation in Alberta. Mansell, who co-authored a book called Strength in Adversity, noted that net per capita formation of new businesses rose dramatically after the 1986 oil price collapse. Even though Ontario was booming while the Alberta economy was on the ropes, in the prairie province new businesses formed twice as quickly per capita.
“I would have expected this result to some extent,” said Mansell. “But I didn’t expect it to be so powerful.” He attributed much of the spurt in business formation to the fact that the oil industry had released people with transferable skills – “marketing, accounting and technical skills, for example, and often international experience as well.”
Another reason for the rapid diversification of the provincial economy was the election in 1993 of the Ralph Klein Conservatives. Klein’s government adopted policies pioneered by Britain’s Margaret Thatcher, US president Ronald Reagan, and a series of New Zealand governments recovering from the near-death experience of prospective bankruptcy.
Taking lessons from these diverse sources, Klein embraced policies based on deregulation, fiscal restraint, low taxes and a generally friendly environment for business. The success of these policies, which made the province an even more powerful magnet for business, is nowhere better illustrated than in Canadian Pacific’s 1996 decision to transfer its head office from Montreal to Calgary.
Of course, the Klein government’s policies were not cut out of whole cloth. The trend to deregulation had already begun, notably with the energy accords of the mid-1980s. Soon after, the Mulroney government began negotiating the Canada/United States Free Trade Agreement. Once that agreement had received formal approval from both governments, negotiations to include Mexico began. The outcome was the North American Free Trade Agreement, or NAFTA.
While deregulation had begun, Albertans seemed more amenable to the process than other Canadians. Here is an illustration: As the Free Trade Agreement was under negotiation in 1987, the Canadian Institute polled CAs across the country on a number of issues, including international trade. On that issue, freer trade with the US received more support from Alberta CAs (90 per cent) than from Canadian accountants as a whole (80 per cent). Like the province they hailed from, members of the Alberta Institute wanted government to unshackle market forces.
Accounting Regulation
Given Klein’s penchant for deregulation, it is fitting that the rankling issue of accounting regulation was finally resolved during the watch of his predecessor as premier, Don Getty. But real credit for this achievement belongs to a Peter Lougheed cabinet appointee.
As we have seen, the matter of accounting regulation had been mooted for decades without resolution. This changed when Lougheed gave responsibility for Professions and Occupations to the solicitor general, Dr. Ian Reid. In 1985, Reid initiated three pieces of accounting legislation. If passed, this legislation would have made audit exclusively the province of CAs, while the review and compilation functions of accounting would have been shared among all three professional bodies. This legislation grandfathered CMAs and CGAs, but did not make that provision for other accountants.
The weakness in the proposed legislation can be seen in a contemporary comment from institute president Kenneth Porter. Porter was discussing the extensive negotiations with the provincial government concerning Bill 71 – the new Chartered Accountants Act. “The Institute’s fundamental position has not changed in the past two years of negotiations,” Porter said. “We are the pre-eminent accounting body in this province...and we intend to keep it that way. We will not compromise our standards.”
This was easy for the Alberta Institute to say, but it upset the other professional bodies. The accountants whose livelihoods were at stake – notably a group organized as the Registered Public Accountants – lobbied against the legislation. So did the CGAs (arguing that it would provide an “unfair monopoly” for CAs). So even did the CMAs, who historically had often supported the institute. Not surprisingly, the legislation died on the order paper.
Somewhat chastened, Dr. Reid began a new round of consultations. His efforts swiftly translated into workable new legislation, which passed in 1987. And on June 17, 1987 the Honourable Helen Hunley, the lieutenant-governor of Alberta, gave royal assent to Bill 50, the Chartered Accountants Act.
“What began as a request from the Institute for revisions to the former act, ended as a completely new and modern act,” wrote President Bill Halford in the CA Monthly Statement. “The events in between have been traumatic at times, but the process was healthy for our profession. We looked at ourselves and the practice of accounting in ways we never have before and we took steps to reinforce the Institute’s position as the pre-eminent accounting body in Alberta.”
As Halford summed up the outcome, “Under previous legislation there was no assurance of standards. Even if CAs, CMAs or CGAs were suspended from their respective organization for any reason, they could still operate public accounting practices. Now, all who practice in the fenced area are accountable to their own self-regulating body with the authority and responsibility to discipline its members. And, if dealt with in such a severe way as suspension, would be unable to perform audits and reviews.”
To enable this legislation to pass, council had made a notable concession. This watershed development occurred at a meeting between ICAA president Keith Adams and his CGA counterpart, Wolfgang Koch. CGA support for new legislation was critical, because the most intense antagonism within the accounting profession was between CAs and the CGAs. So the institute agreed to share the audit and review functions with the other two major accounting bodies. For his part, Koch agreed that the CICA Handbook would serve as the accounting standard. From that point on, negotiations went smoothly.
The new legislation involved, first, the passing of three virtually identical acts to govern each of the three accounting bodies. In law, therefore, the accounting organizations were now equals. Only those who were registered with one of the three large accounting bodies could practise in audit and review. Non-accredited accountants who were billing $25,000 per year for financial audits or reviews were grandfathered, provided they registered as members of one of the three major accounting bodies. About 130 individuals took advantage of this opportunity. About half joined the CGAs, while the others were evenly split between the other two groups.
More importantly for those who use accounting services, the new legislation created the Joint Standards Directorate. The function of this inter-organizational body was to ensure that each of the three accounting groups met a common minimum standard in practice review.
Because the Alberta Institute was easily the largest of the three accounting bodies, it was quite important to council that representation on the directorate be proportionate to number of members. Single-minded about making the institute’s case in this matter, Executive Director Steve Glover found himself unable to get an appointment with the solicitor general. Knowing that Reid would be attending a labour conference at Edmonton’s Westin Hotel, he registered for the program. “On a break, I followed Dr. Reid into the washroom. Standing beside him, I reiterated our specific concerns. He quickly agreed and we walked away.”
As institute president Bill Halford explained the directorate to institute members, it imposed on public accounting “the assurance of common basic standards, based on the CICA Handbook, and consistent monitoring to ensure application of those standards....That Directorate will be comprised of members of the three accounting bodies as well as representatives of the general public.”
Public Representation
As we have seen, the institute began to appoint public representatives to committees in 1980. This reflected the beginnings of a movement toward “multi-stakeholder consultation” – an approach to decision-making based on the idea that bringing diverse views to an issue is an excellent way to find solutions that meet a spectrum of interests. Public representatives participated freely in all deliberations and proceedings.
When it passed in 1987, the new accounting legislation made this practice a matter of law. But by then the Alberta Institute had already appointed its first public councillor. Ralph Thrall Jr. began serving on council in February 1986, a position he held until 1989. Thrall was simply an observer until the new legislation allowed official status for public observers. “Public representatives bring different experiences to bear,” said Thrall, but each is “a member of Council. We use our different origins to bring new perspectives to the table. Our role is to work with others in debating the issues, to help arrive at workable solutions.”
Former provincial treasurer Lou Hyndman became council’s second public representative in 1987. Other public observers followed. Besides Hyndman, these included Carl Smith, Tom Chambers, Judy Williams, Tom Jackson and Jack Donald. At first there was only one public observer; this was later changed to two.
In 1994 Thrall, a rancher by occupation, was elected an honourary member of the institute. When banker Carl Smith was chosen an honourary member a few years later, he described himself as “absolutely dumbfounded, because in my mind I had done nothing to warrant such recognition. As a public representative I had just tried to be myself, do things that I thought were helpful.”
At the risk of sounding pedantic, it is worth noting that council proclaimed these two individuals to be the institute’s first and second honourary members. In fact, the institute’s first honourary members were founders Alexander Mouat (1928) and George Percy Blythe (1933). Those early honourary memberships, of course, were for CAs. They were more like life memberships than honourary memberships, as they are understood today.
In addition to the two on council, a public representative served on the Professional Conduct Committee. The first person in this position was Edmonton architect Morley Workun. He was followed by the University of Alberta’s Lorne Leitch. As this book went to press, the public member was corporate finance advisor David Betts.
There were also two public representatives on the Joint Standards Directorate. Appointed on May 16, 1989, the first to serve in this capacity were Anne de Villars, an Edmonton lawyer, and Glen Grover, a contractor from Lacombe. The first ICAA members to serve on the Joint Standards Directorate were Keith Adams, Gerry Coakwell, Garry Daunheimer, Jack McMahon, David Stewart (all government appointees) and Scott Montgomery, who was appointed by the institute.
The regulation of the profession was a major accomplishment. As we have seen, four decades passed from the time the debate began to final closure. As it was being achieved, however, institute members seemed to greet the deed with a collective snore – so much so that President Keith Adams grumbled about apathy during his 1987 term. For example, he reported on one of a number of regional information sessions held to review regulation and other institute matters. Of 112 members invited, 21 agreed to come. Only eight showed up.
Practice Review
Under the new CA Act, the Practice Review Committee became legally responsible for inspecting and approving practicing offices. This was actually an extension of a policy the institute had adopted in 1980 and, through the work of an ad hoc committee chaired by Roy Leard, revised in 1985.
As we have seen, the Practice Review Committee had a mandate to inspect each practice every four years. Although its focus was primarily educational, some members groused that it also had a de facto enforcement function. The perception that its focus had shifted from education to policing raised hackles in many quarters. In a 1994 issue of the CA Monthly Statement, however, Ken Kouri reminded members that its main focus had always been for practising offices to learn about office operations and general trends, and to ask questions.
This may be, but the Chartered Accountants Act of 1988 gave sharp teeth to the Practice Review Committee. The committee could, for example, apply to the Court of Queen’s Bench for an order for disclosure of records. And it could cancel an approval for a practice to train students, and lodge complaints for professional misconduct with the institute’s executive director. In addition, the firms reviewed were required to pay whatever costs were associated with the practice review.
While most practice reviews did not lead to drastic action, each year some of the reviews uncovered problems. During the period 1990-94, for example, the institute reviewed 675 practicing CA offices, 29 of which later closed for one reason or another. Of the practices reviewed, nearly 100 required one or more follow-up reviews. Furthermore, during the four-year period 11 matters were referred to the institute for disciplinary review.
Professional Liability
The 1980s were riven with a worldwide crisis in insurance markets, driven largely by product liability claims originating in the United States and in response to natural disasters. In addition, professional liability insurance claims grew spectacularly in both numbers and amount. The initial result was that premiums multiplied several fold. Somewhat later, the reinsurance market for accountants’ liability insurance began to dry up. By the beginning of 1986, reinsurance had virtually disappeared. The large international firms were forced to form their own captive insurers and to self-insure to cover huge deductibles.
CICA’s professional liability insurance program had problems of its own. Competing insurers had disappeared, premiums had gone through the roof and, with virtually no reinsurance available, the maximum coverage fell to $1 million.
“Accountants face open-ended liability which has caused insurers to abandon the market,” wrote institute president Bill Halford in 1987. By 1988, the crisis had begun to abate. That year maximum coverage doubled to $2 million. It increased to $10 million as reinsurers returned to the market over the next few years. At the same time, premiums began to fall.
In January 1990, CICA took over the administration of the Professional Liability Insurance Program that had previously been handled by an insurance broker. The objectives were to create a more stable underpinning to the program and to achieve greater flexibility in dealing with the vagaries of the insurance market.
Shortly after this debacle, the Alberta Institute imposed mandatory liability insurance on CAs in public practice. The Alberta Institute’s Public Practice Committee reviewed the issue extensively, and Tom Halford prepared a report on Accountants’ Professional Liability. The institute then adopted a new insurance policy.
Under the terms of this policy, all members in public practice were required to carry professional liability insurance effective April 1, 1991. This would protect the public from financial loss due to professional negligence. It would also enable members to provide services without fear of unreasonable personal loss. Practicing offices were required to carry minimum coverage of $250,000 for each CA or professional corporation employed by or a partner of the office. The minimum was $1 million; however, a practicing office could elect to carry more. Professional liability insurance had recovered by this time, and members were free to obtain coverage from their carrier of choice.
Canada’s accountants got an insurance break in the early 1990s, as the companies offering professional liability insurance engaged in a price war. One outcome was that, while national and international firms were paying greatly for liability insurance, regional and local firms were paying premiums based on Canadian loss experience, which was the lowest in years.
Limiting Liability
While liability insurance mitigated the problem, it was clearly not the total solution to the rise in lawsuits and litigation that threatened the profession. As Bill Halford explained in 1987, “We must ensure that those with valid claims have an opportunity to obtain compensation for loss suffered as a result of a breach of duty by a professional accountant, but at the same time the exposure to liability faced by accountants must be reasonable.” Under Halford’s presidency, the institute presented to the provincial government a position paper seeking legislative amendments to reduce liability exposure for Alberta CAs.
This issue took a long time to be resolved. In 1994, the CA Monthly Statement described a “litigious environment and abusive lawsuits that are hitting accountants and auditors far out of proportion to their ability to protect themselves.” The profession’s unlimited liability could allow claimants to collect losses for negligence from a CA firm. And if the accounting firm’s assets were insufficient to cover the losses, the courts could order seizure of the personal assets of partners even though they may not have been directly involved in whatever misconduct or malpractice occurred.
Liability took on a patina of urgency in 1990 when the US accounting firm of Laventhol & Horvath collapsed. The seventh largest accounting firm in the US at the time of its demise, the collapse was brought on by the firm’s liability burden. To prevent personal bankruptcies, individual partners had to contribute nearly US$50 million from their personal assets to the eventual settlement, and this was after the firm itself had ceased to exist.
These accountants were the victims of a point of law known as joint and several liability. As Willard Estey later told a Senate Task Force on Corporate Governance, “it is comically ironic that the law profession, through me, would be invited by the auditors (that is, the ICAA) to explain joint and several liability, which we invented. With that scheme, we have wrecked the practice of medicine in California, we have wrecked the operation of hospitals in Florida, and we are about to wreck the auditing profession through joint and several liability here unless the legislature intervenes.”
The perceived injustice of unlimited liability fuelled the drive for new legislation. In 1994, the Alberta Institute established a task force on unlimited liability, chaired by Bruce Dunlop. Because of high levels of litigation, the task force argued, “the profession will not be able to attract the brightest and best people for fear of losing their personal assets. Firms will and are withdrawing auditing services from high risk clients. The profession is threatened.”
The task force first recommended proportionate liability legislation. This would limit assessments for damages to that proportion for which the accounting firm was responsible. Second, they recommended that the province allow accountants to form limited liability partnerships. Under this arrangement, partners would not be personally liable for obligations arising from negligence, wrongdoing and misconduct by other partners or by employees of the partnership. Limited liability would protect partners from personal liability for the negligence of others. They would still be personally liable for such commercial partnership obligations as loans, leases, taxes and wages, however.
The arguments for limited liability began to fall upon friendly ears – first in Ontario, then in Alberta. In 1998 the Ontario government began allowing limited liability partnerships in that province. The following year, Alberta’s legislative assembly passed Bill 34, Amendments to the Partnership Act. This important legislation allowed accountants and five other professions to form limited liability partnerships. Alberta thus became the second province to achieve limited liability for its accountants.
Planning
The institute has frequently set up planning committees. During the Second World War, the first such committee began preparations for returning students and CAs. Many others followed.
But the 1987 CA Act came at a time of profound change within the profession and within Alberta. So council decided to begin preparing for the future through a two-day strategic planning session. In early 1988, members of council and senior institute staff met to make plans for the future.
One outcome was a report titled Chartered Accountancy in the 1990s, released the following year. In his introduction to the report, Strategic Planning Committee chairman Ron Elliott discussed the problem of inspiring people to take planning as seriously as it deserved. “Let’s face it! For most of us it is difficult to gaze too far into the future to assess where we should be going, not to mention take the steps necessary to get there.”
That said, he described the committee’s strategic planning process as one that involved firm and member surveys, focus group meetings and dialogue with the Canadian Institute. In addition, the committee reviewed CICA’s 1986 Long Range Strategic Planning Report and a variety of other materials.
The outcome of this effort was a strategic plan that had a major impact on the institute. It identified five areas of focus. The first two were student education and professional development, which the committee called pre-certification education and post-certification education, respectively. The others were standards, governance of the profession and communication. The reader will recognize these as the five main themes of this history. In this closing chapter, we will focus on each in turn.
Student Education
The strategic objectives behind the proposed changes to student education were to cap the body of knowledge expected of entry-level CAs; to split the UFE into a qualifying exam (written after completion of the university course and before articles begin) and a certification exam; and to work with Alberta universities to modify their existing programs. According to the strategic planning report, this approach would alleviate two major stresses on the existing system – part-time study while working in a CA office, and screening late in the process.
Working from these precepts, in 1990 the Pre-Certification Committee introduced a new course and exam program. The new student education package simplified the previous program quite substantially. Its objectives were the same as in earlier times: to bridge the gap between university course requirements and the demands of the UFE, and to help prepare candidates to do well – ideally, passing the UFE on the first try.
There was an important change of focus, however. Council believed that the extremely stringent requirements of the previous years were keeping excellent prospects out of the system. Reducing the requirements would bring in more students, and it would enable the bright ones to get through faster.
The new program included a Qualification Course and a Qualification Exam. Taken over three days, the nine-hour exam was designed to ensure a minimum level of technical knowledge of core material in auditing, financial accounting and taxation. A single cumulative score permitted a slight weakness in one subject area to be compensated for by strength in other areas.
Was this program successful? Not according to Duncan Green, a former Director of Student Education. Concerned that in 1992 48 per cent of first-time UFE candidates had failed the UFE, Green expressed alarm in a letter to the CA Monthly Statement. “The changes to the Alberta education program in 1990, which effectively removed all subject area courses and exams, have proved to be a complete disaster. The pre-certification education committee must take immediate action to reintroduce a professional education program that is worthy of our students and provides sufficient preparation for them prior to the UFE.” Green recommended that the ICAA introduce a required course and exam in May each year to test skills in financial accounting and auditing through integrated case questions.
Uniform Final Exam Pass Rates (per cent)
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Alberta 72 63 72 70 56 58 56 55 57 61 67 71 69
National 52 49 48 49 50 54 52 54 55 58 60 66 65
Statistically speaking, the table above supports Green’s contention. Since the latter 1970s, Albertans had been doing better on the UFE than Canadian candidates as a whole – between 1984 and 1990, remarkably better. But the wide differential between Alberta scores and the aggregated scores of Canadians collapsed when the new system went into effect.
There is no doubt that Green was correct in his assessment. Although higher standards in other provinces for UFE candidates probably played some role in the change, there was one primary reason why Alberta’s UFE scores fell: under the new system, candidates were not culled as heavily. Previously, students took separate subject area exams in each of the six subject areas. Under the new system, there was just one requirement to become a UFE candidate: pass the Qualification Exam, which only covered Tax 1, Audit 1 and Financial Accounting 1. The new system let the UFE test the material covered in Level 2 course work.
The need for more students was great, and that need was the underpinning of the new system. Even the lessening of test requirements did not bring large new waves of students into the system, however. By the end of the 1990s, the institute was admitting about 300 new CA students per year – well below the records set in the early 1980s. However, the requirements for becoming a CA followed the pattern established over many decades.
What were institute requirements? To become a CA, a student needed a university degree, in any subject. He or she also needed to take a series of 12 to 15 prerequisite university courses called pre-prep, an abbreviation for pre-professional preparation.
In addition, a student had to work for an approved training office, where he or she needed to complete 30 months of practical experience in accounting and auditing services and tax services. In 1994, council agreed to reduce the number of attest training hours from 1,250 (of which 625 then needed to be in audit) to 500 (of which 200 were in audit). One reason was audit’s decline in importance to the CA. Another was to make accounting more attractive to students. This move by council was quite controversial – in fact, it put national reciprocity at risk. Because of this change, a small number of recent CAs would not automatically be accepted as members of the Ontario Institute if they moved to that province.
The 1987 CA legislation had required that students acquire their experience in an approved training office. Members approved a register of such offices at the institute’s annual meeting the following year. By the end of the century, only about 150 of the province’s 850 practising offices had institute approval to train students. This is not quite as small a percentage as it might seem. After all, of the province’s 850 offices, 450 were one-person shops. Certainly since the 1960s, these very small offices have been unlikely to employ students. One reason is that technician salaries are much less than those of articling students. Thus, while once most CAs had three students, by the end of the twentieth century there were far more CAs than students.
Students also needed to complete a professional education program or PEP. This is a series of courses and examinations sponsored by the institute. And finally, of course, they needed to pass the UFE – 16 hours in length, it consisted of four 4-hour exams. While the duration of the exam was down from its 1960s peak, when candidates wrote six 4-hour exams, it is worth remembering that prior to 1970 candidates were not required to have a university degree.
Although this was the state of affairs at the end of the century, it is unlikely to remain unchanged. According to Executive Director Steve Glover, the institute “is looking at the possibility of a very extensive re-engineering of the education model to cope with the increasing complexity of the profession. In general, the profession wants to offer CAs a broader set of skills. CAs obviously have strong numerical and analytical skills. We want to expand that so they have more finance and management information system skills.”
Sidebar: The Medallists of 1999
The reader will recall that in 1917 the institute introduced a $10 cash award to the student with the top marks on the Final Exam. In 1924, the institute changed this to gold and silver medals – a tradition that continues. In 1999, the Alberta Institute’s gold, silver and bronze medallists were Travis Bouck, Brandy Horn and Jill Kleebaum. All three worked for PricewaterhouseCoopers – Bouck in Sweden, Horn in Calgary, Kleebaum in Edmonton. To wrap up our study of the CA training program, we interviewed each in turn.
Gold medallist Travis Bouck was inspired to become an accountant by Greg Wood, a CA who had coached him in hockey. While getting a co-op degree in commerce from the University of Alberta, he began his articles in Red Deer (later moving to Edmonton). Before his articles were up, however, he had moved to Stockholm, so that his Swedish wife, Åsa, could finish her education. “When I came to Stockholm I couldn't get a job in accounting because of the language barrier,” he said. “I ended up working at the Post Office delivering mail and studying Swedish in the evenings. After about six months I had learned to speak enough Swedish to start work at PWC’s Stockholm office.”
For overseas transfers, the usual rule is that an individual can apply six months of foreign experience to articling time. In Bouck’s case, the institute allowed him nine months of articles overseas. At the time of writing, he had completed his articles but had not yet become a member of the Alberta Institute.
Bouck had concerns about certain trends within the articling system. “The push within the larger CA firms is for industry specialization,” he said, “and this starts at the beginning of an articling student's career. My belief is that new articling students often do not have the experience or knowledge to make informed decisions about the area they would like to specialize in, and they may find it difficult to change industries without taking a step back in their career paths.”
That may be, but Bouck himself had little doubt about where his own career was heading. He would continue to specialize in international business. “I am planning to write the reciprocity exam in the US when I transfer there in November 2000,” he explained. “The CPA is what I need internationally, since a lot of the companies I work with are subsidiaries of US corporations. There is a lot of emphasis on International Accounting Standards in Europe. But as long as the US does not require these standards, American Generally Accepted Auditing Standards and GAAP are much more important for me.”
What is it like to work overseas? “If you've never been to Stockholm you should definitely come. It’s one of the most beautiful cities I have ever seen.”
Silver medallist Brandy Horn chose accounting over law after considerable soul-searching toward the end of her years at the University of Calgary. As this book went to press, she was still completing her articles: her 30-month term would end in May 2001.
What are working conditions like in the offices of one of the world’s five largest accounting firms? Because she is new to articles, Horn is one of the students designated to use PWC’s “hotelling” workspace system. “You come in to work and pick a cubicle that’s empty and you take it. When you become a senior associate, you are assigned a desk in your own cubicle.”
Her quick summary of articles is that it involves “learning a lot, getting practical experience and receiving a regular pay cheque. Conditions are great; I enjoy working here.” Asked whether women are treated as equals, she is adamant. “Yes. I haven’t run into any situations here where I felt I was discriminated against because of my sex. The opportunities are equal. It just depends on what you want to do. I want to specialize in tax, and they are accommodating me on that.”
Horn believes that university preparation has some weaknesses. “More work could be done at the university level to prepare us for articling. It would be better for accounting majors if we were given more practical courses in audit, tax and financial accounting. The Handbook is supposed to be the accountant’s Bible, yet you are not even required to look at it in university. It may be useful to have university courses geared towards those intending to go the CA route.”
Like other UFE candidates, she reports the test is tough but “thankfully, technical issues are not as important for the UFE as for the Qualifying Exam. You do not need to know the technicalities to get marks.”
Like articling students for several generations, she reported that hours are long during the busy season – January through February for audit, March through April for personal tax, and into May and June for corporate taxation. Like other articling students from time immemorial, she did not get overtime pay.
Bronze medallist Jill Kleebaum was also an articling student at the time of writing. A graduate of the University of Alberta, her articles were to be complete in late 2000.
Her reasons for becoming a CA were highly practical: “I knew it would provide me with a good business background. When I decided to pursue my CA designation, I was aware how difficult it would be. I also realized that people who make it through this process earn a tremendous amount of respect from their colleagues.”
As this manuscript was in preparation, Kleebaum had her own cubicle. “I was here about a year and a half before I was promoted to senior associate.” She had not decided on a specialty, but “I work exclusively in the assurance side. I have a wide array of clients – from pretty small to very big. I’m always learning; it’s never the same thing over and over. For example, as I have gained experience I have been given the responsibility of coaching more junior staff members.”
Working for PWC “gives me the opportunity to travel a bit – I’m going up to Inuvik (on the shores of the Beaufort Sea) in a couple of months. That will be pretty interesting.” She has also worked in such small northern Alberta towns as Slave Lake, Whitecourt and High Level.
“Work-life balance is becoming increasingly important to young professionals,” according to Kleebaum. “I have heard many stories from managers at my firm about their articling experience and the severe amounts of overtime they were required to work. So far, I haven't been required to work a significant number of overtime hours and I do not have the impression that this is seen as a bad thing. People are being encouraged to maintain a suitable work-life balance.”
Although it is ironic that they all work for different offices in the same firm, Travis Bouck, Brandy Horn and Jill Kleebaum represent the continuation of a long tradition. The articling experience has been at the heart of the CA profession since professional accountancy’s early days in Alberta.
Professional Development
Professional development continued to be an important area of focus for both the institute and its members. In 1986, however, there was much talk about making professional development mandatory, following such a recommendation from the CICA’s Long-Range Strategic Planning Committee.
As institute president Bill Halford explained council’s response to this issue, “Mandatory professional development is really a requirement to give PD priority and to ensure members make the time for it. And, considering the variety of courses available from a broad range of sources it shouldn’t be difficult for members to find the time, or topics, relevant to their jobs or careers.”
The British Columbia Institute approved “required continuing professional development” for members in public practice beginning January 1, 1991, and the Quebec and Manitoba institutes followed. Council was not swayed. According to executive director Steve Glover, the ICAA’s system of voluntary continuing education, practice review and discipline was working well to maintain high professional standards. “The key test of professionalism,” he said, “is whether the best interest of the public is being served.” Clearly, his view and council’s was that the public interest did not require mandatory professional development.
Rather than requiring professional development, the institute introduced an innovative approach to increasing participation in these programs. To help reduce the costs and increase enrolment, in 1993 the institute began using the “PD Passport”. This innovation allowed Alberta members to pay a fixed price and attend an unlimited number of ICAA-sponsored courses. By January 31, 1994, total attendance had risen 77 per cent. The reason? For the $595 cost of the passport, participating members had been able to enrol in courses that would otherwise have cost between $2,500 and $3,000. In the economist’s jargon, this was a classic case of elastic demand.
In time, however, it became clear that PD passports were not enough. In 1998, 72 per cent of members supported a continuing education regulation; the following year, the institute needed to take another vote because of delays by the government in developing a new Regulated Accounting Profession Act.
“The regulation gives CAs formal recognition of the many professional development activities they are already involved in,” said Member Education Director Dianne Johnstone in response to the first vote. “CAs will report their CPE [Continuing Professional Education] credit hours on a simple form, sign it off, and return it to us.”
The regulation’s effective date was January 1, 2000. After that date, CAs in public practice were required to invest a minimum of 20 hours per year in professional development, 100 hours over a three-year period. CAs not in public practice needed to spend half that amount of time in professional development.
A great deal of latitude surrounded these requirements. For starters, the member was to judge what study was relevant. While half of the professional development needed to be formal in nature, it could come “from any organized school, university, college, professional organization or industry association, and includes in-house presentations, conferences, technical groups and teaching.” The other half could include “pre-course preparation, research, writing and private reading and study.” Members needed to confirm each year that they had met their professional education requirements and submit to the institute a statement of how many hours they had spent in professional development.
Specialist Certification
“We must wrestle this issue to the ground,” said Strategic Planning Committee chairman Ron Elliott of the matter of professional specialization. As he explained, “the certification of specialists has been promoted very actively within our profession in the past decade. Perceived implementation problems, however, have frustrated any effective establishment of a working model to accredit specialists.”
This volume has reviewed the increasing specialization of the profession since the latter 1950s. Professionally speaking, an accountant’s area of specialization was something he or she informally developed; it did not receive formal professional recognition. By the 1980s, it was becoming increasingly clear that this needed to change.
One important milestone occurred in 1988, when the CICA established a study group to address the issue of forming CA membership divisions. This development stemmed from earlier recommendations by CICA’s Long Range Strategic Planning Committee, which proposed allowing members to develop and promote areas of specialized expertise and competence.
The Alberta Institute supported the need for a formal program of accreditation of specialists. In council’s view, a formal process to recognize and accredit specialists would provide a solution to “pressing professional and public needs.”
The first step toward the accreditation of specialists would be the establishment of membership sections, which were voluntary associations of CAs with a common interest “in existing or emerging areas of the CA profession’s technical knowledge and skills.” Conceptually, the sections would fall into four general categories. They could reflect a mature discipline such as taxation, a discipline in a state of change like information technology, such emerging disciplines as environmental accounting or a discipline of interest to members in industry, government or education such as controllership.
In practice, CICA’s first four divisions were Business Advisory Services, Environment Auditing Services, Personal Financial Planning Services and Corporate Controllership, Finance and Treasury Services. Soon to be created were divisions focusing on Taxation and on Information Technology. Within CICA, these were organized within a Council on Sections.
According to the section council’s 1991 chairman, Jim Gaston, interest in the new sections was high. “We have been inundated with requests for more information. Often the public wants the confidence that their needs are being met by a specialist, and our members want immediate access to current information that pertains to a specific area of business, but our traditional membership fee cannot be stretched any further.” In November 1992, members of five interest groups met in Toronto for an Interest Groups Founding Conference.
In time, this led to the creation of the National Specialization Council. Under the leadership of Alberta CA Andy Farvolden, this council reported to the CICA board. CICA and the provincial institutes came to recognize two routes for members to achieve formal recognition as specialists.
One way was through accreditation by another professional organization. The other was certification within the CA profession itself. Under this arrangement, new specialties would be created after members saw a market need for the area of specialization and established an “Alliance for Excellence” – in effect, an organized meeting of minds within the CA profession. The National Specialization Council would decide whether to designate a new specialization. As this book went to press, there was only one area of CA specialization – in Investigative and Forensic Accounting.
Governance
In a 1990 editorial in the CA Monthly Statement, President Morley Hirsch cited an Alberta government policy paper on the regulation of professions: “Self-governance is a privilege delegated to a profession only when the public interest is served by doing so, and when the advantages clearly outweigh the disadvantages.” Hirsch used this quote as the foil for a potent argument: “If we do not serve the public interest or are perceived by legislators as not doing so, then this right will be in jeopardy.” This has long been one of the central principles behind institute governance. Given the terms of the 1987 Chartered Accountants Act, which mandated public representation on council, this issue was very clear.
In its 1988 report, the Strategic Planning Committee identified three other objectives for institute governance. The first was coordination between the Alberta Institute and other accounting organizations; the second, to encourage member involvement. The third was to establish a fee structure based on a user pay philosophy. In time, the institute devised a system of governance that substantially met these objectives.
In this book we have described a number of management structures for the Alberta Institute – structures that, like governing bodies everywhere, continually evolved and changed. When the Strategic Planning Committee issued its report, council consisted of 15 elected members (including two vice-presidents) and two public members appointed by government. The president and two vice-presidents served as the executive committee, and council met about eight to 10 times each year for one or two days. Over the next few years the institute’s governing structure was changed in a number of ways, but the nature of its governing body did not. The institute continued to be governed by council and a group of committees. That soon changed, fundamentally.
This was a period of structural reform at every level of society. Canada was recovering slowly from the long, deep recession that began in 1990. Canadian businesses, including CA firms, were “re-engineering” – that is, “downsizing” staff and creating more cost-effective operations – in the quest for greater efficiency. ICAA members, who had become more cost-conscious, were less willing to volunteer large amounts of time on ICAA business, and they expected change from the institute, too. They wanted an institute that could respond to issues more nimbly, and they wanted a more accountable institute. In May 1995, council began investigating governance structure and policies.
After a year of study, council proposed a wholly new structure. The size of council would be smaller: two council positions went in 1997. This left 13 CAs on board, plus two public representatives. In addition, the second vice-president’s position was eliminated.
Council continued to make decisions on policy and was organized into four sub-groups. The officers (president, vice-president and secretary-treasurer) formed one sub-group. In addition, individual members served as monitors, overseeing such specific areas of concern as communications. Council also included such standing sub-committees as Audit and Nominating. And as necessary, members formed themselves into strategic task forces.
Reporting to council were seven peer groups. These included Practice Review, Professional Conduct, Registration, Exams, By-laws and Rules, Recognition and the Appeals Tribunals. In addition, a group of panels called hearing committees were part of the discipline process. Also reporting to council were operational task forces (struck, for instance, to analyze matters of public finance) and policy task forces (struck, for example, to establish an institute communications plan).
Besides streamlining the organization, the new structure needed to make the institute more agile. Accordingly, council eliminated the executive committee and vested greater authority in the president, who received sanction to act on urgent matters between council meetings. In recognition of that position’s larger responsibility, the president’s employer received compensation for his or her work. Initially, the amount was $25,000 per year – exactly 1,000 times the amount of J.B. Watson’s 1912 honorarium.
While these changes made a big impact on institute governance, more changes would come very quickly. At year-end 1999, the proposed Regulated Accounting Profession Act (RAPA) had passed third reading in the Alberta legislature, and would be proclaimed once the appropriate regulations and by-laws had been prepared.
Considering the history of conflict among Alberta’s three accounting organizations, it is a measure of the distance the groups had come that they all supported this bill, which would streamline and simplify current legislation by replacing the three existing accounting acts – in other words, all three organizations would operate under a single piece of legislation.
The new legislation was created with the protection of the public in mind. Under RAPA, the government would appoint at least 25 per cent of the representatives on each accounting council or board and all discipline and appeal tribunals. In addition, all council or board meetings would be open to members. Also, all registration, practice review, discipline and appeal hearings would be open to the public. And an independent review by the provincial ombudsman would be available to unsatisfied applicants, complainants and registrants.
The legislation would continue to ensure that only CAs, CMAs, and CGAs could perform audit and review engagements. It would give their professional organizations explicit authority to govern both individuals and firms, which were defined as entities that issue auditor’s and review engagement reports, and conduct public accounting practice.
Strength Beyond Numbers
By nature, communication is a recurring phenomenon, one that is continually rediscovered and reinvented. But the needs behind communication do not change fundamentally over the years. A great illustration of this can be seen in the 1988 report of the Strategic Planning Committee. Essentially, its communications objectives were little changed from those of the institute’s earliest years.
The institute wanted to promote the profession to potential students, enhance the CA’s image, work with other institutes, get widespread endorsement of CA standards and let people know about the value of chartered accountancy. Also, of course, it was important to accomplish these objectives efficiently. For the most part, the institute’s recent public relations achievements have thus echoed accomplishments of previous years, though often with an innovative twist. These have included, for example, developing ties with the Junior Achievement program, which teaches high school students about business, and creating an interactive computer game to do the same.
In the 1990s, however, the most noteworthy communication developments took place on a larger scale. For example, in 1991 Canada’s CAs adopted a new national logo, giving the profession a universal look. Developed under the auspices of the Inter-Institute Communications Committee, whose mandate was to identify and oversee national communications opportunities, the new logo incorporated a universal symbol, standardizing the CA initials across Canada. All 14 of the CICA-related institutes (including Bermuda) began using the logo. The campaign received a merit award in the “new corporate identity program” category from the Financial Post Magazine.
CICA’s Inter-Institute Communications Committee trumped this achievement in 1994 with a new image advertising campaign. “Strength Beyond Numbers” became a familiar phrase, frequently seen in business publications. The new ads showcased CAs as business advisors. “The purpose of this campaign is to show that CAs are much more than just number-crunchers. They have strength of experience, strength of vision, and strength of commitment – each identified in three separate ads,” explained the CA Monthly Statement. Like the logo, this campaign received a prestigious award: the International Association of Business Communicators’ “Capital Award of Excellence.”
In 1996, institute president Ann Rooney wrote warmly about the Strength Beyond Numbers campaign. “The phrase satisfies many of our objectives in communication to clients and employers. It’s no secret that CAs understand and work well with numbers. That’s why we have nicknames like bean counters, number crunchers, and graphite commandos. But we also want the world to recognize us as readily for the business advisory skills and financially informed leadership that we bring to the work we do. That is what communicators intended this phrase to convey.”
In 1995, the Alberta Institute decided to undertake a more visible image advertising campaign – one that promoted the leadership of the profession and the diversity of skills CAs could offer. Research showed that the province’s CAs wanted advertising that was “aggressive” and consistent with the CA profession’s leadership position. A television ad campaign was duly launched.
The campaign used inkblots, abstract painting and cloud scenes to convey the notion that “CAs see something else.” The concept was that CAs have the talent to use their training and expertise to see beyond the obvious or just the financial side of the business problem. The ability to deliver “strength beyond numbers,” went the pitch, made CAs uniquely qualified to identify and capitalize on valuable business opportunities for their employers and clients.
The focus on image advertising continues, both nationally and provincially. In 1997, the new campaign, which included both print and television ads, promoted the benefits of employing CAs. “In the past, our advertising efforts have been rather conservative,” said ICAA president Leo Kelley. “With the new ad campaign, we’re hoping to shake things up a little. You can say you are different, but if change isn’t reflected in everything you do, people won’t believe you.”
As Kelley’s remark suggests, the 1997 campaign was quite different from traditional CA advertising. It focused on the broad range of services offered by CAs, and expanded the CA profile by taking a public stand on selective major issues. The shift in the portrait of the CA from an expert in tax and auditing to someone with multi-disciplinary knowledge was quite important. The image ad campaign in 1999-2000 demonstrates CAs' non-traditional skills through radio and magazine columns that provide audiences with real business advice. As we shall see, it also reflects important changes in the business environment.
Diversity
During the 1990s, large organizations throughout North America began to cotton on to the reality of fundamental change in the working environment. Not to be ignored, these changes needed a measured response. Workplace initiatives that went under the general title of diversity were one outcome.
We have suggested some of the trends leading to workplace diversity elsewhere in this book. The simple fact that many CAs had received degrees in arts and science was one. The institute came under pressure to create bridging programs that could speed up the process by which individuals with backgrounds in petroleum engineering, for example, could become CAs.
Another source of diversity was the greater participation of women within the profession. The larger number of women brought issues that demanded immediate attention – for example, arrangements for maternity leave. Greater numbers of women in the profession also helped impel the creation of policies about workplace harassment. These policies covered sexual improprieties, verbal and emotional harassment (called power tripping in simpler times) and discrimination based on race, religion and ethnicity.
The latter aspect of harassment reflected a fundamental change in the make-up of Canadian society – one tied to a change in Canada’s immigration mix. Prior to about 1970, Canada’s immigrants arrived primarily from Europe and the United States. After that, they came increasingly from South and East Asia and from other parts of the world. During the last half century, among the large industrial democracies Canada has continually had the highest level of immigration – an annual amount equal to perhaps one per cent of total population. One result was that Canada’s larger cities, including both Edmonton and Calgary, became quite cosmopolitan. The workplace became ethnically, racially and religiously diverse.
Because these changes occurred very quickly, the workplace ethos often had trouble catching up. While most CAs were likely to see greater ethnicity and gender balance as the norm, some struggled with the change. In 1994, the Canadian Institute rolled out a program called “Making a Difference: Valuing Diversity in the CA Profession.”
This initiative focused on a few deceptively simple messages. First, diverse ideas and backgrounds represent strength, not weakness. Second, the most effective working teams harness diversity in the interest of getting better results. Third, diversity is good for business, and workplace tolerance is therefore essential. Carol Loughrey, who chaired CICA’s diversity task force, put it this way: “If it’s good for your people, it’s good for your business – because to be competitive, you need to get and keep the brightest and the best employees. And increasingly, you need to reflect the diverse makeup of customers and society, where change and diversity are regular parts of life.”
By the end of the decade, there was much greater diversity in business than ever before, and society too had made a great deal of progress. The reasons were fairly simple. In the CA institutes and most large firms, women and representatives of “visible minorities” had risen to positions of authority and influence. Diversity training programs had helped change attitudes, and a decade of workplace harassment policies and their enforcement had made an impression on many of the individuals for whom those policies were devised. Operating at a more subtle level, perhaps, was the simple fact that in earlier times women and visible minorities had to work harder to earn their places in the CA world. As these highly motivated cohorts entered the profession, they pushed the others to work harder. This raised standards for everyone.
Old attitudes and stereotypes lingered, however, and the larger accounting firms in particular were seriously committed to wiping them out. Like society as a whole, the profession was becoming intolerant of harassment. There could be no turning back.
Multi-disciplinary Activities
As we have observed, the business that law firms can develop is far more constrained than the business of accounting firms. The governing bodies for CAs permit accountants to diversify business beyond core practices – an advantage that bar associations do not confer upon law firms. Although accountants have enjoyed this benefit for decades, by 1990 the opportunities that faced accountants were pushing well beyond the services traditionally provided by accounting firms.
In that year, newly elected president Morley Hirsch offered insight into issues of the day. He noted the increasing dissatisfaction with institutions and leadership at a time when the globalization of business, political discord within the country and concerns over the economy required strong leadership. He expressed concern that the profession was losing out to competing bodies, and that institute governance inhibited an effective response. He also worried about increasing competition from non-CAs, especially since CAs were providing a much broader range of services than in the past.
The changes that Hirsch enumerated have turned out to be very fundamental, and they strongly affected the way the profession conducts business. The convergence of many factors helped create the new environment. These included, for example, changing technology, increasing specialization and the growth of international trade and transnational corporations. In addition, organizations – particularly those that had restructured – began using independent contractors and other service providers rather than in-house operations to meet many of their business needs. Also, corporate financial reporting began taking into account items that reflected growing environmental concerns – for example, such environmental obligations as decommissioning costs. Taken together, these factors provided a business environment rich with potential for the accounting firm.
Quite aware of the implications of these developments, in the early 1990s the Canadian Institute struck an Interprovincial Task Force on the Multi-disciplinary Activities of Members Engaged in Public Practice. Alberta’s representative was Robert Wilson. The task force noted in its 1995 report that, besides offering management and information technology consulting, CA firms now provided actuarial services, valuations, forensic and investigative accounting and even environmental services.
The proliferation of services began with the larger CA firms, many of which created separate business units to provide specific consulting services. Increasingly, these units were staffed with non-CAs – such experts in other areas as lawyers, actuaries and systems analysts. As the task force duly noted, this development generated important benefits for both CA firms and the profession as a whole. “It has enabled the firms to provide valuable new services to the business community and thereby achieve stability and real growth in the face of declining revenues from traditional services. It has also generated greater diversity in career paths for chartered accountants and other professionals.”
While the task force acknowledged the value of diversification for the public practice firm, there was clearly a problem. The profession had developed in simpler times, and there were conflicts between some provincial by-laws and multi-disciplinary practice. After considerable discussion, the task force agreed that the “old paradigm” of what constitutes a CA firm was no longer adequate. “Professions,” they proclaimed, “must learn to adapt quickly if they are to succeed and prosper. This is particularly true for one that is as closely connected to commerce as ours is.”
Accordingly, the task force enunciated five principles that should frame the development of a new paradigm for the profession. The first of these was credibility, which they called “a fundamental attribute of services performed by public practice firms.” Second was that high standards of objectivity be observed. Third was that any changes to the profession must be directed “toward enhancing the protection of the public interest.” As the task force noted, these principles have long been among the profession’s core values.
The last two principles, they suggested, should be specific to the multi-disciplinary activities of members in public practice. One was that the Rules of Professional Conduct should apply to all professionals working in these firms, whether they were CAs or not. The other was that CAs must control public practice firms.
Using these notions as a guide, the task force laid out ten recommendations for rules and regulations by which public practice could take full advantage of multi-disciplinary diversification. With this work done, they left it to the provincial bodies to make the appropriate changes to their by-laws – although monitored and coordinated by CICA’s Harmonization Committee. The era of the large-scale accounting firm providing diverse professional services had clearly arrived.
The Vision Project
As the Multi-disciplinary Activities report came off the press, the Canadian Institute struck another CICA task force to begin the Vision Project. On the principle that a shared vision is the key to a successful future, the task force’s mandate was to envision what the profession could become. In 1996 a truck from the bindery delivered the inevitable report, which was focused around a mission and a vision for the contemporary CA.
The profession’s mission, according to the final wording, was to “enhance decision-making and improve organizational performance through financial management, assurance and other specialized expertise. We act with integrity, objectivity and a commitment to excellence and the public interest.” The profession’s vision was to “be leaders in creating, validating and interpreting information that measures and enhances organizational performance, and be the obvious choice for financial management, assurance and other specialized services."
“Visioneering” was the 1990s buzzword for this process, and its significance is obvious. Understanding the profession within these mission and vision statements enables CAs to develop accounting practices that are in touch with contemporary business realities. However, it is worth comparing the outcome of the Vision Project’s task force with that of an earlier exercise in visioneering. The year was 1918.
In that year ICAA stalwart Frank Harvey proposed that the institute define the term chartered accountant, so that the institute would have a clear understanding of who was eligible for membership. The definition adopted was concise: “A public accountant is a person skilled in the affairs of commerce and finance and particularly in the accounts relating thereto who, either on behalf of himself or others, places his services at the disposal of the public for remuneration and maintains an office or place at which his services may be engaged and whose time, during the ordinary hours of business, is not entirely under the control of any one individual, firm or corporation.”
Without unduly stretching the point, it is worth noting direct lines of descent between the mission and vision of 1996 and the definition of 1918. Both focus on specialized skills, particularly in finance. Both stress objectivity and independence. Each is well suited to the environment of the day.
New Digs, New Technology
At the beginning of the 1990s, the institute was again feeling the constraints of cramped living quarters. Accordingly, in 1991 the ad hoc Premises Committee reviewed accommodation. Institute staff had increased from 26 to 34 since the move to the TD Tower, and the organization needed more space. The committee concluded that 14,375 square feet would do the job, and sought competitive bids for space in four buildings: Manulife Place, Metropolitan Place, Scotia Place and TD Tower.
Council opted for the Manulife building because of its “newer age, superior mechanical systems, dedicated freight elevator and the ability to house all of the Institute’s functions in one space.” Gross rent (including operating costs) for a 10.5-year period would be $3.3 million. The institute moved into its present premises in the spring of 1992 under the leadership of the institute’s associate executive director, Wayne Kauffman.
Along with new digs came new technology. As the move to the new building was under consideration, the institute began planning to replace and upgrade its entire information system. Again under Kauffman’s guidance, the institute proposed that everyone should have a computer workstation, and that the new system should include high-volume networked printers, electronic mail, a customized database and other state-of-the-art features.
In January 1992, computer-consulting firm DMR Group received the contract to develop a networked computer system that could be adapted for other institutes and associations. System development, which took place in three stages over the following year and a half, included both installation of a client-server network and the development of a specialized database for the institute. The database was designed to handle all aspects of institute business – from member registrations to tracking student exams to the financial transaction tracking of professional development courses.
In the fall of 1993, the Quebec ordre’s professional development director visited Edmonton on other business, and was given a demonstration of the system’s capabilities. She was so impressed that she soon convinced L’Ordre’s council to adapt the Alberta system to Quebec’s needs. The deal between the two institutes was concluded in about six months, and Quebec began using the Alberta-designed system in August 1994. As a result, Quebec’s ordre advanced its systems development and the Alberta Institute recovered some of its development costs.
While the cost of this system was high, it proved to be quite cost-effective. Once the deal with Quebec had been fully implemented, the CA Monthly Statement described the new system in some detail. The newsletter also enthusiastically editorialized: “What a payoff! The development of this information system has reduced ICAA’s full-time staff complement by 10 per cent. Member and student dues have been held constant for three years. Significant rebates to members were appreciated, ICAA is maintaining a comfortable overall surplus and some cost recovery was realized....”
As the decade wore on, the world became aware of the Internet, and software that could enable computer users to access this new form of communication became widespread. The potential of this system was clear, and the institute set up a web site (www.icaa.ab.ca) in 1996. The following year the Alberta and British Columbia institutes established a joint site for CA careers.
The Next Generation
This history has described the growth of the CA profession from primitive beginnings to high-tech pioneers. In closing, it might be appropriate to look at a few comments on the qualifications that future CAs will require. After attending an accounting education symposium at the University of Alberta in 1993, President Denis Harvey remarked that “the profession seems to be fairly uniform in its view that tomorrow’s CA firm must be a broad-based financial consulting firm providing the ‘trusted business advisor’ role to its clients. This will require that the personnel in these firms be broadly educated in general business as well as have specific skills and knowledge which can be applied directly to meeting the needs of their clients.”
As part of the Vision Project discussed earlier, CICA sponsored Vision Forum ’97 in Toronto, based upon the theme “Leading Change.” The conference proposed that the profession’s core competencies should include finance, control and risk management; information and communication technology; performance measures (including financial accounting and reporting); assurance and taxation. During the forum, the participants continued to worry about the gap between the profile of the CA and the qualities future CAs would need.
The Alberta Institute’s executive director, Steve Glover, was one of 150 leaders to participate. “Participants said it was less a question of admitting only the brightest, and more one of making the profession attractive to well-prepared candidates with the right ethics, attitudes, business instincts, and skills,” he reported. “Concerns were expressed that a funnel effect narrows the profession’s intake to those taking a Bachelor of Commerce degree. Almost universally, participants wanted to see broader intake, reflecting a wider diversity of people and experiences.”
The following year, institute president Leo Kelley again reflected on this theme. He noted that one of the goals of the Vision Task Force report was to ensure the CA profession is accessible and attractive to a wide range of young men and women. “Continuing to attract Alberta’s best and brightest remains a strategic priority,” he said. “We strive to accomplish this goal by replacing the CA stereotype with a dynamic image that focuses on the profession’s key selling points: 1) opportunity; 2) mobility; and 3) flexibility.”
As these remarks suggest, one of the Alberta Institute’s key concerns was still its intake of students. This only makes sense, of course, since the ICAA is fundamentally a learning institution.
After 90 years of history, it is perhaps apt to think of the institute as being like an hourglass, with the CA training program as the narrow middle. The institute draws students into its training system from a wide range of backgrounds. Through concentrated studies in financial accounting, auditing and tax and exposure to a wide variety of business environments, it helps them develop professional skills. After descending through the narrow middle of the timepiece, accredited CAs spread out into a broad range of careers.
Perhaps the authors can be forgiven for thinking that the institute, seen in this way, has changed little during the best part of 100 years. True, society has become more complex. Equally true, the institute has always responded. But the hourglass has always functioned – from hour to hour, day to day, year to year. One after another, highly skilled men and women have poured through the training program into a great profession. Their careers have marked the rising wealth of the society they have served.
Sidebar: Technology Rules
Everyone has interesting stories about technology to tell. As institute president Bill Halford observed in 1987, for example, “electronic technology first invaded the security of my non-mechanical business work in the form of a photocopier. Those early machines were slow and aggravating. The developing fluid was usually unreliable and several tries were needed to get even a passable copy. Now it’s difficult to imagine an office without a photocopier.”
As Halford explained, “the invention of the transistor brought the next step of technological advance. Calculators had not really progressed from the abacus until transistorized models arrived. The first one I saw cost $1,450 in 1965 and was the size of a portable typewriter. Today’s disposable models, costing less than $10, have far more capacity.”
The year after Halford’s comments, John Denholm wrote an article for the CA Monthly Statement to highlight other developments in business communications. Among the topics he carefully explained were “electronic mail” and “facsimile systems.”
Such is the speed with which technology has advanced that Halford’s and Denholm’s comments, though a part of the recent past, seemed almost quaint and old-fashioned as this book went to press.
To wrestle with technologies whose power was still unknown, the Public Practice Committee helped form a microcomputer users group in 1985. The implications of personal computers were still vague and clumsy – dominated by the often-complex commands of DOS, Microsoft’s Disk Operating System. The implications of “user-friendly” computer technology became clear just two years later, with the production of the CA Monthly Statement on the ICAA’s new Macintosh Plus computer.
By now, it was becoming apparent that some brave new world was waiting to burst forth, somehow to be realized through the application of these infernal machines. Within five years, networked computing had enabled these technologies to leap forward, as the institute’s new computer system illustrated.
Without fanfare, during the 1990s convergent technologies began to transform society. They increased business and industrial productivity, formed part of the groundwork for a restructuring of Canada’s economy, speeded up the evolution of international economic interdependence and helped create a global financial system that could move enormous sums from nation to nation with the click of a virtual button. These technologies bounded forward with amazing speed.
Most emblematic of the raw and growing power of computers, perhaps, were two titanic matches between chess grand master Garry Kasparov and Big Blue, an IBM computer. Kasparov won the 1996 match but, the following year, lost the rematch. He reported after the first tournament that to win he had first to understand the computer’s “personality;” he felt the encounter had eerily revealed a kind of machine intelligence.
Like the nineteenth century Luddites, who were frightened that steam-driven textile machinery would entirely replace skilled craftsmen, many of those who followed these games believed Big Blue foreshadowed a world in which technology would somehow unseat mankind. More pragmatically, chartered accountants wanted to be masters of the technology, which was clearly changing their world. Technology was having so great an impact on business and commerce that CAs could only ignore it at their peril.
To understand how these changes are taking place, let’s begin with a retrospective on the accountant and information technology. In the most basic sense, the accountant’s tools are three: the written word, the human voice, and mathematical systems. The chartered accountant has always needed information technology, and advanced technologies have long been part of the CA’s office.
In Victorian times, three inventions – one developed in Canada, the others in the US – began a revolution in each of these tools. The first was the development of a practical typewriter by Christopher Sholes, who received his second (much improved) patent in 1868. The typewriter brought the printing press into the office, adding greater clarity to the written word. In 1876, Alexander Graham Bell received a US patent for the telephone, which he had developed in southern Ontario. The telephone extended the reach of the voice (and eventually, other data as well). And in 1884, Hermann Hollerith patented a tabulating machine that used holes punched into a long strip of paper to represent information. By the time this machine was used to process the data collected for the US Census of 1890, Hollerith had improved the machine so that it used cards the size of dollar bills.
Broadly understood, the ubiquitous information technologies of the latter twentieth century have all evolved from these nineteenth century inventions – plus, one could add, the later development of radio and its offspring, television. Unlike those early inventions, however, today’s IT systems are cheap and powerful. Increasingly, they are also convergent. Telephony, electronic publishing and data processing are so intimately connected that the boundaries among them are vague, if not impossible to discern – notably in the Internet.
The impact of the Internet on accounting will probably be great, although most of the particulars have yet to unfold. A hint of what is to come can be seen in the example of electronic commerce, which rocketed upward from a standing start in 1996. As the year 2000 began, it was already estimated to be a $500-billion-dollar segment of the global economy, and it was growing exponentially. Industrial giants General Motors and Ford Motor Company were making plans to turn the Internet into the heartbeat of capitalism by creating rival on-line bazaars for the goods and services they buy. According to GM, its site alone would generate annual sales of US$500 billion by 2001. By creating economies of scale and more intense competition, the corporation believed this arrangement would lower its costs by billions of dollars per year.
The biggest impact of technology on the profession arrived in response to information technologies owned by the clients of CAs. For example, accounting firms became hugely involved in the development of corporate information systems.
A diminishing part of the accounting business, in only a decade the traditional audit changed in profound ways. Notably, the paper trail began to disappear. As the decade came to an end, companies often did not see paper invoices – indeed, some had policies against receiving hard-copy invoices; only faxed or electronically communicated copies were acceptable. Transactions occurred online with increasing frequency, and payment authorizations were equally likely to have been executed by a few keystrokes. Electronic storage began replacing filing cabinets.
The increasing diversification of the large CA firm represented a boon to business, but it also created greater potential for conflict of interest. Consider, for example, the example of a firm serving as both computer consultant and auditor to a large business. If the auditor found that his or her firm had created financial systems for the client that were not quite up to snuff, would that person feel pressure not to report the deficiencies? After all, disclosing that information could lead to the loss of a major client. Although accounting firms separate their functional operations, this example suggests the potential for conflict of interest.
As the century drew to a close, another trend was changing the profession. Increasingly international businesses strengthened the need for international standards, with the result that nations began losing sovereignty over accounting and other standards. Canadian nationalism, which is roughly the same age as the Alberta Institute, still resonates for most of this country’s citizens. Yet there was little outcry about this loss.
Perhaps this muted response reflects recognition that globalization and its sway are the logical development of trends that began in Victorian Britain. As we observed early in this volume, nineteenth century Scots and English accountants created standards that quickly spread through the Empire and into the United States. Then, as now, those standards were in direct response to changing technology (at that time, the railroad and other applications of the steam engine) and growing world trade.
The lesson may be a simple one. The more things change, the more they stay the same.
Chapter Eleven -- Appendices
Institute of Chartered Accountants of Alberta
Presidents – 1910-2000
1910 George Percy Blythe
1911 Arthur H. Edwards
1912 John B. Watson
1913 James B. Sutherland*
1914 Charles L. Richardson
1915 Donald Archibald McCannel*
1916 WW Gould
1917 WHA Thompson
1918 Cecil E. Race
1919 James B. Sutherland*
1920 Edmond Douglas C. Thomson
1921 Frank Micklewright Harvey*
1922 Malcolm Campbell McCannel*
1923 John H. Williams
1924 Cecil E Race
1925 Eric Richardson
1926 Harry O. Patriquin
1927 JCM Ligertwood
1928 James Alexander Henderson
1929 Harry Eastwood Howard
1930 James Cottew Thompson
1931 Kenneth John Morrison*
1932 William Stuart Johnstone
1933 David Alexander Ross
1934 George David Kenneth Kinnaird
1935 AJJ Fanshaw
1936 Einar Maynard Gunderson
1937 Frederick Asbey Smith
1938 George Patterson Ponton
1938 Colin M. Lang
1939 Thomas Humphries
1940 HA Black
1941 Mervyn Gilmore Graves*
1942 Bernard Greer Aylen
1943 Walter Gordon Skinner
1944 William F. Reid
1945 Cuthbert Keith Raynor Huckvale
1946 RW Hamilton
1947 Leslie J. Munn
1948 James George Duncan*
1949 JS Simpson
1950 James Laurie Kergan
1951 Alfred Gordon Burton
1952 John Malcolm Tweddle
1953 Eric Connelly
1954 Alexander Johnstone Hamilton
1955 William Herbert Nield
1956 John Peter McClary
Clarence Arthur Richards
1957 Joseph Gilliland Simonton
1958 Gilbert Edward Gee
1959 Robert Edward Waller
1960 Haughton Gimby Thomson
1961 Donald Archibald McGregor
1962 Elvin Arnold Christenson*
1963 Walter Fay Anderson
1964 Eric A. Geddes
1965 Allan William Bell
1966 Raymond George Harris
1967 John Illtyd Rawlinson
1968 John Marshall Rooney
1969 Edward William Bert Adamson
1970 John Lorne Baxter
1971 David De Wolfe Bentley
1972 Harvey Walter Bliss
1973 William Dawson Grace*
1974 William Parker Davis
1975 Gordon Ernest Woodman
1976 Duane Edwin Wikant
1977 Gilbert Stuart Ramsay
1978 William Grant Stephen
1979 Jack Hastings McMahon
1980 Giles Robert Meikle
1981 John Malcolm Tweddle
1982 Donald Hugh Bessell
1983 John Ormond Cuthbertson
1984 Randall Boyd Diaper
1985 Kenneth David Porter
1986 William Keith Adams
1987 William Michael Halford
1988 William Robert Jacobson
1989 Ronald Marvin Elliott
1990 Morley Paul Hirsch
1991 Jerry Alan Bennis
1992 Jackson Stephens Allan
1993 Denis Matthew Harvey
1994 Clayton Alan Holt
1995 Ross Allan Denham
1996 Ann Isabel Rooney
1997 Leo Richard Kelly
1998 Fred Robert Neal Snell
1999 Robert George Young
2000 Raymond Peter Mack
* CICA Past President
FCAs
Frederick Fraser Abbott, FCA
Kenneth Simon Aberle, FCA
William Keith Adams, FCA
Edward William Bert Adamson, FCA
Jackson Stephens Allan, FCA
Edward Burritt Allan, FCA
Dennis Arthur Anderson, FCA
Walter Fay Anderson, FCA
Mary Campbell Arnold, FCA
William John Astle, FCA
Ronald Arthur Baines, FCA
Douglas Neil Baker, FCA
John Edward William Baker, FCA
David Brown Barr, FCA
Charles Frederick Barth, FCA
John Lorne Baxter, FCA
John Herbert Bennion, FCA
Jerry Alan Bennis, FCA
David De Wolfe Bentley, FCA
Donald Hugh Bessell, FCA
Kenneth Austin Biggs, FCA
Harvey Walter Bliss, FCA
Hugh John Bolton, FCA
Robert Wilfred Bowhay, FCA
Donald Leroy Brandell, FCA
Glen Wayne Braum, FCA
Robert Bernard Breakell, FCA
Harold William Buddle, FCA
Francis David Bush, FCA
David Bruce Carpenter, FCA
Robert James Carwell, FCA
Elvin Arnold Christenson, FCA
John Adrian Clarke, FCA
Clement Ernest Collins, FCA
John Ewart Collins, FCA
Eric Connelly, FCA
John Herbert Cook, FCA
Richard Joseph Cormier, FCA
Cameron Walter Crawford, FCA
Glen Edward Cronkwright, FCA
John Ormond Cuthbertson, FCA
David Costley Dahl, FCA
Arthur Kenneth Davies, FCA
William Parker Davis, FCA
Paul Arthur Dawson, FCA
Ross Allan Denham, FCA
Wilhelm Karl Detlefsen, FCA
Randall Boyd Diaper, FCA
James Ian Douglas, FCA
James George Duncan, FCA
John Bruce Dunlop, FCA
Arthur Gordon Dyck, FCA
Ronald Marvin Elliott, FCA
Charles Edward English, FC
Frederick Robin Estlin, FCA
Rhys Tudor Eyton, FCA
Ralph Anderson Farvolden, FCA
John Thomas Ferguson, FCA
David Copland Finlay, FCA
Keith Otis Fowler, FCA
James Simpson Steele Frazer, FCA
Barry Richard Gardiner, FCA
Donald Ellard Gass, FCA
Eric Geddes, FCA
Michael Gibbins, FCA
Leo Erwin Gitzel, FCA
Steven James Glover, FCA
Donald Allan Gower, FCA
William Dawson Grace, FCA
Harry Stephen Graschuk, FCA
James Gregory Greenough, FCA
Douglas Reid Hagerman, FCA
Allen Reid Hagerman, FCA
William Michael Halford, FCA
John William Halpin, FCA
Alexander Johnstone Hamilton, FCA
Raymond George Harris, FCA
Ross James Harris, FCA
James Christopher Hartley, FCA
Denis Matthew Harvey, FCA
Richard Francis Haskayne, FCA
Donald Spencer Heasman, FCA
Harold Ralph Henderson, FCA
James Douglas Herbison, FCA
Kenneth Wayne Heywood, FCA
Arthur Hironaka, FCA
Morley Paul Hirsch, FCA
Clayton Alan Holt, FCA
Walter Eastwood Howard, FCA
Cuthbert Keith Raynor Huckvale, FCA
David William Hughes, FCA
William Robert Jacobson, FCA
Archibald Dick Johnston, FCA
Leo Richard Kelly, FCA
Ian Robin Wilson Kinnell, FCA
Nicholas Grenville Kirton, FCA
Cheryl Maureen Knebel, FCA
Kenneth Charles Kouri, FCA
Henry Richardson Lawrie, FCA
John Roy Leard, FCA
Homer Graham Lebourveau, FCA
George Linder, FCA
Thomas Rex Little, FCA
George Bain Lomas, FCA
Robert Edward Lord, FCA
Brian Frederick Macneill, FCA
Donald Fook Men Mah, FCA
Ian Edward Walter Mcconnan, FCA
Mary Kathleen Mcgurran, FCA
Ronald Earl Mckague, FCA
Francis Arthur Richard Mckinnon, FCA
Jack Hastings Mcmahon, FCA
Thomas Gordon Mcnab, FCA
Allan Douglas Mctavish, FCA
Giles Robert Meikle, FCA
Harold Philip Milavsky, FCA
James Garnett Millard, FCA
James Charles Miller, FCA
Gordon Thomas William Miniely, FCA
Eric John Morris, FCA
Donald John Morrison, FCA
Vernon Clifford Morrison, FCA
Charles Kennedy Orr, FCA
Paul Hartley Palmer, FCA
Robert Melvyn Parkyn, FCA
Ross Ferguson Phillips, FCA
Kenneth David Porter, FCA
Kenneth Edward Poyser, FCA
Russell Herbert Purdy, FCA
Crosby Harold Quilliam, FCA
Gilbert Stuart Ramsay, FCA
John Illtyd Rawlinson, FCA
John Oliver Reid, FCA
Janice Gaye Rennie, FCA
Clarence Arthur Richards, FCA
Edward Richard Roberts, FCA
William David Robertson, FCA
Roland Francois Rocque, FCA
Douglas William Rogers, FCA
Bartlett Bidwell Rombough, FCA
Ann Isabel Rooney,
Gordon Frederick Roper, FCA
Lawrence Sydney Rosen, FCA
Donald Dahl Salmon, FCA
Harry George Schaefer, FCA
George Richard Schulli, FCA
William Bell Simpson, FCA
Derek Arthur Smith, FCA
James Crawford Smith, FCA
Fred Robert Neal Snell, FCA
John Ritchie Stefan Stankiewicz, FCA
William Grant Stephen, FCA
Brian Arthur Storey, FCA
Ian Kent Strang, FCA
Terrance Stephen Stroich, FCA
Jochen Daniel Alfred Struck, FCA
James Rodney Winter Sykes, FCA
David Logan Martin Miller Tait, FCA
Haughton Gimby Thomson, FCA
Daniel Blyth Thornton, FCA
Douglas Adam Tien, FCA
Lester Neil Tutty, FCA
John Malcolm Tweddle, FCA
Charles Peter Valentine, FCA
William Ross Walker, FCA
Donald Dickson Webster, FCA
Roderick James Whitehead, FCA
Duane Edwin Wikant, FCA
Jerome Paul Wilde, FCA
Michael Allan Williams, FCA
David Lea Willis, FCA
Andrew John Kendall Wingate, FCA
Robert George Young, FCA
Henry Bernard Zimmer, FCA
Index
A.A. Aldrich, 6—243
A.A. Garrett, 5—211
A.C. Littleton, 5—196
A.J.J. Fanshaw, 4—158
A.J.J.Fanshaw, 4—162
Aboriginal People, 8—296
Aboriginal peoples, 1—21, 1—22
Act to Incorporate the Institute of Chartered Accountants of Alberta, 2—57
Ada Saunderson, 7—265
Adolph Hitler, 5—181
Al Jolson, 3—96
Alan Nash, 4—174
Albert Edward Nash, 2—55, 2—56, 2—70
Alberta Chartered Accountants Act, 4—139, 4—164, 7—287
Alberta Companies Act, 3—126
Alberta Labour Act, 6—246
Alex Cairns, 6—259
Alex Hamilton, 1—7, 4—161, 6—238, 6—239, 6—240, 6—253
Alex Ross, 4—139
Alexander Ballantyne, 7—283
Alexander Graham Bell, 10—458
Alexander Hannah, 4—146
Alexander Mackenzie, 1—26
Alexander Mouat, 2—65, 10—417
Alexander Rutherford, 1—42
Alf Bennett, 6—226
Allan McTavish, 1—7, 6—223, 6—235, 6—242, 6—246, 6—248, 8—327
Amendments to the Partnership Act, 10—423
An Act to Incorporate the Institute of Chartered Accountants of North America, 2—52
Andrew Chu, 9—390
Andrew Thompson, 8—317
Andrew Wingate, 1—7
Andy Farvolden, 9—371, 9—388, 10—436
Ann Rooney, 10—442
Anne de Villars, 10—417
Anne Rooney, 9—398
Arnold Saffel, 8—317
Arnold Soars, 2—56
Arthur Edwards, 2—61, 2—63, 2—93, 3—123
Arthur Neff, 3—105
Austin Carr, 4—147, 4—167
Austin H. Carr, 4—150
Barb Carle-Thiessen, 9—398
Barbara McKrow, 9—389
Bart Rombough, 4—149
Battle of Britain, 5—214
Battle of the Atlantic, 5—213
Bea McLay, 6—236
Bernard Aylen, 5—209
Bev Scobie, 9—397
Big Blue, 10—457
Bill Atkinson, 4—150
Bill Detlefsen, 9—347
Bill Findlay, 3—106
Bill Grace, 1—7, 9—353, 9—354, 9—406
Bill Halford, 1—7, 9—370, 10—413, 10—415, 10—420, 10—421, 10—432, 10—455
Bill McMinn, 8—318
Bill McMullen, 8—318
Bill Nield, 2—94
Bill Payne, 9—372
Bill Reid, 5—209, 5—211
Bill Rodden, 8—343
Bill Rogers, 1—7, 7—266, 9—355
Bill Stephen, 1—7, 1—8, 1—19, 8—324, 9—358, 9—377, 9—400, 9—401
Birdie Archer, 9—389
Board of Examiners, 2—69, 4—155
Bob Elliott, 9—408
Bob Gehmlich, 7—266, 9—356
Bob Waller, 1—7, 5—216, 6—219, 7—284, 8—303
Brandy Horn, 1—7, 10—429
Brian Mulroney, 10—411
British Empire, 1—17, 1—30, 4—132, 5—181, 5—211, 6—216
British North America Act, 1—38, 2—52, 2—53, 3—122
Bruce Dunlop, 10—422
Bruce Mitchell, 8—331
Bruce Smith, 9—382
Business Profits War Tax Act, 2—80
CA Monthly Statement, 7—285, 9—347, 9—359, 9—368, 9—369, 9—372, 9—382, 9—391, 9—393, 9—395, 9—397, 10—413, 10—421, 10—426, 10—437, 10—442, 10—453, 10—456
Canadian Chartered Accountant, 1—4, 1—8, 2—57, 2—68, 2—79, 3—102, 3—107, 3—114, 4—143, 4—147, 4—150, 4—151, 4—154, 4—156, 4—167, 4—170, 5—193, 5—198, 5—207, 5—208, 6—229, 8—301, 8—302, 8—334
Canadian Chartered Accountant Magazine, 2—66
Carl Smith, 1—7, 10—416
Carol Loughrey, 10—445
Catherine Chichak, 8—343
Cecil E. Race, 2—61, 2—81
Cecil R. Smith, 2—81
Cecil Race, 2—59, 2—64, 2—76, 2—78, 3—98, 3—115, 3—123
Charles Baldwin, 2—56
Charles John Mackay, 4—166
Charles Lang, 2—64, 4—138, 4—178
Charles Mackechnie, 7—280
Charles Richardson, 2—64, 2—70, 2—75
Charlie Chaplin, 3—96
Charmaine Cockburn, 8—327
Chartered Accountants Act, 4—142, 6—239, 9—400, 10—412, 10—413, 10—418, 10—437
Chester Walters, 2—82, 3—108, 4—165, 4—166, 7—287
Christopher Sholes, 10—458
Clarence Richards, 6—239, 7—271
Clayton Adams, 4—177
Clem King, 5—205, 6—237, 7—282, 8—297
Clifford Sifton, 1—39
Col. H.D. Lockhart Gordon, 4—170
Colin Mackintosh, 5—187, 5—207
Colin Mackintosh, 5—185
Communism, 6—216
Confederation, 1—23, 1—38, 1—39, 1—42, 2—47, 4—136
Czar Nicholas III, 2—87
Daniel Thornton, 1—22
Dave Carpenter, 9—384
David Bentley, 1—7, 6—225, 8—337, 9—357
David Betts, 10—417
David Holt, 8—309
David Stewart, 10—417
Dean Cooper, 7—266
Denis Goodale, 7—276
Denis Harvey, 9—410, 10—453
Derek Walker, 8—332
Dianne Johnstone, 10—434
Dick Haskayne, 1—7, 9—404, 9—407, 9—409
Dick Schulli, 9—362
Dieppe, 5—214
Dip De Paoli, 8—293
Dominion Bankruptcy Act, 3—106
Dominion Companies Act, 3—108
Dominion Insolvency Acts, 2—48
Don Gass, 8—305
Don Salmon, 1—7
Donald Alexander Smith, 1—36
Donald McCannel, 2—75, 2—78, 4—142
Donna Page, 8—327
Dorothy Reid, 5—184, 6—221, 7—265
Doug Hagerman, 1—7, 1—16, 6—240
Douglas Whitelaw, 4—157
Dr. Andrew Stewart, 6—254, 6—256
Dr. Dan Thornton.), 9—380
Dr. E.W. Sheldon, 3—107
Dr. Henry Marshall Tory, 2—68
Dr. Hu Harries, 8—317
Dr. Ian Reid, 9—402, 10—412
Dr. John Waterhouse., 9—380
Dr. Robert C. Wallace, 4—155
Dr. Robert George Brett, 3—115
Dr. Robert Newton, 6—230
Dr. Robert Sterling, 9—380
Dr. Rodney Schneck, 8—325
Duane Wikant, 9—386, 9—391
Duncan Green, 10—426
E.D.C. Thomson, 2—84
Ed Roberts, 1—7, 8—292
Edgar Andrew Collard, 6—263
Edgar Benson, 8—325
Edward Burley, 2—55, 3—99
Edward E. Gore, 3—119
Edward VIII, 4—162, 4—163
Einar Gunderson, 4—158, 4—177
Elizabeth II, 4—163
Elvin Christenson, 1—7, 1—16, 5—187, 5—189, 7—269, 7—288, 8—304, 8—312, 9—347, 9—355, 9—378, 9—405
Emile Beauvois, 6—235
Eric Connelly, 6—234, 6—238, 6—241, 6—243, 6—259, 6—260
Eric Geddes, 1—7, 6—225, 8—312, 8—314, 8—329, 9—408
Eric Richardson, 2—70, 3—102
Ernest Manning, 1—15, 6—217, 6—222, 6—233, 6—250, 7—288
Eugene Coste, 1—43
Excess Profits Tax Act, 5—198
Exchequer and Audit Act, 1—30
F.M. Oliver, 2—82
Fascism, 6—216
First World War, 2—80, 2—82, 2—84, 2—87, 2—88, 2—89, 3—117, 3—120, 4—134, 4—154, 5—184
Florence Eulalie Herkins, 3—122
Francis Winspear, 4—128, 4—129, 4—160, 4—161, 4—167, 4—175, 5—198, 6—225, 7—267, 9—379
Frank Harvey, 1—18, 2—76, 2—94, 3—99, 3—113, 3—123, 4—128, 4—131, 4—150, 4—156, 4—165, 10—450
Franklin Roosevelt, 5—181
Fred Barth, 9—357, 9—375
Fred Smith, 4—179, 6—230
Gamal Abdel-Nasser, 6—262
Garry Daunheimer, 10—417
Garry Davidge, 8—327
Garry Kasparov, 10—457
Generally Accepted Accounting Principles, 4—136
George Edwards, 3—101, 3—112
George Eykelbosh, 9—359
George Kinnaird, 3—110, 4—156
George Linder, 9—392
George Melrose Bell, 4—147
George O. May, 4—135
George Percy Blythe, 2—61, 2—64, 10—417
George Simpson, 1—37
George Winter, 3—116
George. Ponton, 4—178
Gerrie Dey, 9—384
Gerry and Margaret Pearson, 7—275
Gerry Coakwell, 10—417
Gerry Pearson, 8—321, 8—333
Gib Gee, 7—275
Gil Ramsey, 9—360, 9—385
Giles Meikle, 9—392, 9—400
Giovanni di Bicci de’ Medici, 1—27
Glen Grover, 10—417
Gordon Burton, 6—223, 6—242, 6—243, 6—249
Gordon Hutchison, 7—283
Gordon Northfield, 6—228
Gordon Skinner, 4—176, 5—209
Gordon Woodman, 9—347, 9—357
Graham Lebourveau, 8—301
Great Depression, 1—3, 1—17, 3—126, 4—151, 4—154, 4—173, 5—181, 5—185, 6—217
Greg Wood, 10—429
Guy Hoult, 7—267
H.E. Guilfoyle, 4—165
H.M.E. Evans, 3—98
H.P. Herrington, 5—208
Hans Maciej, 1—8
Harry Baldwin, 2—61, 2—64
Harry Buddle, 9—405
Harry Hoard, 8—304
Harry Howard, 3—116, 4—128, 4—131, 4—140, 4—144, 4—154, 6—230
Harry L. Price, 2—53
Harry Norman, 5—201
Harry Patriquin, 2—60, 2—70
Harvey Bliss, 9—355, 9—357
Haughton Thomson, 1—7, 1—15, 6—258, 7—289, 9—358
Helen Hunley, 10—413
Henrietta Muir Edwards, 3—121
Henry Ford, 4—140
Henry Kelsey, 1—25
Henry Kwok, 9—390
Henry Lawrie, 1—7
Henry Norman, 5—203, 8—304
Herb Nield, 7—271
Herbert Greenfield, 3—95
Herbert Hartley, 7—281
Herbert Hoover, 4—131
Herbert Nield, 2—77, 6—258
Hermann Hollerith, 10—458
Holland Cameron, 8—294
Hong Kong, 5—214
Howard Ross, 8—297
Hudson’s Bay Company, 1—3, 1—20, 1—36, 1—39
Hudson's Bay Company, 1—23
Hugh Anderson, 2—64
Hugh Black, 5—188
Hugh Nash, 2—56, 2—60
Income War Tax Act, 2—80, 2—81
Investment Contracts Act, 9—403
Irene Lynn, 3—122
Italian campaign, 5—214
J. Ewart Collins, 3—97, 3—111, 4—139
J. Gray Mundie, 4—171
J. Train Gray, 2—74
J.D. Campbell, 4—161, 6—230, 6—236, 6—241, 7—276
J.E.A. Macleod, 4—142, 4—145, 5—199
J.G. Glassco, 5—198
J.W. Quinney, 2—90
Jack Baker, 7—285, 9—383
Jack Donald, 10—416
Jack McMahon, 9—400, 10—417
James (Ross) Henderson, 4—175
James C. Miller, 6—224
James Court, 2—49
James Henderson, 9—374
James Marwick, 2—58
James McClelland, 1—33
James Ross, 2—88
James Sutherland, 2—61, 2—63, 2—75, 3—115, 3—123, 4—160
James Thompson, 3—99, 3—104, 4—128, 4—131, 4—138, 4—143, 4—150
Janice Rennie, 9—358, 9—408
Jared Diamond, 1—23
Jayda Rosenthal, 1—7
Jill Kleebaum, 1—7, 10—429
Jim Duncan, 6—221, 6—250
Jim Gaston, 10—436
Jim Kergan, 4—151
Jim Miller, 1—7
Jimmie Henderson, 3—110, 5—187, 5—202, 8—304
Joan Weston, 8—327
Joe Simonton, 7—282
John B. Watson., 3—97
John Bowles, 7—279, 8—302
John Collins, 1—7, 3—97, 9—359, 9—361, 9—396
John Curran, 9—406
John D. Williams, 4—130
John Denholm, 10—456
John Ferguson, 1—7, 9—407, 9—408
John Francis, 8—329, 9—388
John George Diefenbaker, 7—263
John H. Williams, 4—130
John Harvey, 2—70
John McClary, 7—271
John Olthuis, 9—385
John Parton, 5—198
John Rawlinson, 8—324, 9—355, 9—357
John Robert Doyle, 2—57
John Rooney, 8—302, 8—315, 8—317
John Tompkins, 9—376
John Watson, 2—60, 2—63, 4—141
John White, 6—261
John Williams, 2—59, 2—82, 3—112, 3—113, 3—115, 3—116, 4—128, 4—140, 4—150
John Wilson, 7—270
Joseph Simonton, 6—254
Joseph Stalin, 5—181
Judy Williams, 10—416
Kaiser Wilhelm II, 2—87
Karin Holmgren, 1—7, 1—19
Keith Adams, 1—7, 10—414, 10—417
Keith Drennan, 4—152
Keith Huckvale, 1—7, 4—138, 4—160, 5—185, 7—265, 7—288, 8—340, 9—355
Ken Kouri, 10—418
Ken Morrison, 2—77, 4—143, 6—258
Ken Porter, 9—385
Ken Smith, 7—266
Kenneth Bowman, 2—70
Kenneth Carter, 8—322
Kenneth Porter, 10—412
King Charles II, 1—23
King George V, 2—87, 4—162
King George VI, 4—163, 6—232
L.M. Roberts, 2—92
L.W. Shulman, 4—159
Lachie Campbell, 4—172
Larkham Collins, 4—140, 4—144, 6—230
Leduc, 1—4, 6—218
Len Watkinson, 8—315
Leo Kelley, 10—443, 10—454
Leonardo da Vinci, 1—27
Les Munn, 6—230
Liberation of the Netherlands, 5—214
Lloyd C. Wright, 6—247
Lorne Baxter, 1—7, 6—224, 8—316, 9—355, 9—357
Lorne Leitch, 8—317, 10—417
Lou Hyndman, 9—367, 9—400, 10—416
Louis St. Laurent, 6—217
Luca Pacioli, 1—9, 1—27, 8—305
Lyman MacInnis, 9—347
M.E. Crehan, 3—122
Mackenzie King, 4—132
Major C.H. Douglas, 4—137
Major Rogers, 5—202
Malcolm McCannel, 6—236, 8—304
Malcolm McKenzie, 6—224
Malcolm Tweddle, 6—236, 8—305
Margaret Thatcher, 10—411
Marie Iwanow, 1—7
Marie Onerheim, 9—371
Marion Wallace, 3—122
Marj Little, 7—265
Mary McGurran, 1—7, 9—397
Mary Vair Souch, 5—183
Max Govier, 4—150
Merv Graves, 1—7, 1—16, 4—127, 4—151, 5—194, 5—199, 8—293
Merv Leitch, 9—357, 9—400
Michael Gibbins, 9—379
Mike Williams, 1—7, 4—149
Milt Fair, 7—266
Morley Hirsch, 9—388, 10—437, 10—446
Morley Workun, 10—417
Mr. Glenwright, 3—110
National Energy Program, 1—5, 9—351, 9—381, 9—403
National Resources Mobilization Act, 5—202
Nellie McClung, 3—121
Norm McGie, 5—191
Norman Hindsley, 2—74
Normandy, 5—214
O.H. Harder, 4—151
Ontario Companies Act, 2—72
Pat Burns, 2—74
Pat Ponton, 5—189
Patty Russill, 9—366, 9—370
Peter Lougheed, 9—349, 9—355, 9—402, 10—412
Peter Valentine, 1—7
Philip Ross, 2—88
Philip Simpson Ross, 2—49
Phillip Creighton, 1—30, 3—109
Pierre Berton, 1—20
Quebec Bill 264, The Chartered Accountants Act, 8—344
Queen Elizabeth, 6—228
Queen’s University, 3—100, 3—101, 4—152, 4—154, 4—155, 4—159, 5—190, 6—229, 8—313
R.A. (Bob) Brown Sr., 4—147
R.C. Farris, 4—164
Ralph Klein, 10—410
Ralph Thrall Jr., 10—416
Ray Harris, 1—7, 8—305, 8—314, 8—317, 8—333, 9—366, 9—367
Regulation of Railways Act, 1—36
Reverend Ed Wallace, 8—292
Richard Bradford Bennett, 4—132, 4—136
Richard Brown, 1—33
Richardson, 2—84
Ritchie Paterson, 3—111, 4—142, 4—144, 4—174, 4—176, 5—192
Robert A. (Bob) Brown Junior, 4—149
Robert Mansell, 10—410
Robert Tuomi, 9—382
Robert Wilson, 10—447
Rod Sykes, 9—385
Ron Elliott, 10—424, 10—434
Ron McKague, 9—365, 9—392
Ronald Baines, 1—7
Ronald Reagan, 10—411
Ross Alger, 6—255, 9—385
Ross Denham, 1—7, 1—19
Ross Phillips, 4—149
Ross Skinner, 1—7, 2—80, 5—197
Roy Leard, 8—318, 9—362, 10—418
Sam Broad, 2—74
Scott Montgomery, 10—417
Second World War, 1—15, 1—43, 2—56, 5—181, 5—183, 6—216, 6—221, 6—263, 7—269, 10—423
Securities Exchange Act, 4—135
Shirley Walker, 7—265
Sicilian campaign, 5—214
Sir John A. Macdonald, 1—38
Sir Wilfrid Laurier, 1—42
Sir Winston Churchill, 4—181, 5—182
Special War Revenue Act, 2—80
Steve Glover, 1—7, 9—399, 10—415, 10—429, 10—433, 10—454
Stu Barker, 8—295
Stuart Johnstone, 4—154
T.R. Humphries, 6—250
The (Dominion) Winding Up Act, 2—76
The Assignments Act, 2—76
The Audit of Executors and Trustees Acts, 2—77
The Audit of Solicitors Act, 2—77
The Bank Act, 2—73, 2—76
The Bay, 3—125
The Canadian Chartered Accountant, 2—72
The Companies Act, 2—76, 4—175
The Corporations Taxation Act, 4—175
The Dominion Income War Tax Act, 2—80
the Male Minimum Wage Act, 4—176
The Persons Case, 3—120
The Securities Act, 4—135
The Trustees Act, 2—76
Thomas Hutchinson, 2—74
Thomas J. Rafter, 7—283
Thomas Mundy, 1—7, 9—405
Thomas Wylie, 1—9
Tom Chambers, 10—416
Tom Eykelbosh, 9—392
Tom Halford, 9—362, 10—420
Tom Jackson, 10—416
Tom Mundy, 6—227, 6—244
Town Act, 4—175
Travis Bouck,, 1—7, 10—429
Treasury Act, 9—356
Treasury Department Amendment Act, 3—100, 7—265
University of Alberta, 1—10, 1—12, 1—42, 2—68, 2—70, 3—103, 3—107, 4—155, 4—159, 4—160, 5—204, 6—230, 6—239, 6—259, 7—281, 8—297, 8—312, 8—317, 9—379, 9—384, 9—408, 9—409, 10—453
University of Calgary, 8—297, 8—312, 8—320, 9—375, 9—380, 9—407
University of Lethbridge, 8—312
University of Saskatchewan, 4—153
Vern Morrison, 8—300
Vic Dzurko, 8—310, 8—318, 8—327, 9—347, 9—363, 9—398, 9—400
Village Act, 4—175
Vimy Ridge, 2—87
W.A. Crosbie, 6—227
W.A. Paton, 1—1, 5—196
W.B. Coutts, 8—299
W.D. Wing, 2—61, 2—65
W.H. Berkinshaw, 2—92
W.H.A. Thompson, 4—143
W.W. Gould, 2—68, 2—75, 2—78
Wallis Warfield Simpson, 4—163
Walter Nobbs, 6—241
Wa-Pa-Sun, 1—25
Wayne Kauffman, 10—451
Wilfred Laurier, 1—39
Willard Estey, 9—403, 10—422
William (, 4—137
William Blake, 1—30
William I, 1—29
William Lyon Mackenzie King, 4—179, 5—182, 6—217
William Reid, 5—190
William Stewart Herron, 2—92
William Wood, 3—112, 4—139
Winnifred Dolsen, 7—265
Winslow Hamilton, 4—151, 4—161, 4—175, 5—209, 6—258, 7—283
Wolfgang Koch, 10—414
About the Authors
• Peter McKenzie-Brown is a professional writer. He has written two other business books: The Richness of Discovery (1998) and The Great Oil Age (1993, with Gordon Jaremko and David Finch). He also co-authored Canadian Oil and Gas, The First One Hundred Years: 1850-1950 (1987, with Hans Maciej).
Since 1992, he has provided contract writing and editorial services for a number of Canadian organizations through a private company, PMB Communications Ltd. In prior years, he worked as a writer and editor for the Canadian Petroleum Association (1981 to 1992) and as a writer and public relations counsel with Gulf Canada (1977-81). Before that, he worked for Reuters Financial Services in London, England. He has an honours degree in political science and philosophy, and completed post-graduate courses in philosophy with high marks.
An endurance sports enthusiast, he has competed in the Ironman Triathlon 12 times and has completed 19 marathons. British by birth and American by upbringing, he is Canadian by choice. He has two adult children, Richard and Leah, and is married to Bernie (Fahy) McKenzie-Brown.
• Stacey Phillips operates her own company, The Write Connection, which specializes in corporate communications. She has written for television, newspapers and magazines and has worked as the editor of several publications.
Since 1996, she has been involved in the design, implementation and managing of corporate web sites. In 1999, she received an international award of excellence for one of the sites she developed and currently manages.
She graduated magna cum laude from the University of Southern California with a double major in journalism and political science, and wrote an honours thesis in environmental politics. She and her husband reside in Calgary.
13 comments:
yes language really matters to understand people and their culture
fantastic site
It is amazing and wonderful to visit your site.
CPR Blythe CA
1 Accounting Singapore is a Professional Accounting firm that provides a full range of accounting, assurance, tax, advisory, and specialty services. If you want to know more about accounting services please click below links
corporate tax services singapore
Accounting software for small business Singapore
Thankful for the beloved information provided by the team.
CPA Exam in India | US CPA Course
California estimated tax payments Awesome article, it was exceptionally helpful! I simply began in this and I'm becoming more acquainted with it better! Cheers, keep doing awesome!
Patriarchal Society- Speed Breaker of Women Empowerment
Get all information and facts about the patriarchal society- speed breaker of women empowerment. We are focused to give you information based on facts, which will help you to rethink and rebuild your thoughts.
Visit here - http://www.biasedopinion.co.in/patriarchal-society-speed-breaker-of-women-empowerment-part-ii/
Energy audit ontario Awesome article, it was exceptionally helpful! I simply began in this and I'm becoming more acquainted with it better! Cheers, keep doing awesome!
Awesome article, it was exceptionally helpful! I simply began in this and I'm becoming more acquainted with it better! Cheers, keep doing awesome!
Accounting firm in Canada
Our team of tax accountant in Vancouver will deliver sound accounting advice and give smart financial decisions by using the best tools and resources for making the firm's economy strong by reducing corporate taxes.
https://www.conlinkcatalogue.com/author/kehalcpa/
This blog is really helpful regarding all educational knowledge I earned. It covered a great area of subject which can assist a lot of needy people. Everything mentioned here is clear and very useful.Chartered accountant in Gravesham
this artical is really amazing .
yes language matter to understand the meaning of language.
I am heartily impressed by your blog and learned more from your article. Thank you so much for sharing with us. Here is the best solution. If you want to look please visit here Real Estate Lawyer Edmonton Here another informative information.
BCL GLOBIZ
Accounting & Bookkeeping Services Dubai UAE
Post a Comment