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CGA and the Audit - a good thing?
Certified General Accountants (CGA) provides a verity of audit services including External and Internal Audit; Compliance Audit; Environmental audit; Forensic Audit; and Operational Audit, to their clients. However, they are facing problem in the field of external audit or assurance engagement. Despite having all the prerequisites educational qualifications, experience, and certification requirements, they are not allowed to perform assurance function throughout Canada. In fact, they are in a disadvantage position in relation to their CA competitors. CGAs have taken up the issue with the concerned authority for granting permission to do attest function throughout Canada, as allowed to CAs, in the best interest of the auditing profession due to various advantages such as high competition, quality of service, cost effectiveness and creation of job opportunities.
CGA is a professional accountant who is the member of the Certified General Accountants Association of Canada. This designation is given to those who successfully complete its program of professional studies and meet other academies and experience requirements. In public practices, CGAs can offer accounting, auditing and taxation management services to the public. Under financial auditing, they can provide three types of services, namely Audit Engagements, Compilation Engagements and the Review Engagements.
Under the Compilation Engagement, CGA can compile unaudited financial information into financial statements, schedules or reports, based on information provided by the accountant's client. Basically, client information is arranged in the form of a financial statement, without performing an audit or a review. Presently, the finical statements can be compiled by all the three major players namely CA (Chartered Accountant), CMA (Certified Management Accountant) and CGA.
The second level of assurance is Review Engagement which is the unaudited review of financial statements of a business or organization by an independent accountant for the purpose of determining the plausibility of the information reported on. The review involves making enquiries concerning finical, operating and contractual information, applying analytical procedures and having discussions with appropriate officials of the enterprise. In Canada, CGAs and CAs can undertake the review engagements where as CMAs are not allowed to perform the review assignments.
The highest level of assurance is Attest or Audit Engagements. Under such engagements an independent accountant is engaged to determine if the finical statements of an organization present fairly, without any material misstatement, the economic events that occurred during the period audit. The external audit is done for the shareholders/ owners. This is a dilemma that a CGA cannot perform assurance engagements in some Provinces like Ontario and Manitoba while he / she can do in other province like British Columbia. In fact, CAs have monopolized this function and do not allow the other designations like CGA / CMA to enter this area.
CGAs can offer other audit services such as Internal Audit, Compliance Audit, Environmental Audit, Forensic Audit and Operational Audit. As a matter of fact, all the auditors including CA, CGA and CMA can perform these functions and there is no restriction as applicable to attest engagement.
CGAs are trying their best to make it a level playing field and striving to achieve their right to perform the assurance engagements throughout Canada, at par with CAs. They have requested time and again to Accounting Standard Board (ASB) to grant permission to CGAs for performing attest function throughout Canada. However, their efforts didn't bring any success.
It would be interesting to mention that the educational qualifications, experience requirements, course of professional studies and certification requirements of CAs and CGAs are almost the same. However, there is a huge disparity between the powers to perform the attest engagement because CAs can perform this function throughout Canada where as CGAs cannot perform the same throughout Canada. This problem needs to be addressed appropriately by the concerned authorities.
The issue of giving permission to CGA for performing assurance function is contentious and outstanding since long. The ACSB should review the situation and allow the permission to CGAs to undertake this function in the best interest of the auditing profession because there are a lot of advantages and benefits associated with this permission. The main advantage attributed is that the auditing field would become a leveling playing field for both CAs and CGAs. The auditing profession would become more competitive and professional because the auditors would have to be committed to the highest level of achievement due to the high degree of competition. Secondly, the clients would expect highest level of quality services form the wide variety of auditors. Thirdly, this compaction would have a profound impact on the cost of audits. Due to the absence of any competition, CAs are free to charge any amount of audit fee from their clients. Therefore, the entry of CGAs in assurance function would reduce the audit cost because there are more auditors available in the field due to acute competition. Last but not least is the advantage of generating more job opportunities and the creation of new businesses and accounting firms across Canada.