Chartered accountants more optimistic about own company than Canadian economy


A  report released in November shows there has been a steep decline in optimism about the 12-month prospects of the Canadian economy among Canada’s C-level executive CAs (CEOs, CFOs and COOs), a group uniquely positioned to provide perspective on the current health of Canadian business activity.
When compared to the results from a year ago, the study marks the first decline in optimism among executive CAs about the Canadian economy since the first quarter of 2009. These latest findings clearly underscore growing concern about the state of Canada’s economy.

More than half of executive chartered accountants (56 per cent) are optimistic about how their company will perform over the next 12 months despite their lack of optimism in the Canadian economy, according to the latest CICA/RBC Business Monitor (Q3 2010).

Only 39 per cent of executive CAs surveyed are optimistic about how the Canadian economy will perform over the next 12 months, a steep decline from the 57 per cent who had a positive view in the second quarter of 2010. When compared with CICA/RBC Business Monitor results from a year ago, optimism about the national economy is down seven per cent, marking the first year-over-year decrease since the first quarter of 2009.

Liquidity crisis

“It’s a very good barometer on the overall business environment today,” Doug Baker, Past Chairman of the CICA. “I think it originally stems from the liquidity crisis of two years ago that we are coming out of, albeit very slowly and gradually. I think the best way to describe the business environment is to call it fragile.”
Baker suggests that the low confidence is stemming from  fragile economies outside of Canada. “Certainly our leaders in the CA profession in the senior roles know their companies are not immune from international events,” says Baker. “We are facing a situation in Europe where there is concern over the Euro and countries there that are having difficult financial problems such as Greece, Ireland, Iceland, Portugal and Spain. Those things create uncertainty and people are asking how is this going to affect our company further down the road.”

Company growth

Fifty-eight per cent of respondents expect their company to grow faster than the Canadian economy, while 21 per cent anticipate growth at the same rate and another 21 per cent expect growth to be slower.

“Since the executive CAs have more direct impact on their respective companies, it appears they have greater faith in how those companies will perform,” said Kevin Dancey, president and CEO, Canadian Institute of Chartered Accountants (CICA).

Nevertheless, the latest CICA/RBC Business Monitor (Q3 2010) study from The Canadian Institute of Chartered Accountants and The Royal Bank of Canada suggests that optimism about the executives’ individual companies remains strong with 58 per cent reporting that they expect their firms to grow faster than the Canadian economy.

The level of optimism among executive CAs with respect to their company’s performance has held steady since the third quarter of 2009, running between 55 and 62 per cent. Results for this quarter are consistent with the 58 per cent recorded in the second quarter of 2010 when allowing for the margin of error.  “Collectively, the continued company optimism is encouraging,” added Dancey.  “It represents a solid base with an optimistic viewpoint as Canadian companies navigate through economic uncertainty.”

“The results are not surprising as Canadian businesses are resilient and fared relatively well through the recession,” said Shauneen Bruder, executive vice-president, Business and Commercial Banking, RBC. “Although Canadian businesses see signs of uncertainty in 2011, it is obvious that they are confident in their ability to adapt to and confront economic challenges.”  

The CICA/RBC Business Monitor also shows positive projections for the next 12 months relating to revenues (+4.1 per cent), profits (+4.1 per cent) and employment numbers (+1.6 per cent).

The CICA/RBC Business Monitor is issued quarterly, based on a survey conducted by the CICA. The report draws upon business insights of CAs in leadership positions in privately and publicly held companies across Canada.

For the Q3 2010 report, emailed surveys were completed by 329 CAs of 4,011 identified by the CICA as holding senior positions (CFOs, CEOs and COOs).
The response rate was 8 per cent, with a margin of error associated with this type of study at ± 5.4 per cent, with a confidence level of 95 per cent. The survey was conducted September 21 – October 7, 2010.

The CICA/RBC Business Monitor (Q3 2010) is part of an international initiative. The American Institute of Certified Public Accountants (AICPA) in the United States and the Institute of Chartered Accountants in England and Wales (ICAEW) in the United Kingdom also undertake quarterly studies that tap the insights of members in senior positions to provide a barometer of economic activity in their nations and as a basis for future comparative analysis across countries. A background document is available online at