CA executives foresee sweeping change in business ownership, says inaugural CICA/RBC Business Monitor



    TORONTO, June 27 /CNW/ - Almost half of all executives who are Chartered
Accountants (CAs) in privately held Canadian companies expect to sell, close
or transition their business within the next 10 years, according to the
inaugural edition of the CICA/RBC Business Monitor (Q2 2007). This new report
is based on a national study being conducted quarterly by The Canadian
Institute of Chartered Accountants and RBC.
    "These results highlight the growing focus on succession planning and
merger and acquisition activity among privately held businesses in Canada - a
phenomenon that we believe will have significant implications for thousands of
businesses, employees, and for the Canadian economy as a whole," said Kevin
Dancey, CICA president and CEO.
    The CICA/RBC Business Monitor (Q2 2007) is based on interviews conducted
by email with Canadian Chartered Accountants in senior corporate positions
such as CFOs, CEOs and COOs in both privately held and publicly held
companies.
    "Many of the key sentiments expressed in this survey reflect current
realities regarding the outlook for the Canadian economy," noted Craig Wright,
vice-president and chief economist, RBC. "The survey rightly identifies
pressures on competitiveness, expectations that the wave of consolidation will
continue unabated, and the need to rebalance fiscal policy priorities in order
to address these issues."
    Respondents cited market competition (40 per cent) as their number one
business challenge, followed by customer demand (25 per cent); regulatory
requirements (23 per cent); value of the Canadian dollar (23 per cent); and
management skills shortage (20 per cent).
    The business leaders linked some of their concerns to current federal
fiscal policy in Canada, specifically high overall taxation and the size of
the national debt. A strong majority (69 per cent) believe lowering taxes
across the board is the best thing the government could do to improve Canada's
competitiveness. Three in 10 believe at least 30 per cent of the federal
budgetary surplus should be allocated to reducing the national debt.
    "The survey underscores the view of Canada's CAs that reducing high
taxation and national debt levels should be among this government's top
priorities," added Dancey. "It's particularly important that we permanently
address the country's persistent problem of high taxation levels cited in the
survey in order to boost Canada's competitiveness."
    The inaugural CICA/RBC Business Monitor (Q2 2007) also shows the current
overall mood among Chartered Accountants in senior executive roles to be one
of cautious optimism about Canada's future economic prospects. Nine in 10
surveyed are either "optimistic" or "neutral" about the economy. Provincially,
optimism varies markedly. Almost all respondents in Alberta and British
Columbia are "very optimistic" or "optimistic" about the economic prospects
for their province in the next 12 months; less than half of respondents in
Ontario and Quebec shared the same sentiment.
    Senior executives showed more optimism about the prospects for their
business for the upcoming year with 73 per cent citing plans to expand
operations in 2007. Those surveyed also said that in 2007 they expect to:

    
      -  Increase total revenues by 5.2 per cent and total profits by
         4.4 per cent
      -  Increase their workforce by 2.7 per cent and increase average total
         salaries by 3.2 per cent
      -  See input prices increase by 2.3 per cent, and to increase their
         prices by 1.8 per cent
      -  Increase department budgets in IT (3.6 per cent), research and new
         product development (2.9 per cent), advertising, sales and marketing
         (2.4 per cent), and other capital investment (3.2 per cent)
      -  Obtain additional funding of 2.7 per cent from equity, 2.4 per cent
         from debt, and 1.9 per cent from bank borrowing.
    

    The survey was completed by 345 CAs of the 2,053 identified by the CICA
as CAs holding senior positions in publicly or privately held companies in
Canada, for a response rate of 17 per cent. The margin of error associated
with this type of study is +/- five per cent, with a confidence level of 95
per cent.

    The CICA/RBC Business Monitor (Q2 2007) 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 are also undertaking quarterly studies
that tap the insights of senior executives to provide a barometer of economic
activity in their nations and as a basis for future comparative analysis
across countries. The CICA/RBC Business Monitor (Q2 2007) is available online
at www.cicarbcbusinessmonitor.com.

    The Canadian Institute of Chartered Accountants (CICA), together with the
provincial, territorial and Bermuda Institutes/Ordre of Chartered Accountants,
represents a membership of approximately 72,000 CAs and 10,000 students in
Canada and Bermuda. The CICA conducts research into current business issues
and supports the setting of accounting, auditing and assurance standards for
business, not-for-profit organizations and government. It issues guidance on
control and governance, publishes professional literature, develops continuing
education programs and represents the CA profession nationally and
internationally. CICA is a founding member of the International Federation of
Accountants (IFAC) and the Global Accounting Alliance (GAA).

    RBC delivers a wide range of financial services through a variety of
channels to individuals, small and medium-sized businesses and commercial
clients, including deposit accounts, investments and mutual funds, credit and
debit cards, business and personal loans, and residential and commercial
mortgages. It is the personal and commercial banking division of Royal Bank of
Canada (RY on TSX and NYSE).





For further information:

For further information: Media Contacts: Mimi Tsui, CICA, (416)
204-3435; Judi Levita, RBC, (416) 974-8810

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Canadian Institute of Chartered Accountants

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