AICPA President and CEO Barry Melancon, speaking at the fall meeting of the Institute’s governing Council in Las Vegas on Monday, gave an update on the impact of globalization on the profession, the AICPA’s ongoing efforts to support members and the public during the economic downturn and recovery, and on new technology efforts on the horizon.
Melancon said small business will drive the economic recovery.
“Understanding small business…giving some ability for good decision making so that good entrepreneurial business decisions can be made in the heartland of America, in the small businesses of America…will be the key as to whether we are in a recovery mode or …hit into a second dip,” Melancon said. “Our profession touches those small businesses… Our impact as a profession on small business is going to play a huge role on how our economy ultimately recovers.”
Melancon also noted the importance of the Institute’s involvement in international associations including the International Federation of Accountants and the Global Accounting Alliance.
He said the globalization of the world’s economies will mean that the ability of CPAs to operate across borders will no longer refer just to state boundaries but to international borders as well.
Also during his update, Melancon discussed international reporting standards and sustainability.
An AICPA survey released Monday showed that U.S. accountants delayed taking steps to prepare for adopting International Financial Reporting Standards over the past six months after the SEC set aside its review of U.S. plans for adoption. Melancon noted that in the survey, 65%of CPAs said they want the SEC to address its plans for IFRS adoption by the end of the year.
Familiarity with IFRS among U.S. CPAs did not advance during the past six months, according to the survey. Eight percent of respondents said they need more knowledge now, while 50.6% said they expect they will need relevant IFRS knowledge within the next one to three years.
Tabulated survey results are available on the AICPA Online Media Center at aicpa.org/download/news/2009/IFRS_Survey_Results.pdf.
“Our members are aware of the issues of IFRS and clearly they want some certainty,” Melancon said. “Basically the message is, ‘Tell us where we are going.’”
The AICPA is working with NASBA to offer the U.S. CPA exam internationally.
Because members will need to be able to demonstrate a competency in IFRS, the AICPA plans to launch in May 2010 an IFRS Certificate of Accomplishment for CPAs, which will require 72 hours of content to complete.
Regarding the AICPA’s position on IFRS, Melancon said, “We are supporters of what we would call ‘IFRS pure’—one set of standards applicable everywhere, not country-specific modifications to it.
“To date, there is still a lot of work to be done for countries really to get to IFRS pure, even the countries that have adopted IFRS,” he said.
Melancon also touched on the issue of sustainability.
“Sustainability is about the accounting profession’s role in the expectations of businesses worldwide to be accountable for, to measure and to strategically align their businesses operations in a world that is sensitive to what their customers, suppliers and other stakeholders expect from them,” he said. “The accountancy profession has a huge role in the credibility of that information, the reliability of that information and the consistency of that information. We are stepping up our role and our leadership in that area.”
As part of that movement, the AICPA on Monday announced an effort to raise the prominence of sustainability within the U.S. accounting profession.
The effort is in the awareness-building stage, said Arleen Thomas, senior vice president—member competency and development. Thomas held a panel discussion on the topic Monday during the Council meeting. The meeting also featured a recorded message from The Prince of Wales about the role of accountants in sustainability.
Thomas explained sustainability as linking economic performance, environmental stewardship and social responsibility.
“Sustainability is the intersection of the triple bottom line, not just going green,” she said.
“The idea is to connect sustainability to strategy and long-term value creation in the company.”
Thomas noted that “standalone sustainability reports (are) the first step. Reports that connect sustainability to the performance of the company are the ones that will make a difference.”
Other panelists also said that sustainability initiatives can extend beyond social responsibility to having an economic impact as well as encouraging employee engagement.
One panelist, Patricia Cochran, vice president and chief financial officer for Vision Service Plan (the largest HMO that provides vision services and benefits), explained the elements of The Leadership in Energy and Environmental Design (LEED) certification process for VSP, which achieved LEED’s platinum status on its building.
The LEED Green Building Rating System was developed by the nonprofit U.S. Green Building Council (USGBC). It is a voluntary, consensus-based national rating system for buildings designed, constructed and operated for improved environmental and human health performance.
“For those in public practice, there’s also an opportunity on the horizon: the need to develop information, verify the data and measure processes,” she said. “It’s good for business, our countries and our world.”
Panelist Mike Knowles, business consulting and valuation partner with Frank, Rimerman + Co. of Palo Alto, Calif., discussed how he expanded his practice area to assist clients in accounting for their business’s environmental impact.
“Sustainability is not a socialist plot. It’s a capitalist strategy,” said panelist Aaron Nelson, CEO of the Chapel Hill-Carrboro Chamber of Commerce in North Carolina.
In his remarks to the Council, Prince Charles, The Prince of Wales, said U.S. CPAs should take a leading role in helping develop the tools and information necessary for companies to embed sustainability issues effectively in their day-to-day operations.
“We have to ensure that we are not battling to meet 21st-century challenges with, at best, 20th- century valuation, decision-making and reporting systems,” The Prince of Wales said. “It is the accountant’s role and responsibility to show that acting for the long term, and in the best interests of communities and the environment, is also the right financial approach and not just an expensive luxury to be discarded rapidly in times of economic downturn.”
The Prince of Wales acknowledged the AICPA’s membership in his Accounting for Sustainability Project, saying the Institute is one of the 16 accounting bodies around the world to “recognize formally that sustainability is an issue of global concern and to commit to the principles developed by my project.”
AICPA leaders will attend The Prince’s Accounting for Sustainability Forum in the United Kingdom in December. Melancon and others attended last December’s Forum at St. James’s Palace in London.
(To see The Prince of Wales’ entire speech, click here.)