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| Implications for Industry CPAs |
The same forces that should lead CPAs in public practice to reorder their priorities affect CPAs in business and industry. Management accountants already have demonstrated their flexibility with their intellectual ferment on performance measurement, which has paid off by increasing the value of information they provide to managers in all sorts of organizations. But that is not enough.
CPAs in companies face cost pressures, new sources of competition for accounting work and a decline in demand for their traditional function: accounting information supply. Financial reports prepared under generally accepted accounting principles are losing decision-information "market share" (both inside and outside the enterprise), and software increasingly is taking over routine accounting functions. The cost squeeze will continue, making insourcing-or-outsourcing decisions routine. Competition from non-CPAs in organizations will grow. Information technology gives nonaccounting departments additional power to collect and report their own information. If internal users are dissatisfied with the information supplied by the financial reporting system, they may look to other departments to supply the information decision makers need.
These are symptoms of interrelated megatrends that will play a more prominent role in the future. Technology is transforming all aspects of information collection, storage, reporting and analysis. It is transforming commerce by creating a new medium for selling and conducting transactions. It is transforming relationships among producers and consumers by enabling consumers to exert more influence on producers and enabling producers to go further in meeting consumers needs. Meanwhile, stakeholders of all types are demanding more accountability information from responsible parties. The kinds of assets that enable profitable growth are increasingly off-balance-sheet intangibles (such as the asset value of data used to run the business, marketing capabilities, the demand pull of brands, knowledge translatable into new products or services or improved processes and organizational learning capacity).
CPAs in industry are not satisfying their customers (that is, company executives, managers and supervisors) needs for information if they provide only financial statements (including those intended for external use and those designed for internal use), but the opportunities for additional valuable activities are enormous. Boards of directors and senior managements, for example, are requesting information on risks, monitoring business processes and benchmarking and industry comparisons. Industry CPAs must be involved with delivering such information or else their customers will seek it elsewhere.
CPAs in business and industry can expand their expertise and range of activities by themselves or in conjunction with CPAs in public practice, based on the opportunities developed by the special committee on assurance services and pursued by the assurance services committee. The new services will not be mandated by standards or regulations. Entities will purchase them voluntarily to enhance their performance.
Corporate CPAs, like CPAs in public practice, must adopt a customer focus, identifying customers decision-making needs for information. They should take a broad view of their potential activities, at least as broad as what is given in the special committees definition of assurance services (services that improve the quality of information, or its context, for decision makers). Industry CPAs should not limit themselves to improving financial information or to any other specific types of information. Nor should they be bound to a single type of improvement. They should be open to improving accuracy, relevance, timeliness, format or any other quality that better serves decision makers.
Opportunities for new contributions by industry CPAs are growing even as the changing environment threatens their traditional contributions. The greater the role information plays in our economy, the more need for improved information, and the greater the opportunities for CPAs in business and industry.