CPAs Speak Up on New Global Credential

EXECUTIVE SUMMARY

THE CONCEPT OF A NEW GLOBAL CREDENTIAL grew out of the AICPA’s efforts to uncover opportunities to help members continue to excel in a competitive marketplace. STUDENTS SEE XYZ AS A COMPLEMENT to existing professions, rather than as a replacement. The concept of a combined XYZ and CPA has a high level of appeal among students. PRELIMINARY RESEARCH RESULTS show acceptance on the part of most members. Approximately 75% of the members surveyed responded positively to the concept and almost a quarter of them said they’d be inclined to obtain the new credential. SOME PRACTITIONERS EXPRESS CONCERN that the new credential might drive some potential CPA candidates away from the profession. Others say that money being used for XYZ would be better spent stretching the CPA brand. Still others say they would benefit from adding the XYZ credential to their CPA designation. MEMBERS ARE ASKING WHETHER the new credential is consistent with the CPA Vision. Although the vision statement doesn’t call for a new credential, some members say that if XYZ helps members of the profession “transition” to a higher value, that’s a goal of the vision. THE INTERNATIONAL ASPECT OF THE CREDENTIAL appeals to members as well as the opportunity it offers to provide nontraditional services to a client anywhere in the world who will know that the professionals she or he is working with in other countries are living up to high standards. Further, it will give small and midsize firms that don’t have the resources of a Big Five or Fortune 500 company an opportunity to be players on a global scale.

ADAM SNYDER is a freelance writer who writes frequently on the media and other business issues. He recently worked with former AICPA President Philip Chenok on his book, Foundations for the Future: The AICPA from 1980 to 1995.

few months ago, Dominic Cingoranelli, a partner in Grimsley White and Co., a Colorado-based CPA and consulting firm, was pitching his services to a group of association executives. Cingoranelli specializes in organizational development, helping clients articulate their strategies and identify practices to achieve a strategic vision.

“As usual, I spent the first 15 minutes explaining why I was qualified to do this work in spite of the fact that I’m a CPA,” Cingoranelli says. “People look at a CPA and believe that here is a person with integrity and objectivity, and that he or she understands business. But those of us practicing outside the normal box of public accounting, as well as those in business and industry whose work goes beyond traditional controllership activities, have to continually rebrand ourselves. I think something like the proposed new global credential would be a terrific help to us.”

Cingoranelli is one of a growing number of AICPA members who, as they learn more about the proposed new interdisciplinary global credential, currently referred to by its “placeholder” name, “XYZ,” express enthusiasm for it. In fact, preliminary results of the research requested by the AICPA governing council indicate significant acceptance on the part of most members, even among those who aren’t yet thoroughly familiar with the idea. After hearing a description of the new credential, approximately 75% of members surveyed responded positively to the concept, and about 20% said they’d be inclined to try to obtain the new credential. This compares favorably to benchmarks used in standard market research. A 17% to 20% positive response to a new concept is highly indicative of future success.

EMPHASIS ON THE STRATEGIC INTEGRATION OF KNOWLEDGE

The concept of a new global credential grew out of the AICPA’s efforts to uncover opportunities to help members continue to excel in a competitive marketplace. The idea was for CPAs to complement their existing professional credentials with a new specialty that emphasized the strategic integration of knowledge.

“I like it because it’s an effort to move the CPA up the value chain,” explains Veronica Locker, a CPA who works as a business analyst with Eli Lilly & Co. in Indianapolis. Terri Svihla, chairwoman of the Indiana Society of Certified Public Accountants and a business and financial consultant with Frisse Law Offices in Terre Haute, Indiana, agrees. “I think demand for this kind of credential is becoming stronger every day largely due to the globalization of the business world, but also due to multidisciplinary practices that the market is demanding,” she said.

Not all CPAs are so supportive, of course. When first introduced to the concept of a new global credential, many members wondered why the AICPA did not decide to support and stretch the CPA brand instead of creating a totally new credential. “Let’s convince the world the CPA already has a spectrum of services,” says Doug Stives, former president of the New Jersey state society and a partner in the 130-member accounting firm of Wiss & Co. LLP in Red Bank, New Jersey. David George, a CPA partner in the Irvine, California, firm of Soren McAdam George Investment Advisory Services, agrees. “I’m keeping an open mind,” he said, “but if we can communicate what an XYZ does, why can’t we communicate that the CPA has the same wide range of services?”

THE CREDENTIAL IS DISTINCT

But the XYZ is not intended as a way of broadening the boundaries of the CPA. It is an entirely separate professional credential, with a different set of competencies and skills. It is also unrelated to the profession’s continuing efforts to stretch the CPA brand. “The AICPA is actually stepping up efforts to continue promoting the CPA brand,” points out Ronald Thompkins, president of the Florida Institute of CPAs and the Florida managing partner of the New York City-based Watson, Rice LLP. “It recently began a matching fund program with the state societies. They’re not giving up on the CPA at all.”

“One of the comments I hear is that we should just spend the money being used for the XYZ to stretch the CPA brand,” says Clarke Price, CEO of the Ohio state society. “Conceptually I buy into that, but it can’t be the only thing we do to keep our profession viable. It also doesn’t resolve at least two issues: First, the CPA is not a global designation, and I can’t envision a scenario that changes that reality, and, second, I don’t think anyone could spend enough money to completely break down the negative stereotypes people have of the CPA credential. We’re not going to stop trying, but we also have to live up to our role as stewards for the future ranks of the profession.”

“I think it’s just a different way of stretching the CPA brand,” adds Robert Sher, a member of the AICPA council, vice-chairman of Schostak Brothers and Co., a Michigan-based real estate firm, and a Burger King restaurant franchisee.

Like Cingoranelli, many members also believe that for them, the ideal situation would be to have both a CPA and an XYZ credential. “For me, a second credential would add credibility,” says Terri Svihla. “The CPA brand covers my area of practice fairly well, but I believe a global credential would allow for additional opportunities in the future. I think it would allow me to get more work for my firm.”

IMPACT ON STUDENT ENROLLMENT

Another concern on the part of many members is how the XYZ will affect student enrollment in accounting programs. “Will this drive away some students who might otherwise have become CPAs?” wonders Lee Wunschel, past chairman of the Ohio state society and a partner in the Toledo, Ohio-based firm of Lublin, Sussman, Rosenberg and Damrauer LLP.

The AICPA council asked the Institute to investigate this issue after the concept of the new credential was first discussed at last October’s council meeting. With the intent of deliberating further, the council asked for a business plan, backed by more extensive research, with particular attention to the impact the credential would have on the CPA brand and on students. The council will review the material at its spring meeting, and decide whether to authorize a full membership vote. Ultimately, members will make the judgment as to whether XYZ presents an opportunity for many CPAs working in the United States as well as for those who are just now considering whether to enter the profession.

While the new credential is certainly not intended to “solve” the problem of the decreased number of accounting students, the research was designed to investigate whether it might discourage accounting students from becoming CPAs. Preliminary results seem to alleviate that concern and indicated the XYZ might well represent an opportunity to attract students to accounting who otherwise might have chosen another career path. Although the research is still being collected and analyzed, it appears that those students already interested in the accounting profession perceive XYZ as value added and not a substitute for the CPA credential. While there seems to be considerable interest in combining XYZ with a CPA credential, only a very few accounting students report that they would choose to obtain only the new credential.

Jack Hatcher, a past president of the Indiana state society and an assistant professor of management at Purdue University, one of the top 15 business schools in the United States, is on the front lines in the battle to stem the tide of the diminishing number of CPA students nationwide. “Purdue now produces no more than a dozen CPAs a year out of more than 100 accounting graduates,” Hatcher explains. “Our students have many opportunities and will gravitate toward the best of them and the best money. Too often that’s not public accounting. It would only help if we had a new global, multidisciplined credential which appealed to students.”

AN OUTGROWTH OF THE VISION PROCESS

Another question members are asking is whether the new credential is consistent with the CPA Vision developed on a grassroots level during the past several years. “I haven’t made a firm decision yet about XYZ, but I question whether it is a logical consequence of the Vision Process,” says Lee Wunschel. “The Vision statement doesn’t say anything about establishing a new credential.” But Svihla, who attended the CPA Vision future forums in Indiana, disagrees. “My participation in the Vision Process enabled me to understand the need for a new global credential as soon as I heard about it,” she says. “The Vision Process identified that being a strategic solution provider was a skill set CPAs wanted to offer, but one that the market doesn’t recognize. I think this global credential is part of the solution.” Sher says that “if XYZ helps members of the profession ‘transition’ to a higher value, I think that’s part of the vision.”

One attribute that almost everyone agrees XYZ brings to the table is its internationalism. “Boundaries as we know them, whether state or international, are disappearing,” says Clarke Price. “The new credential will give the CPA in Dublin, Ohio, the opportunity to provide a nontraditional service to a client in Dublin, Ireland. And it will help a CPA/ CFO in Ohio know that the professionals she or he is working with in other countries are living by the high standards set by a credential the CPA profession created.”

“Another thing that makes XYZ appealing is that it will give small and midsize firms that don’t have the resources of a Big Five or Fortune 500 company an opportunity to be players on a global scale,” adds Florida’s Ronald Thompkins. “The marketplace is continuing to become more and more global, so this global credential is, I believe, an opportunity for professional service providers to further market themselves while also retaining their CPA license as a national identity.”

IF NOT CPAs, SOMEONE ELSE WILL DO IT

Thompkins also believes that if CPAs don’t drive the initiative, someone else will. “The global credential is an opportunity to keep pace with the evolving global business marketplace,” he says. “I could easily see the growing number of consultants making an effort to organize themselves and to have a globally recognized set of competencies that everyone would recognize as a way of further promoting themselves.” New Jersey’s Doug Stives, despite his skepticism about the XYZ, agrees. “I’m afraid that if we don’t pursue this,” he says, “another profession will come out with something like the XYZ and do to us what the Ravens did to the Giants.”

Wunschel further points out that the accounting profession is in an ideal position to take the lead in formulating a new credential. “CPAs hold a unique position in the eyes of many in the business community,” he says. “I’m not sure other groups that have that same stature could pull it off.”

Many have expressed dissatisfaction with the original working title of the credential—Cognitor. One problem is that a Web consulting company is already using that name, but another is that many members just don’t like it. Focus groups and legal and linguistic searches are being used to explore other possible names, with emphasis on their appropriateness in all countries, relevance to the credential’s characteristics, availability for trademarking and market appeal. But finding a name that is universally applauded may be difficult—a common phenomenon in branding. “I have problems with the name “Cognitor,” but I’m highly in favor of the concept,” says Jack Hatcher.

NOT FOR EVERYONE

Another area of consensus is that XYZ is not designed for all CPAs, just as the profession’s other accreditation initiatives in the areas of information technology or investment advisory services, for example, are not for everyone. Whether or not an individual CPA chooses to obtain the XYZ credential will depend on that person’s own strategic business goals. Some CPAs simply may not see a need for it. “If people choose not to get the credential, for whatever reason, they are still valued members of the Institute,” Sher points out.

“I’m not sure an XYZ credential would mean much to my clients,” adds Wunschel, whose Ohio firm of about 25 people serves small and midsize businesses. “Yet I know there are some CPAs locally who would definitely benefit from it.”

Demand-side research is also under way to measure the number of employers willing to pay for the services the new credential holders would provide. “I don’t think there are people looking for professionals holding the XYZ credential today, but that doesn’t mean there isn’t a demand for people with that set of competencies,” says Sher. “Fifty years ago people didn’t run around looking for MBAs.”

Stives points out that the transition away from the stereotypical CPA functions is already well underway. “This is nothing new,” he explains. “It’s been at least ten years since the Big Five took “CPA” off their letterheads.” Clarke Price agrees. “I talk to any number of CPAs who are proud of their credential but don’t use it in every situation,” he explains. “They have two business cards, one that identifies them as a CPA and one that does not. Which one they use is dictated by the service they want to provide. Lots of people have recognized that the marketplace doesn’t associate certain competencies with the CPA credential. I think the XYZ will simply say this person has an additional set of skills and competencies.”

And what about Cingoranelli? He landed the job with the association executives, but when that client referred him to an association of advertisers, he lost out to a non-CPA firm. “The association told me it had gone with someone else who provided out-of-the-box, creative thinking,” he explains. “There’s an assumption sometimes that we as CPAs are not as creative as other professionals. I think I would have had a leg up if I had had another credential such as the XYZ. It would help CPAs claim a market space in which we already are working.”