n the aftermath of the September 11 tragedy, we’ve all reflected on the important things in life. My thoughts were on family, on friends and on my career—on the choice I made some 30 years ago to enter this great profession. Perhaps, as you reflected, you questioned the significance of our vocation—of how what we do as CPAs fits into the whole scheme of things. I did.
But my thoughts turned quickly to our profession’s historic role in making the United States a global economic power. For more than 100 years, CPAs have made it possible for people to believe in and rely on our country’s commerce and industry. We’ll always do that—proudly—because it’s our vocation, our passion, our strength as CPAs.
VOTE—FOR THE PROFESSION
We’ve taken a bold step during this session of council. By overwhelmingly supporting the bylaw change and the member referendum on the International Institute of Strategic Business Professionals (IISBP), we’ve acted as leaders and stewards of the profession, and I congratulate you for placing this issue in the hands of our members.
Some fear the profession may suffer from the debate and disagreement relating to the global credential. I disagree.
Instead, I think they prove we’re a profession deeply committed to its future. There’s nothing wrong with disagreement—it helps us to make the right decisions. Loyal opposition, conducted respectfully and professionally, is productive. We shouldn’t fear, nor harbor resentment over, heated debate. So whatever side you’re on, I applaud you for caring enough to be on it.
This process of deliberation—more than any initiative—is what the Vision Project is all about. We’re CPAs, mindful of our future goals and the choices we have to make to meet them. The global credential is just one possibility. There’ll be many more. So let’s move forward as a leadership team united in our quest to achieve the Vision.
ROAD MAP TO SUCCESS
You may wonder what I bring to the table and how I can help the AICPA meet its members’ needs or how I plan to implement our initiatives and move the profession forward.
First of all, what I hope to do for the AICPA and our membership is very much in tune with what I do for a living—listen, assess, collaborate, implement and usher in change. I’ve been doing that in my firm for more than 28 years and I’m going to use the same leadership style during my tenure as chairman.
I see the Vision as our profession’s marching orders, and I ask you to do the same. Its core values, services and competencies define our professional strength and serve as the foundation for our current and future activities. It’s our road map to continued success.
I’ve learned you can succeed only when you set priorities for your hopes, goals, ambitions and initiatives. And I plan to do that by making the most of—playing to—our professional strength. It’s made us what we are today—one of the most respected and successful professions in the world. That strength has kept us from becoming complacent, has compelled us to look to the future and has motivated us to build bridges to get there.
I see four areas in which we must make considerable progress. But success will elude us unless we leverage our collective professional strength. We should
Increase our assurance services’ value to all stakeholders.
Expand and protect our fundamental right to self-regulation.
Make student recruitment an ongoing priority.
Enhance our professional image.
FOCUSING ON ASSURANCE SERVICES
Audit and attest services are the foundation of our profession and of the public’s confidence in the American economic system. To preserve those values in the world of modern finance, we have to continually show how CPAs are best qualified to perform the attest function.
As auditors, we enjoy an incredible privilege—access to companies’ most sensitive financial and operational information. As the profession’s home, the AICPA will continue to honor that role and ensure that future attest professionals do the same. We’ll do that by using our expertise and good judgment to provide greater value to investors, creditors, management, management’s clients and customers and the public.
We will couple the audit of the historical financial statement with a broad array of assurance services. We’ll help organizations identify, assess and analyze risk. We’ll advise on the appropriate performance measures for businesses. We’ll provide continuous assurance on real-time information. We will —with service after service—raise the prestige of the audit professional and the value of the audit to all users.
We’ll also see to it that the AICPA audit and attest team continues its vigorous efforts to raise the value of these core services. I will support our Auditing Standards Board, which has a number of initiatives under way to modernize our audit standards and the guidance we provide to help auditors
Better understand the business being audited, its environment and the risks associated with it.
Identify and research performance metrics.
Improve guidance to preparers and auditors to increase the chances of deterring and detecting fraud.
As an added value of the modernized audit, share with management the insight gained from this business approach.
This will help achieve our foremost goal, which is to improve the effectiveness of the audit in our public-interest role.
Please keep in mind, however, that in promoting audit services we must focus on more than historical financial statements. At our council meeting last year, Robert Litan of the Brookings Institution spoke about the increasing irrelevance of traditional financial reporting. His point was that investors need information to decide whether a company is worth investing in for tomorrow , not today. Yes, the historical, cost-basis, GAAP financial statement has limitations.
In response, we’re developing assurance services that supplement historical financial statements and can greatly increase our value to clients. One example is the AICPA’s Performance View, which CPAs use to identify and measure an enterprise’s nonfinancial drivers of success.
In addition, as the Vision says and as SEC Chairman Harvey L. Pitt recently affirmed, changes in the economy and in technology are accelerating the demand for more timely assurance on a broader range of data. Investors, creditors and management want information on an instantaneous basis.
We stand ready to equip auditors with the knowledge and tools they need to provide this real-time assurance. Innovations such as SysTrust and XBRL (eXtensible Business Reporting Language) are the foundations upon which we’ll build continuous auditing services.
In sum, we must—and we will—modernize our assurance services. The Vision requires it and our commitment to public protection demands it.
THE IMPORTANCE OF SELF-GOVERNANCE
Objectivity, integrity, ethics and competence have been our profession’s core values for well over a hundred years, and the Vision reaffirms their significance. Our publics rely on us, depend on us, trust in us because they know the rigor of our self-regulatory process. They know that as individuals we may not be flawless, but together we’re perfectionists in our commitment to ethics and excellence.
As a profession, we’ve always been better than we had to be—largely because we developed self-regulatory standards that define who we are and how we behave. We enjoy public confidence because of self-regulation, and that’s why I’m more committed to it than ever.
The less contentious, more cooperative tone of our relationship with regulators is encouraging. We will keep the doors of communication wide open. A new POB (Public Oversight Board) charter is in place. And we’re strengthening our longtime collaboration with NASBA (National Association of State Boards of Accountancy), working together on several initiatives critical to our self-regulatory system and the profession’s health.
So I’m pleased to report to you that I sense a very positive trend in our self-regulatory efforts and in our relationships with the regulatory community. We’ll never see eye to eye with every regulator on every issue, but we do have our eye on the same ball—public protection. We all acknowledge that common mandate and the need for a viable profession to make good on it.
REJUVENATING THE PROFESSION
The only way for us to stay viable as a profession is to attract more young people to careers as CPAs. The disturbing reality is that only 1% of high school students are planning to major in accounting, down from 4% in 1990. That number alarms me and should dismay everyone in the profession.
Without talented young people, we can’t fulfill our public protection mandate and we can’t continue to make good on the Vision’s promise.
While there’s no one solution to this problem, I’m proud to say our profession is responding in a variety of ways. Last June, council approved a bold student-recruitment program—$5 million dollars a year for five years. Its goals are
To show high school and early college students just what a Vision-aligned CPA does.
To dispel students’ misconceptions about the profession.
To convince them that studying accounting and becoming a CPA leads to an exciting and rewarding 21st century career.
How can we do this? By making a professionwide effort to show students what CPAs actually are—advisers providing strategic guidance and direction to successful business leaders. State societies, universities and employers must all get the word out to students that this is an exciting and rewarding profession.
This will take more than mere words. We’ve got to reach out and recruit our successors, our professional heirs. No challenge facing us is more important.
SHARPENING OUR IMAGE
I’m a wholehearted supporter of our image campaign. Under my leadership, you can count on the AICPA—as the professional home of all CPAs—to enhance and strengthen our hallmark. Whatever other initiatives we embark upon, we will never forget, nor let our publics forget, the strength of our CPA heritage—objectivity and integrity.
When I say “image,” I mean how the world sees us and how we see ourselves. We make a tremendous contribution to society and the world economy, so it’s important to spread the word about who we are and what we really do. This is vital to achieving the Vision and essential for attracting exceptional young people to our profession.
Not many people know that only about 20% of us operate exclusively in the licensed space. In fact, too few employers and clients perceive us as the valued strategic business advisers we really are, and that’s an obstacle to some CPAs’ professional advancement. Certain members—for example, those in industry—encounter it all the time, so we have to rectify those misperceptions.
We’ll do that by continuing our fruitful collaboration with state societies. We’ll also establish a presence on national radio and launch new print ads in national media, making them available to state societies for placement in local magazines and newspapers.
But let’s face it. Advertising alone is not the answer. An image campaign by itself will not get us where we need to be. That’s where you—and every single member of our profession—come in.
Each of us—CPAs in industry, in government, in public practice and in education—is living, talking proof of our profession’s variety and scope. We’re the ones who can make employers, clients, the public and young people appreciate our growing importance. Let’s blow our own horns. Let’s show everyone that CPAs are insightful, creative and forward-thinking and belong in the executive suite.
Let’s do our part as individuals by proudly displaying our CPA credential—on our business cards, on our Web sites, on our letterhead, in our brochures—wherever and whenever our names appear. Those image-boosting practices are something we have to follow every day. They make our formal image campaign pay off and give our message real meaning.
And let me be perfectly clear. The student campaign and the image enhancement campaign work in tandem. It’s not an either-or situation. The AICPA didn’t redirect funds from the image campaign to support the student campaign. We’re targeting three key audiences: students, business decision makers and affluent consumers. We must reach all three to achieve what the Vision says we want to achieve.
PLAYING TO OUR STRENGTH
As stewards of this profession, as guardians of the public trust placed in us, we must look inward and outward during the coming year. Listening, assessing, collaborating and implementing, ushering in change: That’s the kind of leader I am and that’s the kind of leader I ask you to be.
With all the amazing and fascinating changes happening in and around our profession, I’m passionate about being a CPA, as I know you are. We can make that passion contagious. We can carry it back to our state societies, to our firms, to our companies, to our schools, to our government offices. By wearing our professional passion on our sleeves, by making our CPA designation our proud calling card, we’ll send the following message, which is in total harmony with the Vision:
Here we are: CPAs with a proud past, a successful present and a future of unlimited promise, all based on our reputation for objectivity and integrity.
Here we are: CPAs playing to our strength, now more than ever.
James G. Castellano, CPA, became chairman of the AICPA board of directors in October 2001. This article is based on his acceptance speech, delivered at the Institute’s annual meeting in November. Portions of his remarks appeared in the January JofA (see Inside AICPA, page 99).