A United Profession: A Force for Prosperity and the Public Good

What you will get from me is simple, straightforward and durable: an honest pledge to work hard and give you my best this year, with an intense focus on the interests of the public and our members. I firmly believe that we are a profession united by our values and professional integrity. We represent a profession that is at once a force for prosperity and the public good. A challenging balance at times but one that we have repeatedly faced with a profound sense of accountability and commitment.

I seem to have taken the wrong route to the right place. As an undergraduate, the only accounting course I took was “Accounting for Non-Accountants” but later decided to take several more accounting courses to learn the language of business that would be useful for a ­career in finance. After graduation, I joined Ernst & Young. Thirty-one years later, I’m still there, currently as the firm’s senior technical partner. Being a CPA has been good for me and my family; it is a great profession made up of great people.

Unlike many of my predecessors, I did not come to the AICPA leadership team with years of experience at the state level. I first became actively involved in 2001 through the AICPA’s former SEC Practice Section Executive Committee. As I became more involved, what I thought I heard along the way was that the AICPA wanted someone to be active with a Big Four perspective. I think now what they actually meant was they wanted to make sure that the Big Four did not lose perspective.

There was a period of time during the 1990s when the largest firms probably did lose some perspective on our role as part of a broader profession. We took for granted that professionalism and serving the public interest were the underpinnings of our day-to-day actions. However, we received a very loud wake-up call a few years ago.

The years since 2001 have been stressful and challenging for all CPAs. But I am confident that we have emerged in better shape and standing than before. We came out of this period humbler and very thankful for the CPAs on Main Street, in academia, and in government who did so much to uphold the profession’s reputation. We have built on that foundation to enhance the reputation of the CPA profession broadly. The more I learn, the more I am convinced of the importance and power of the profession as a whole and what we have in common.

Increasingly, global issues are Main Street issues…and vice versa. We are all dealing with:

the complexity of ever-shifting and sometimes conflicting rules and regulations;

the ability to raise and invest capital anywhere in the world;

the appropriately high expectations of demanding clients;

the heightened pressure on and expectations of CFOs in Corporate America;

the fear that somewhere, something isn’t being done right by somebody but there is no easy way to know absolutely for sure;

and the fear that there is no way the next generation will be able to survive the pressures and demands being placed on our profession.

All CPAs share a very important public role: the voice of expertise and common sense in a complex economy. We bring our employers, clients and the public knowledge and sophistication about financial matters. We add value to our communities and our nation. We help families plan, small businesses grow, public institutions and corporations to meet their goals while staying on the right side of the accounting and tax laws. We do it efficiently, too—despite a very dense tax code, a complex set of ­accounting standards, a maze of ­regulatory systems and an unforgiving ­calendar.

Because of our important role, people view CPAs as one of the most trusted of business leaders. At my firm, the last few years have prompted a renewed focus on quality and on our obligations to the public interest that we serve. We have focused on our key role in the health and vitality of the capital markets, on giving back to the communities where we live and work, and on furthering the legacy of this great profession. This is true throughout the profession: We are doing things right, and respect for the profession has been growing immeasurably.

The AICPA has taken on the challenges of a new regulatory environment and is thriving. Barry Melancon, the Institute’s committed staff and my AICPA predecessors deserve the credit for this success, and I hope only to build on it. One of my goals as chair is to see life breathed into the strategic framework for the organization, to help drive this organization and profession into an ever stronger, unified force for economic prosperity and the public good. Let me boil down what is most important to me over the next year.

First, recruiting new talent and retaining it. Today, the services that our profession performs are in such high demand that most of us simply cannot hire as many good people as we need. The AICPA Private Companies Practice Section’s annual survey found that “finding and retaining qualified staff” is the No. 1 concern. No surprise. Public accounting firms and Corporate America alike have been experiencing shortfalls. Further narrowing the pipeline is a shortage of new accounting Ph.D.s to become the university professors who will educate all of those bright young people we want to hire.

The AICPA is doing a terrific job on this front. Our award-winning “Start Here. Go Places.” Web-based recruitment campaign has already exposed more than 1 million students during the past five years to the prospect of accounting and business careers. Our long-standing Minority Initiatives Committee has enabled more minorities to graduate with accounting degrees and become CPAs. Several programs supported by the AICPA Foundation are working to create a stream of new accounting professors. And the Young CPA Network is helping to retain the people we attract by appealing to their needs.

The work force in America is changing. As leaders of our profession we must create a more flexible and diverse workplace. We will only attract and retain the talent necessary for us to sustain a thriving accounting profession by zealously pursuing gender and ethnic ­diversity to a much greater degree than we have so far and adjusting our thinking to a new generation of college graduates.

The second item of importance to me is that we never overlook the value of continuing to burnish our reputation through excellent work. A strong reputation may be the most important aspect in convincing young talent to join the profession. We must be relevant to young graduates who want to affect lives and make a difference.

Let me state this directly: We are indeed relevant to the next generation. Accounting is the “hot” profession. Has there ever been another time when accounting issues so dominated the business headlines?

The Sarbanes-Oxley Act.

The fear that the U.S. capital markets are falling behind in a global economy.

The struggle to find a balance between investor protection and over-regulation.

Shortfalls in pension funding.

The Alternative Minimum Tax.

The Treasury Advisory Committee on the Auditing Profession, which includes the AICPA’s CEO.

And the SEC Advisory Committee on Improvements to Financial Reporting that is looking at the accounting rules and much more in tackling the “complexity” issue.

It’s not enough to just be topical. ­People have to be confident that we’re on the right side of all those issues. Our CPA ambassadors have done a ­fantastic job of talking to community groups and the media—and turning the shy and retiring image of our profession on its head. The new Center for Audit Quality (CAQ) is doing excellent work in serving investors, public company auditors and the capital markets. The CAQ evolved from the original AICPA SEC Practice Section and has added an overarching public policy mission to the more traditional focus on improvements to the financial reporting and audit processes.

Today what we do and how well we do it, whether in a small or large firm or in Corporate America, is newsworthy. In our firm we have talked often about “what we do matters” and even more about the unequivocal need to “do it right.” When we work in a high-quality manner and act with integrity, honesty and objectivity, we continually enhance our reputation that CPAs are trustworthy and add tremendous value to society and the economy.

We can do this in part by committing to ongoing education and professional development. The AICPA’s Employee Benefit and Government Audit Quality Centers help members focus on quality performance. Practice quality also is the primary purpose of the AICPA’s new business valuation standard. The AICPA’s Auditing Standards Board is beginning a large-scale “clarity” project to make its standards easier to read, understand and implement. Peer review also demonstrates our commitment to high performance. Recent efforts have focused on enhancing the process and making reviews more effective, efficient and understandable. There are equally impressive educational and professional development efforts for members in business and industry and the Private Companies Practice Section.

But even if we continually demonstrate our value through high-quality work, we will still fall short of achieving all that we can. We have to go one step further—to use our expertise whenever we can to argue for the public interest. We need to engage public policymakers in issues that are discussed around the kitchen table or in boardrooms of global corporations: issues such as making a CPA license completely mobile from state to state on a temporary basis, finding a way to facilitate access for state licensing boards to the results of our peer reviews, or opposing the granting of patents on tax strategies.

There is also the question of the convergence of accounting standards. In a global economy, it’s imperative. The FASB and IASB have made good progress in recent years. The adoption of IFRS by nearly 100 countries is an important step. The SEC’s rule proposal to no longer require foreign issuers to provide reconciliations to U.S. GAAP is another. There are good odds that the SEC will ultimately permit U.S. issuers to use IFRS. But even better would be convergence to a single set of high-quality financial reporting standards that are used around the world.

But let’s hope that convergence gives us something better than compromise. The truth is: We have real problems with complexity. There is a growing awareness that the complexity of our rules is hurting U.S. capital markets and American businesses. We might do well to move to a more “principles-based” or “objectives-oriented” accounting system and get rid of the idea that every possible eventuality has to be explicitly dealt with in our rules. But there are high hurdles to overcome in the U.S. if we were to move ­toward such a system. We need a regulatory and legal environment that accepts different conclusions reached by different professionals, all acting in good faith, and above all respects the application of sound professional judgment. At the same time,we must not give the public any reason to think we would stray from exercising judgment in a sound, objective, professional manner.

We should also think about whether our business reporting model really gives investors all of the information they need. Investors are already increasingly using nonfinancial operational data to make decisions. Maybe that data should be part of the reporting mix. Increasingly, technological breakthroughs such as XBRL will put the power of customizable information in investors’ hands. The AICPA will continue to be a leader in these initiatives.

Finally, we need to use our collective voice to increase financial literacy nationwide. The current crisis in subprime mortgages underscores that many families are struggling to gain even a basic knowledge of household finances. The results suggest that our guidance is in demand at all levels of the economy.

We have the expertise to help Americans build their futures on more solid foundations. The AICPA has great programs and volunteer effort devoted to ­significant improvements in financial literacy. We clearly should continue these ­focused efforts and find new ways to share our expertise and talents.

The great strength of the AICPA is that it brings so many men and women together as members of a single profession. Individually, we do great things for American households, businesses and governments. Together, we are an even more powerful force for prosperity in the economy at large—we pool our knowledge and speak with one voice. In the face of many challenges, we—as a united profession—have a fantastic future ahead of us.