Exercising Leadership

Editor’s note: On Oct. 21, Ernie Almonte began a one-year term as the AICPA’s chairman. Almonte, Rhode Island’s auditor general, is the first AICPA chairman from the government sector. This is a condensed version of Almonte’s inaugural speech, delivered at the October meeting of the Institute’s governing Council in Tucson, Ariz. For the complete text of the speech, click here.

I want to speak about where our profession is headed during the next 12 months and beyond, and how getting there will require a willingness to think and act differently. I will describe some methods I think we can all use to train ourselves to look at things from a different perspective. Then I’ll discuss how the AICPA’s approach to shaping the future of the profession demonstrates this broad perspective.

The fact that I am the first AICPA chairman to come from government is one clear sign of our commitment to approaching challenges from the broadest perspective possible. One of the remarkable aspects of this governing Council, the AICPA itself, and our more than 350,000 members, is that we somehow balance our enormous diversity with a shared conviction in our core values. We can think differently because we listen to the many different voices and perspectives of the people who comprise our profession.

When I attended the Kennedy School of Government at Harvard University, I had a great professor, Marty Linsky, who wrote the book Leadership on the Line. Professor Linsky taught us to think differently by using what he called “the balcony analogy.” He asked our class to imagine ourselves on a dance floor. On it, we can see all the people dancing around us. We may be jostled a bit, or maybe if the dance floor is too crowded, our feet get stepped on. We’re swaying and moving. We are part of the action.

Now, imagine that we step to the edge of the dance floor, travel up to the balcony, lean over the railing and observe the dance floor from this new vantage point—suddenly the entire scene changes. We see the entire dance floor as one moving piece, and we are separated from the experience, gaining perspective. We can see how the dancers are flowing across the floor. We see who is coming onto the dance floor, and who is leaving. We see who is moving in rhythm, and who is not. Who is standing by themselves, and who is engaged with others.

Observing is not enough, however. When you are on the balcony watching those on the dance floor, imagine yourself down there with them. How were you reacting to and connecting with others? Were you having a positive or a negative influence on the action? Did you contribute to the rhythm of the dance, did you disrupt the movement, or did you stand outside the action?

[Linsky] suggested that exercising leadership requires moving from the balcony, to the dance floor and back again—a constant shift in perspective so that we understand not only the big picture, but also our individual role in the action and the impact of our decisions and movements on those around us.

So the first part of exercising leadership is to be open to shifting perspectives. It is about understanding dynamics, interactions and reactions that occur in a rapidly changing world. As a profession, we must be willing to do this.

Let me give you a few examples: In our increasingly borderless world, the AICPA is taking a close look at the profession’s growth and future. This will be a key focus during the next year through two very important projects.

We have worked with the National Association of State Boards of Accountancy, the state societies and the state boards of accountancy to advocate for a state-based system that would allow any CPA with a valid state license to obtain practice privileges in any other state, with no notification required. This has resulted in tremendous momentum, and now more than 30 states have embraced what we call mobility—basically the unfettered ability to offer services across state lines.

The solution seems obvious now. But it would not have happened without some out-of-the-box thinking that led to this question: What if we approached the CPA profession as the U.S. does driver’s licenses? If you can get in your car and drive across the country, why not be able to share your skills and services as well? We answered that question resoundingly and must continue the march forward. We must not rest until all states have mobility.

Now we are taking this concept even further. What if your clients live a continent away? The accounting profession is in a time of great change as it moves toward International Financial Reporting Standards or IFRS. The SEC has announced its intention to adopt a road map that would allow 110 of the largest U.S. companies to begin using IFRS instead of U.S. GAAP as early as 2010. The road map’s anticipated IFRS adoption date could be as early as 2014. (See page 16 for specifics on the proposed road map.) From the balcony perspective, it’s clear that moving toward international standards will eventually happen.

The AICPA saw this development coming and has been working closely with U.S. regulators and the international community to promote an orderly transition to international standards. Our goal has been to help members see what’s on the horizon, increase their skill set and understand that their knowledge of U.S. GAAP gives them a head start in implementing IFRS. Last spring, the AICPA launched an information-rich Web resource (www.ifrs.com) that provides members and the public with both an overview of IFRS and the details on the differences from U.S. GAAP.

I encourage members to frequent the AICPA Web site, join the practice sections and the quality centers, and attend CPE training on their quest for world-class performance. World-class performance is something that will be necessary to excel in an increasingly shrinking world.

It is also important to communicate the great things about our profession to others. We are not a profession that is especially good at saying nice things about ourselves. That needs to change. Take advantage of the AICPA’s CPA Ambassador program, which brings best-in-class media and spokesperson training into the states and is working to make our profession’s voice louder and clearer every day. Get out there and share your knowledge not only with other members, but with others in the business community, with the public, with the media and with government officials.

We know that the new president is going to be faced with financial challenges, the likes of which we haven’t seen in a generation. The current credit crisis, and what certainly looks to be a recession, has many Americans concerned.

Congress acknowledged that it needed to take swift action. Whether you agree with the rescue plan or not, it seems clear that such an unprecedented crisis requires new thinking. This country and the global economic community will have to find new, thoughtful solutions to combat what is now a worldwide financial crisis.

As a profession, we will be involved with the new administration to do everything in our power to help. One step will be to provide input on policy issues whenever appropriate. It is no coincidence that the next Council meeting in April will be held in Washington, D.C.

When I think about what’s happening in Washington, and on Wall Street and Main Street, I am deeply concerned. I call on CPAs across the country, in business, in accounting firms and in government, to bring their usual integrity and discipline to help guide this country back into prosperity.

As a CPA in government, I have seen how an action we took saved our city or our state millions of dollars. The actions of the individual matter, and CPAs collectively can make a difference. CPAs are the objective experts of finance—uniquely trained to analyze and synthesize complex information. CPAs have the integrity and discipline to communicate the reality of the situation.

We have brought this integrity and discipline to public and economic policies in the past. This work is consistent with our deep commitment to public service. If you are not already familiar with what is being done in the area of financial education, take a look at the 360 Degrees of Financial Literacy effort and the Feed the Pig public service campaign. They just might be the most successful public education campaigns the profession has ever undertaken.

Another example of how the AICPA is thinking differently is what we are currently doing with the path to becoming a CPA—the pipeline. One decision the AICPA made through its strategic planning process last year was to look at the pipeline from a broader perspective. The Institute hired a new vice president of students, academics and membership to tie all the pieces together, beginning with young children and continuing through retirement.

CPAs are in high demand, and we’ve seen a resurgence of interest in the profession among young people. Indeed, the number of accounting degrees being awarded is at an all-time high. Yet, there continues to be a serious shortage of CPAs.

The Institute has been incredibly proactive in addressing this problem, both to encourage students to enter the profession and to retain those who are already working as CPAs. I urge you to check out the award-winning student Web site startheregoplaces.com. This program has steadily built a pipeline of students interested in the profession, amassing an astoundingly huge database of 450,000 prospects. Research shows that high school students are eight times more likely to study accounting after registering on the site, and college students are four times as likely.

We each have to be responsible for recruitment. If each person in this room brought five new people into the CPA profession, we’d be several good steps forward in addressing the staffing shortage.

We also can do a better job of reaching students in community colleges—an untapped and rich resource of potential talent. And we need to make sure there are professors who can teach. The Accounting Doctoral Scholars Program is doing an excellent job of working to resolve this issue.

We need to continue our commitment to recruiting more minorities, and that is something I intend to focus on during my term as chairman. We already do a lot in this regard, with various minority initiatives and scholarships. But we can do more individually and collectively.

I’m particularly excited about a new initiative launching under my direction this year, and that’s the Leadership Academy. We’re going to take a group of young CPAs, ideally 25 to 35 years old with between three and eight years of work experience, who have good skills, but who can benefit from learning about leadership.

We are going to make sure that the group represents our nation’s diverse population. They will matriculate through a program focused on learning leadership skills, and we will instill in them a commitment to be involved in the profession’s volunteer organizations.

The academy will also include one-on-one coaching. Then we’ll give this list of young CPAs to the AICPA’s various nominating committees, offering them up as potential committee members. Our goal is to get them involved. We will then track their progress and development.

I would like to close with one final point about shifting perspectives. In Daniel Pink’s book, A Whole New Mind, he gives several exercises to use right brain-directed thinking. I want to share two with you. The first is to read books, newspapers and trade magazines in areas other than your expertise. The goal is to be well-rounded on trends and forces that are affecting the world and the way we think.

I love to read. I try to read a book a week. Since reading Daniel Pink’s book, I read everything I can get my hands on. Recently, I’ve read books about Roman emperors like Augustus, founding fathers like Alexander Hamilton, and futurists like Edie Weiner. But I also read magazines on the planes and trains I take, my sons’ college textbooks, pamphlets and PowerPoint slides from other presentations. They all help me to think differently.

Another key lesson from Daniel Pink’s book is the “coffee shop” experience. You see people in the coffee shop, drinking coffee and reading a book or a magazine. Once in a while, take a product with you. It can be anything that you use in your daily life. As you’re drinking your coffee, take out a pad and pen and jot down ways you could improve this product. Be creative. Think differently. It might be a financial problem for one of your clients, or your own career, or even our profession. How can we reengineer ourselves to be better at what we do? Put that on the table and think of creative ways to solve the problem, and you might come up with a much better idea.

I once heard someone say that there is a reason why they make the windshield larger than the rearview mirror. Learning from the past is important. But it is also important to look at the future. You can’t change the past. But you can change the future.

The AICPA has always looked into that future and either adapted, or changed it. It has been said that our choices will define how we will be remembered. I ask all of you to join me, to work together, to look beyond ourselves. To use our imagination. To think differently. And to exercise leadership.

For complete text of the speech, which gives thanks to various past AICPA chairs and Almonte's family, click here.

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