CPA value at home and abroad

October 30, 2008

In his presentation to Council October 20, Barry Melancon, CPA, AICPA President and CEO, stressed that the AICPA had received “pretty good indicators” that the SEC would not be rolling back fair values. In fact, Melancon reported, debates over “mark-to-market” would cease if a buyout goes through, as the market would then know real economic values.

Fundamentally, Melancon stated that accounting rules should be about true economic conditions, and that the independence of the standard-setting process should not be affected by political pressures.

As buyers attempt to sort out the true economic value of mortgage-backed securities, XBRL  can bring strong value in tracking data sets of underlying assets for the future, said Melancon. 

Timing of the proposed SEC roadmap for adoption of IFRS could be deferred by uncertainty in global capital markets or by a new political administration, according to Melancon.

As current events highlight the connectedness of international markets, what is the future value of the CPA in a global economy?

Facing increased international demand for the CPA designation, NASBA and the AICPA have been investigating the potential for international administration of the CPA exam. Reviewing this proposal, Leslie Murphy, CPA, and Arleen Thomas, AICPA Senior Vice President, outlined criteria important to this consideration, including:

·         Assessing the security of the exam and the testing ethics of the local culture

·         Requiring the same rigorous process as is required in U.S. administration of the exam

·         Not authorizing CPA designation holders to provide attestation services, which continue to be subject to local licensure.

At the heart of the issue is how will the CPA credential be positioned in a global marketplace.  Today “CPA” only applies inside the U.S.  In a global environment, what steps should be taken to ensure that the CPA credential means more than just competence in the U.S.?  How can we ensure that other global credentials don’t make CPA a second tier credential?

Concerns raised by Council members included putting the CPA “brand” in the hands of candidates who may not have the same level of buy-in to the profession’s core values, and how the disciplinary process would work for those holding the CPA designation outside of the U.S.

Results of a new U.S. survey indicate that CPA brand is stronger than ever. Presenting recent survey results, Melancon reported that the CPA has been resilient in the face of crisis and resistant to reinvention. Investors and business decision-makers are more confident in work done by a CPA than a non-licensed accountant, and nearly two-thirds responded that CPAs are subject to more rigorous training and testing than other financial credentials.

The prominence of fraud as a top concern of investors and business decision-makers has declined, being replaced by global competitiveness, health care, and economic growth as the dominant concerns. CPAs ranked second only to physicians in market perception, with a notable decline of mortgage brokers and hedge fund managers to the bottom of the survey results.

The research was conducted post-sub-prime mortgage crisis, but pre-stock market decline.

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Exercising Leadership

October 29, 2008

In evaluating the highest attributes of the CPA profession, the market continues to value CPAs for integrity, professional competence and objectivity, according to the AICPA research.

Integrity, reliability and accountability are among the core values on the reverse side of Ernie Almonte’s business card. Almonte took office as the new Chair of the AICPA Board of Directors during this meeting of Council. When introducing himself, Almonte said he always presents the card values-side up, and asks the person to call the number on the back of the card if he ever fails to live up to those values.

In an impassioned speech accepting his Chairmanship of the AICPA, Ernest Almonte, the Auditor General of the State of Rhode Island, urged CPAs to learn to listen to many perspectives. Using a ballroom analogy, Almonte encouraged CPAs to continually shift from the balcony to the dance floor: gaining perspective of a rapidly changing, increasingly borderless world, but then reinserting oneself as a leader and determining how you should be part of the action.

Our job as a profession, per Almonte, is to:

· Adhere to a solid set of unwavering core values

· Become well-rounded on the trends and forces within and outside of the profession

· Communicate great things about our profession to others

· Help others see opportunities available to them, whether they are in international business, or on the path toward becoming a CPA.

Increasing diversity in the profession is a priority for Almonte as Chair.


“I Feel All Too Relevant Again”

October 28, 2008

That’s what AICPA Chair Randy Fletchall, CPA said in introducing the Fall session of AICPA’s governing Council on October 19. Discussing the current state of the economy, Fletchall emphasized the role of the CPA profession in addressing recent events.

Responding to charges that fair value accounting may have played a role in the economic downturn, Fletchall said that fair values capture economic realities, and any standard that works to obscure reality isn’t transparent or beneficial to capital markets. While the AICPA supports a timely review of FAS 157 by the SEC and the profession’s participation in that review, they don’t believe that fair value should be suspended .

Instead, Fletchall’s view is that heightened interest in accounting for financial institutions points all the more strongly to a need for one consistent, global set of accounting standards.

Fletchall thanked the members of the profession for all they do to protect public trust and confidence.

Accepting the AICPA’s Gold Medal Awards for Distinguished Service, Robert Bunting, CPA, former Chair of the AICPA, and David Walker, CPA, former Comptroller of the United States and head of the GAO, echoed the theme of the profession’s commitment to core ethical values.

Walker noted that a reputation that took 90 years to build can fall quickly if CPAs lose sight of their core values. Walker urged that what policy makers do and fail to do in the next 5 years will have a profound impact on the country, and challenged CPAs to take up the priorities of fiscal responsibility and government accountability.

The economic crisis makes a business case for the AICPA’s 360 Degrees of Financial Literacy and Feed the Pig campaigns. “I’m convinced the profession is part of the solution,” said Carl George, CPA, chair of AICPA’s National CPA Financial Literacy Commission.

George noted that savings deficits and financial leverage are “the critical issues of our time,” and presented results of research that indicates that the “Feed the Pig” message is very sticky. Based upon “financial wishful thinking,” the ads emphasize personal responsibility, through taking simple, achievable actions.

The new campaign will launch November 20, 2008.


A Millennial’s view on working with Millennials

October 16, 2008

I attended one of The Ohio Society’s Fall Professional Issues Updates this week. The Professional Issues Updates, or PIUs, is four hours of free CPE for OSCPA members on news and views about what’s happening in the CPA profession today and tomorrow.

One doesn’t have to be a CPA to relate to all the topics that were discussed at the PIU. Topics such as the challenges employers and employees are facing with several generations currently in the workplace strikes a chord with a wide audience. Being a Millennial (or Gen Y’er) myself, I understand where a lot of the younger workers are coming from when trying to find that perfect balance of work and life, and being understood in the workplace. So, what is it exactly that Millennials want?

A major misconception placed upon us is that we don’t work as hard as our older generation colleagues. The reality is we fully believe that we can work just as hard while maintaining a life outside of the office (we are always connected after all). Millennials value flexibility in the workplace that allows us to get our work done on our own time. It is also my belief that Millennials work well with members of all generations, as we tend to be open-minded and tend to try new things more easily. (Disclaimer: This is not meant to detract from non-millennial workers, as I have met and worked with countless open-minded individuals that are from other [older] generations. I am simply pointing out that Millennials tend to be more open-minded than other generations. Yes I know, it’s a generalization, but you can’t always get away from that so take it at what you will.)

Millennials saw what it was like for our parents to try to make ends-meet, sometimes working more than one job, sometimes laid-off and working odd jobs just to try to stay afloat. Millennials are out to change that for our generation – it’s okay for our generation to have had several jobs, or careers in our early and mid-20s, while we’re trying to figure it all out and gain as much exposure and experience as possible before we bring a family into the mix. Our priorities, expectations and behaviors are not the same as those of our parents.

As OSCPA’s President and CEO Clarke Price mentioned during the PIU presentation, there are Three “Rs” and Three “Cs” to what Millennials are looking for professionally and I can say that (cliché alert) he hit the nail on the head:

•  Respect

•  Interesting and meaningful work
•  An opportunity to learn
•  A positive environment
•  Some flexibility
•  Trusted
•  Loyalty

•  Recognized

•  Monetarily
•  To be thanked for a job well-done

•  Remembered

•  As having made a difference
•  Associated with businesses that care about people and community

•  Coached

•  Not subjected to fault finding
•  Told the “why” they are being asked to do what they are doing

•  Consulted

•  On what will affect them

•  Connected

•  To employer and employee mission
•  How do I fit in?
•  Meaningful part of the whole

So, in short: Millennials want to be valued. We want to be mentored, not managed. We want to be consulted and involved in decision-making processes. And just like technology, which is a part of our genetic makeup, we are always changing, evolving, and never settling. We want to do a good job and succeed, but it’s inevitable that we’re going get to the end goal in a way that’s different from most of our older co-workers.


Change coming in Ohio BWC and group rating

October 8, 2008

Speaking to sponsors of Ohio’s Workers Compensation group rating programs on Monday, John Pedrick, Chief Actuary, discussed reforms that are in process at the Ohio’s Bureau of Workers’ Compensation.

While noting that he wants Ohio’s group rating programs to continue, Pedrick reported that efforts were underway to ensure that the true economics were reflected properly in rates extended to participating businesses. In addition to changes in rates for the group programs, work groups are also studying other forms of performance-based discount programs that can be extended to all businesses.

Proponents of maintaining group rating programs’ maximum premium deduction state that only employers with minimal workers’ compensation claims can qualify for participation in group rating programs, thereby justifying the rate decrease. Pedrick reported that according to a study conducted for the Bureau by Deloitte, actual claims experience does not support rate decreases as high as 85%. Additionally, the Bureau is concerned that participating employers are not as homogeneous within industry and professional groups as originally envisioned.

Ohio Society of CPAs members have realized significant savings from participating in the Society-sponsored Ohio BWC group rating program. Although Pedrick noted that the timing and details are “a bit hazy,” what can participating employers expect if changes are approved? According to Pedrick, expect:

•  Approximately 20% greater premiums than participants were used to paying

•  An increase in live training opportunities that group rating program sponsors are required to offer members

•  A requirement that group rating sponsors identify volunteer employer members that safety staff can visit to “audit” the effectiveness of the sponsor’s communication and education initiatives.

Not every employer qualifies to participate in group rating programs based upon claims experience. Other performance-based discount programs under consideration by the Bureau include:

•  “High deductible plan” models where the employer absorbs the first portion of the risk, thereby reducing premiums paid for Workers’ Compensation.

•  Retrospective rating programs, where members of an employer group participate in a greater portion of their own up-side and down-side risk.

•  Safety dividend programs, in which a safety dividend is awarded if businesses exceed some performance measures as a result of a process implemented to reduce costs.


Ohio brain power

October 1, 2008


I had the honor of visiting my alma mater this year – Miami University – to speak at Miami’s MAcc commencement. After revisiting unique aspects of life at Miami that haven’t changed in the <gulp> 20 years since my own graduation (intramural broomball has as steadfast a following as ever,) I gave the group my own spin on what it means to be a CPA.

Listening to the graduates’ responses, my first observation is that the stereotypes aren’t always true. In too many generational discussions, I’ve heard that today’s graduates aren’t serious about making an investment in their professional career – in doing what it takes to become a CPA and work toward careers as partners and leaders in business. Admittedly, MAcc graduates are the group that’s already serious enough to make the investment in a fifth year of education, but in side conversations with the students over lunch, I heard about plans to gain international experience, conduct research with the FASB, and other evidence of high interest in sometimes demanding paths to CPA leadership.

The CPA Exam Hurdle

My main point to the Miami graduates was to begin their path to the CPA exam now, and not to allow procrastination to stop their journey. With the computerized exam essentially available at any time, once focused on the daily demands of a new career, it’s easy for “anytime” to never come. Afterward, the grads were eager to share their personal plans – “I plan to take this part of the exam on x date, and finish with…” – plotting out their next four exam windows.
It struck me that everyone I spoke with now plans to take only one part of the exam at a time. For the first time, it hit me how difficult it must be trying to START the exam after entering the workforce. When I graduated, the majority of my class took the full exam in May during finals week, and November was considered clean-up for anything you didn’t pass in May. I can’t imagine how difficult it is to not at least kick off the process before becoming fully immersed in a new job.

Driving candidates to the CPA Exam was a key discussion topic at the June meeting of the OSCPA Council of Leaders, a strategic “think tank” representing the diversity of the Society’s membership. Among a number of active steps identified by the Council, The Ohio Society will be publicizing best practices of leading employers on “what works” in advancing candidates to CPA certification. If you know of an interesting practice that has been effective in your workplace, we’d love to hear about it.

If you’re a candidate questioning whether the CPA path is worth it, it would be interesting to hear your views on the hurdles as well.

Speaking with the faculty, they noted that the greatest challenge faced by educational institutions throughout the state is keeping the best and the brightest in Ohio. Far too many star performers were considering locations such as Chicago, New York, and DC as more likely to fulfill their personal and career goals. There is significant debate on the extent and impact of “brain drain” in the state of Ohio; however, faculty observed that in addition to promoting the value of the CPA designation, the Society and the profession can fill a valuable role promoting what high achievers on the path to the CPA can accomplish within our state.


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