The worst of the corporate accounting scandals are some five years behind us, but new issues are continually popping up to haunt CPAs. Luckily, solutions do exist.
AICPA President Barry Melancon outlined just a few of these issues and answers on Jan. 29 during a New York City meeting of state CPA society representatives from across the country. The most pressing issues are what Melancon called “the four Ps:”
1. Pipeline, as in the pipeline that’s pumping new CPAs into the profession. The good news: Enrollment in university accounting programs is at or near capacity nationwide. The bad news: Baby Boomer CPAs will soon be reaching retirement age. Melancon doesn’t think the input will match the output — and that also creates problems related to succession planning, especially for small firms. “No matter how good of a job we do, we probably will not replace CPAs one-for-one in the next 20 years,” he said.
But CPAs can make a difference in an important way: They have to emphasize to CPA candidates the importance of taking the exam, particularly in an era when the computerized exam offers more flexibility (and, therefore, less urgency) than the old, paper-based exam. “Firms in particular have make sure their culture is one in which people are encouraged to take the exam,” Melancon said.
2. Private, as in “private company financial reporting.” More and more people are realizing that a reporting model for large, public companies may not be appropriate for small, private companies, so the profession is investigating whether it would be wise to create a set of reporting standards specific to private companies. “It’s about relevance and making it reliable,” Melancon said. “It’s hard to fathom that a model that works for GE would also work well for moms-and-pops.”
3. Patents: Some people have begun patenting certain tax strategies. More troublesome, a few of these people are thinking about enforcing those patents. The issue, Melancon said, “is not the end of the world today, but it could grow into a problematic situation.” He said the profession is considering seeking federal legislation that would prohibit people from enforcing their tax-strategy patents.
4. Profession: With a new Congress and many new congressional committee chairs in place, there may be a movement afoot among politicians to revisit some of the regulations that have been enacted over the past five years or so — including the Sarbanes-Oxley Act. “The profession will again be under the microscope over the next two years,” Melancon said. “But (revisions of current legislation) are unlikely. We believe Congress will let the regulators figure out the answers to that.”
Despite the issues, though, “our profession is doing very well,” Melancon said. “A lot of decisions have been made that have been very positive for CPAs, and that gives us an opportunity to reinforce the quality of our people and our profession.”
What issues are keeping you up at night?