The Professional Issues Update by AICPA CEO Barry Melancon, CPA, CGMA is always a highlight of Council. It astounds me how Barry is able to keep on top of all of the issues (and the associated details) of all the issues facing the profession—if you ever have an opportunity to listen to Barry give this update, you should definitely make the time.
Barry started off his presentation with a video tribute to outgoing Chairman Rich Caturano, CPA, CGMA. There were some great words of advice from Rich as he reflected on his year as chairman of the AICPA:
- Lean into the curve. When driving a motorcycle you can’t just turn the handlebars, you have to lean into the curve and the bike starts to turn. Rich recommended that we apply this into our lives—that we lean into the curve and feel our journey turn, rather than try to abruptly make changes. To put this in different words, I would say that sometimes you have to just “go with the flow” and not just be so goal-driven/focused (see more on this below).
- Focus on the journey not just the destination; take the time to enjoy the people. Anyone that’s met Rich would definitely agree that he is a people person—with a warm smile and gregarious. But I like the first part of Rich’s advice: to enjoy the journey. I think sometimes we get so destination (goal) focused that we forget that we need to enjoy the journey to get there. This reminds me of what it was like when I first started traveling a lot, I would fly directly to a the city where the meeting or conference was, and when that was done fly back to Hawaii. Well that was lot of time to spend on the airplane. After the first year doing that and not really enjoying the trips, I changed my philosophy and now always add on an additional weekend, sometimes both coming and going to either explore the city I’m going to or to stop by and visit friends and family in a city along the way.
- Accounting provides a good life. Rich’s desire to become an accountant was inspired by a neighbor who was an accountant. This neighbor was the only guy in the neighborhood who didn’t have to take a shower after coming home from work. This definitely resonated with me, I remember actually telling my father: one of the reasons that I became an accountant is because I don’t enjoy manual labor and having to do something that has such a physical toll on my body to earn a living. Simply put, I like that accounting provides me with a comfortable life. It’s not that we don’t work hard, in fact, it’s actually the mental challenge of working through the various standards and architectures and research that we need to consider to develop a business solution that I enjoy almost more than anything else.
Rich also provided some very thought provoking statements. For example, he said that if we keep producing the same kind of CPA that we’ve been producing the last several decades, we won’t have the competitive edge that we need to continue to lead the business world. This echos the finding of the CPA Horizons 2025 report which highlights the many changes expected to come in the next 12 years. (You can check out one of my presentations featuring the findings of the CPA Horizons 2025 Research Study in my “New Horizons for the Accountant” presentation on SlideShare.)
Rich’s legacy will definitely be his efforts in forming the National Commission on Diversity & Inclusion. You can see highlights on the commission’s report yesterday in my Storyify summary: Diversity & Inclusion on #AICPAGC13. In the video Rich made a statement that really stood out to me. He said, “You’re leaders, that’s your responsibility, to make people feel welcome.” I had never thought about it that way: diversity and inclusion is about making people feel welcome. This made me really think about what we in Hawaii call the “Aloha Spirit” and why when people come to Hawaii they always feel welcome. In Hawaii we’re also called the “melting pot” because we have such an integrated population—not just diverse, but actually integrated. I compare this to other cities where there may be a great diversity of people, but when you dig below the surface there is still a lot of separation between ethnic groups. I think we need to figure out a way to “export” and share the Aloha Spirit with the rest of the U.S.
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After the video, Barry continued on highlighting some of the AICPA’s Advocacy-related efforts: Municipal advisors exemption for CPAs, Mandatory audit firm rotation, ERISA fiduciary definition, Patent holding companies, Section 404(b), Broker dealers, STEM, and mobile workforce.
Barry also explained several issues that were causing lot of uncertainty in tax: tax reform, extenders, and DOMA and ACA. He also took the time to highlight some of the issues related to “Cash to accrual basis of accounting” as it related to tax reform, which includes a small business discussion draft which would force businesses over $10 million in dollars in revenue to use accrual basis of accounting. The AICPA has been initiating a grassroots effort to ensure that the structure of this provision does not have a significantly negative impact on small business owners.
The Financial Reporting Framework for Small and Medium-sized Entities (FRF for SMEs) has been a cause of much debate since it was launched earlier this year. Barry reported progress in discussions with NASBA and the FAF. There’s been over 90,000 visitors and over 120,000 page views to the FRF for SMEs web site. Other financial reporting concerns that Barry touched on includes the Private Company Council, iXBRL, proposed changes to the auditor’s report on public companies by the PCAOB, FASB/IASB convergence, changes to the definition of attest, firm mobility, and proposals related to changes to Compilation engagements, including a revised exposure draft.
Barry continued with an update on CGMA. CGMA has now grown to almost 41,000 credential holders. Upcoming CGMA-related highlights included: the publishing of Global Management Accounting Principles, a rework of the CIMA syllabus (the body of knowledge underlying the CGMA), a CGMA Capstone Exam coming in January 2015, and more resources will continue to come out.
The focus then switched to the CPA Firms issues including: guidance for providing comfort letters, EEOC efforts to broaden their reach into the partners of CPA firms, and the future of Peer Review. Barry also shared some surprising data points: 43 mergers of firms in the Top 500, and 24 Top 100 firms acquired another practice.
Barry also shared some of the highlights from the Robert Half 2014 Salary Guide: CPA is the most desired credential by employers and there is been growth in the number of CPAs who hold CFO slots, now up to 38% of CFOs.
The journey to becoming a CPA continues to evolve as the work of the Pathways Commission drives changes to accounting education including addressing the need for diversity and more Advanced Placement courses for accounting in high schools.
Barry continued with an update on the CPA Exam, which has now been delivered to over 2 million (yes 2 million!) since the start of the computerized exam. He shared with us Canada’s switch from CA (chartered accountants) to CPA (Chartered Professional Accountants), and the continued move to internationalize the AICPA’s specialty credentials, starting with CPA Canada.
Technology-related updates were the next focus, including expansion of SOC reporting with adoption of SOC by the Cloud Security Alliance, the issuance of a SOC2 report by Microsoft’s Azure (cloud computing service) division, and the increasing adoption of the Audit Data Standard, increasing access to accounting data for both internal and external audits (I was honored to be a part of the initial chartering of this initiative, it is going to be huge).
Barry closed with updates on CPA education and learning, governmental action, previews of the new advertisements for feedthepig.org, and a video looking at the new normal and how everything we have been building for decades in the profession continue to change and change significantly.
Phew! You can just see from the volume of topics (and I just listed the topics, not all the details that he shared with us) how amazing it is to listen to Barry and hear about all of the issues, challenges, and opportunities currently facing the CPA profession.