the us cpa profession orientation
TRANSCRIPT
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The US CPA Profession& its AssociationsPresented by:
Tom Hood, CPA.CITPCEO & Executive DirectorMaryland Association of CPAs
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WelcomeChinese delegation
Jiangsu provincial and municipal auditors
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Learning Objectives
• Understand the structure of the US CPA Profession
• Understand the role of US Professional Associations
• Understand the latest trends, issues, and innovations in the CPA profession
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A profession has three major attributes
• A distinct and evolving body of knowledge• A commitment to the public interest –
licensed by the government• A code of conduct and ethics
State of MarylandCPA License
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How to become a Certified Public Accountant?
The four E’s (State of Maryland Example)
1. Education – (150 hours) Bachelor’s degree + 30 credit hours
2. Examination – Pass the Uniform CPA Exam3. Ethics – Maryland requires a separate ethics
course and examination4. Experience – 1 year of experience working
with a CPA
And CPE – - 80 hours of Continuing Professional Education reported every two (2) years, including four (4) hours of ethics training
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The CPA profession is part of the bigger infrastructurethat supports the US free market system. Like the pipes under
urban streets, it is often invisible until it breaks.
A useful framework to understand the CPA profession
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Our infrastructure for regulating the US financial markets has been created from a series of reactions to crises and changes and
is in need of repair.
Single auditsDOL auditsAudit quality
Financial Regulatory Reform
Sarbanes-Oxley ActDodd-Frank Wall Street Reform and
Consumer Protection Act
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MD ComptrollerMD Comptroller
CAQ
US Treasury
MD Comptroller
Courtesy of the Maryland Association of CPAs – 2008 edition Drawing by Carol Kirwan, CPA
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Despite major challenges, the CPA profession has maintained its trusted advisor status with the public and investor communities
Both Investors and Business Decision Makers rate CPA’s at the top of all professions, right after physicians.
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Accounting Firms Most Trusted Advisors
• Generally speaking, how believable do you normally find statements made by someone who works for one of these organizations or groups
• “Echo Boomers” (18-34) rated accounting firms highest– 74%67%
62%55%
51% 49% 47%
36%
Acctg FirmsBanksInvestment FirmsHealth Ins. Co.Mortgage CompaniesGov't regulatorsCredit Card Co.
Source: Harris Poll, May 18
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Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB
CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB
State CPA Statutes (Law)
State Boards of Accountancy issue licenses and regulate CPAs
The (infra) Structure of the CPA Profession
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SECFASB
FASBPCFRC
IASBIFRS & SME
PCAOBAICPA
ASB, ARSC, PRB
IAASB
AICPAPEEC
AICPAPEEC
IFAC
Public Company Private Company Int’l Company
FinancialReporting
Audit /Attest PerformanceStandards
Code of Conduct
Another way to look at standards & oversight
State Oversight & Enforcement of CPA LicenseCPALicensure
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INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTION
Governmental auditors are also experiencing changes and convergence
• Increases in audits of ARRA
• Increases in A-133 audits• Changes in
Yellow Book
IAASB
IASB
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Where do major changes come from?Most changes come from regulators and standard setters
Us – AssociationsMACPA & AICPA
OR
Them – Federal & Statelegislators Infrastructure
New laws, regulations& regulators
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The history of associations – Why do we exist?
The First Amendment of the US Constitution allowed “associations”:
• freedom of speech• to peaceably assemble• to petition the Government for a redress of grievances
Bill of Rights - submitted to the states for ratification on September 25, 1789 and adopted on December 15, 1791
US Constitution Bill of Rights
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Associations in America were seen as unique from the foreign perspective
As soon as several of the inhabitants of the United States have conceived a sentiment or an idea that they want to produce in the world, they seek each other out; and when they have found each other, they unite.
From then on, they are no longer isolated men, but a power one sees from afar, whose actions serve as an example; a power that speaks, and to which one listens.
– Alexis de Tocqueville
Alexis de Tocqueville1835
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Maryland played an important role in the formation of the CPA Profession in the US
• Edward Cockey • First President of AICPA
• Henry Harney • concept of CPA
• Max Teichman• founding member of MACPA
Maryland was the third state to enact CPA legislation and firststate in 1928 to restrict audits to CPAs
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The Profession’s Associations
The Standard Setters & Regulators
• The American Institute of CPAs (AICPA)– 450,000 + members
• CPA/SEA – State Executives Association
• 50+ State CPA Societies• The Maryland Association
of CPAs (MACPA)– 9,000 CPAs + 3,000
students
The CPA Profession Associations
• FASB• GASB• AICPA• National Association of
State Boards of Accountancy (NASBA)– 54 Licensing jurisdictions
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What do we do for our members?
Connect
Protect
Achieve
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Connecting our members to their Profession, each other, and the community
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Connect
• Connect to the Profession• Connect to each other• Connect to our community• Drive the market to our members
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Connect to students to fill the pipeline and promoting the CPA Career
Tomorrows CPA.orgNew/Young
Professionals Network
MACPA
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MACPA contributes to national Accounting Doctoral Scholars program
• $16.8 million contributed• 70 firms & 41 state societies• 39 universities• 30 selected as ADS Scholars
Associations do the things individuals cannot do by themselves
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Connect – drive the market to our members
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New social media tools allow us to connect to more members in more ways
MACPA won 2 out of top 10
Biz blogs in MD
MACPA social media efforts featured in J of A and won 3rd place in Mobbies,
Top 75 Biz blogs & Top 50 Accounting blogs
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Protect – the public interest and the CPA license and brand
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Remember this? Advocacy on behalf of our members is a major value to our membersUs – MACPA & AICPA
OR
Them – Federal & State Infrastructure
New laws, regulations& regulators
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Example - CPA Mobility and uniformity achieved through collaboration in profession
TX
WA
OR
CA
NV
ID
MT ND
SDWY
UTCO
AZ NM
HI
OK
KS
NE
MN
IA
MO
AR
LA
MS AL *GA
FL
WI
IL
MI
IN
KY
TNSC
NC
VA
OH
NY
ME
CT RI
*MA
AK
WVNJDE
DC
MD
*PA
CPA Mobility Enacted 46
CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA
*
In Process
Awaiting Governor Signature - 1
NH
CPA Mobility Legislation Pending - 2
VT
PR
GUU.S. VIRGIN ISLANDS
28
• Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies
• 47 states passed legislation in three (3) years
• Maryland enacted it in 2008
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An example - CPE Regulations involved all levels – law, regulations, and procedures
Legislation
Regulations
Policies & Procedures
• SB 128
• 09.24.02 Regulations
• Fields of study
Maryland Senate & House passes bill
A Bill SB 128From State Board
LawMaryland Governor signs into law
Maryland State Board of Public Accountancy
Clarify thru regulationsAnd enforce the law
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An example of how we protecting CPAs by mobilizing our members
Inform & engage members• Town Hall meetings• Publications• Web• Social media – blogs, twitter,
Youtube, and slideshare
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Recent example – The Dodd – Frank Wall Street Reform and Consumer Financial Protection Act of 2010
Crisis hits news
Bureau of Consumer Financial Protection
848 pages
533 regulations60 studies94 reports
HR 4173
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Protecting by advocating for members (CPAs) = real results!
Retained independent structure of financial accounting standards (FASB)
Modified provision to audit broker-dealers (PCAOB)
Exempted CPAs from CFPA registration due to existing licensing and oversight
Stopped excessive liability exposure for auditors (aiding & abetting)
Commented on SOX 404(b) exemptions
Working together with the AICPA and many State CPA Societies achieved these:
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Achieve – enabling our members to deliver high quality services & achieve success
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Achieve – enabling our members to deliver the highest quality services and achieve success
• Public Seminars, Chapters & Committees (over 300 programs)
• Conferences (9 major programs)• In-house Training• Web self-study – AICPA CPE Express• iTunes – Podcasts on breaking issues• Blogs – CPA Success, New CPAs,
Legislative Insider, CPA Island• Webcasts on breaking topics
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Achieve - Technical skills are not adequate to keep up with the rapidly changing world
• Communication & Leadership• Strategic & Critical Thinking• Focus on the Customer, Client,
and Market• Interpretation of Converging
Information• Technologically adept
Top 5 Competencies for the future are:
We created our Business Learning Institute to research, develop and teach these skills
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Achieve – Our own BLI program at the AICPA Leadership Academy
Apply online at http://www.aicpa.org/leadershipacademy
Our “soft” skills are nationally recognized!
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Associations have enduring benefits for both the individuals and organizations that support them
“Association members earn, on average, $10,000 more per year than non-members” And are 19% more likely to say they are “very-
satisfied” with their jobs than non-members”
Source: Where the Winners Meet Study
by the William E. Smith Institute for
Association Research
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Latest trends and issues facing CPAs
• Economy • Globalization• Technology
– Cloud– Social web &
social media• Workforce &
demographics
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Increasing changes and complexity in standards & regulations
• Financial Accounting• FASB – IASB Convergence• Private Company Standards (FAF Blue Ribbon Task Force)• Public Companies – SEC Roadmap
• Tax• Tax Preparer regulation – IRS• Tax changes – Estate, 1099s, Tax rates• Sub S employment tax
• Other• Convergence – ASB Clarity project• Convergence – PEEC• SSARS 19
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Three innovations you should know about in the CPA Profession
• Financial Literacy• Sustainability
Reporting (CSR)• eXtensible
Business Reporting Language (XBRL)
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Financial Literacy – National and state CPA associations are committed to making a difference
www.feedthepig.orgwww.360financialliteracy.org
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The CPA Profession is getting involved in Sustainability Reporting at national and state levels
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XBRL is mandatory for US Public Companies and ushers in a new age of transparency and financial reporting efficiency
MACPA has been advocating XBRL for Maryland business reporting to Government and is working on a non-profit XBRL financial reporting and a non-profit taxonomy
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XBRL – adoption is worldwide
Standard Business Reporting Projects:• Netherlands• Australia• New Zealand• United Kingdom• FDIC• Nevada, US• Oregon, US
Source: Conor O’KellyXBRL Int’l Vice Chair
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Like the medieval carpenters who built the Great Hall at Oxford University in 1529
We are planting the seeds for the future of our Profession
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Tom Hood, CPA.CITPCEO
Maryland Association of CPAsBusiness Learning Institute
(443) 632-2301E-mail [email protected]
Twitter www.twitter.com/tomhoodWeb http://www.macpa.org
Blog http://www.cpasuccess.comBlog http://www.bizlearningblog.com
CONNECT – PROTECT - ACHIEVE