The CPA profession is thriving. The image of CPAs among both the American public and business leaders remains incredibly strong. Now more than ever, CPAs are in great demand. But a strong profession’s work is never done.

In a recent discussion with a group of state CPA society public relations professionals, AICPA President and CEO Barry Melancon, CPA, highlighted four forces shaping the accounting profession environment today. Dubbed the “Four Ps,” they stand for the pipeline of accounting school graduates and new CPAs, the patenting of tax planning strategies, private company financial reporting and professional responsibility.

The Pipeline
One of the profession’s most pressing needs is recruiting and training enough new CPAs to replace those reaching their retirement years. In the next 15 years 75 percent of current AICPA members will reach or approach retirement age. While firms across the country know all too well the challenges of attracting talent, there is good news in this area: the number of accounting degrees awarded increased 19 percent between 2000 and 2005, and there was a five-fold increase in the percentage of high school and college students planning to major in accounting.

Some credit for this improvement goes to the AICPA’s Start Here, Go Places campaign, which for the past five years has offered high school and college students good reasons to consider a career as a CPA. More than one million students have logged on to the campaign’s web site, www.startheregoplaces.com, to use interactive resources that bring to life the excitement of being a member of our profession. The site features dynamic tools, such as the Catch Me If You Can Forensic Accounting Game/Contest, the Turnaround Game and the Money Means Business Online Workshop, all of which expose 16–22-year-old students to the critical roles CPAs play in business.

In addition, the Institute’s Minority Scholarship program is working to improve the profession’s diversity. In 2006 it distributed 130 awards, totaling $423,000, to students in 90 different universities. During the past 15 years, the program has awarded roughly $8 million to more than 1,600 students. (See related story on scholarships recently awarded by the Michigan Accountancy Foundation.)

Yet the shortage of CPAs continues. While accounting firms hired 17 percent more entry level recruits in 2006 than they did in 2005, the need for CPAs is outstripping the supply. Another problem is that one in six CPAs left his or her firm in 2004 — two percent more than in 2003.

To reverse this attrition, the AICPA is helping young CPAs understand the advantages of remaining in the profession. In October 2006 the Institute launched the Young CPA Network, which provides practical information and professional resources — such as The Edge, a monthly e-newsletter, and a special web page, www.aicpa.org/YoungCPANetwork, designed specifically for AICPA members 35 years old and younger. These activities address important pipeline issues.

But CPAs, in firms of all sizes as well as in business, industry and government, also play a crucial role. They can help young people learn more about the benefits of being a CPA. At work, CPAs can implement mentorship programs and address issues important to the new generation. To learn more, visit www.aicpa.org and review the resources under the “Career Development and Workplace Issues” tab on the left navigation bar.

Tax Patents
The patentability of tax strategies is a growing concern among tax practitioners and taxpayers. In 1998, the U.S. Federal Circuit Court of Appeals, in State Street Bank & Trust v. Signature Financial Group, Inc., held that business methods could be patented. Since then, 51 patents for tax strategies have been granted and 83 patent applications for tax strategies are pending (as of 2/28/07). The AICPA believes patents for tax strategies undermine the integrity, fairness and administration of the tax system and are contrary to sound public policy.

For many years the AICPA has worked closely with Congress and the tax authorities to ensure equity and simplicity in our tax system. Likewise, AICPA members help millions of individual taxpayers and businesses comply with federal, state and local tax laws. This experience has guided the Institute in considering the impact tax strategy patents would have on taxpayers, professional tax advisers and the public interest.

The AICPA believes patents granted for tax strategies:

• limit taxpayers’ ability to fully observe Congress’s intended interpretations of tax law;
• may cause taxpayers to pay more tax than Congress intended;
• complicate the provision of tax advice by professionals;
• hinder taxpayer compliance;
• mislead taxpayers into believing that a patented strategy is valid under the tax law; and
• preclude tax practitioners from challenging the validity of tax strategy patents.

The AICPA has written to the chairmen and ranking minority members of the Senate and House finance and judiciary committees, encouraging them to swiftly enact legislation to counteract tax strategy patents’ harmful effects on the integrity of the tax system. In its correspondence, the AICPA recommended that Congress either restrict the patent office from issuing patents for tax strategies involving compliance with federal, state or local law or pass legislation granting taxpayers and tax practitioners immunity from patent infringement liability. CPAs can join the effort by educating their legislators about the importance of this issue and encouraging them to move forward with protections.

The issue of tax patents serves as a reminder that the profession will always face legislative or regulatory challenges that impact its ability to serve clients and employers. History has shown that once this substantive issue is solved, another will take its place.

Private Company Financial Reporting
Another force currently shaping the profession’s direction is the growing realization that public and private companies and their constituents do not have the same financial reporting needs. One size of reporting standards — GAAP — does not fit companies of all sizes.

An AICPA-established task force interviewed more than 3,700 lenders, investors, sureties, business owners, financial managers and public accounting practitioners. While these interviewees said GAAP is highly consistent and useful in allocating capital, they also said too many GAAP requirements are insufficiently useful and relevant to the preparation of private company financial reports.

To address this issue, the AICPA and the Financial Accounting Standards Board (FASB) formed a committee last year to help FASB determine whether and where there should be differences between existing and prospective accounting standards for private companies. In December 2006, Judith H. O’Dell, CPA, the principal and CFO of a family-owned real estate and construction firm, was named chair of the committee. Under her leadership, the committee is reaching out to all key constituents in financial reporting to understand and deliberate on their various perspectives.

The committee represents a broad, highly experienced group of constituents and consists of four CPA practitioners, four financial statement preparers and four users of private company financial statements. The committee will help the FASB continue meeting the financial reporting needs of smaller and private businesses and those that invest in them. The first meeting was slated for May 10-11, 2007 with subsequent meetings held quarterly. To learn more, visit www.pcfr.org.

Grass-roots research has demonstrated the need for standards that are more responsive to the needs of private companies. The solution may lie in new GAAP standards or in separate, private company standards. But it’s clear that more relevant standards would give the practitioners who serve private companies better tools for preparing financial reports that meet the needs of all private company constituents.

Professional Responsibility
All CPAs share a growing concern over the inadequacy of average Americans’ financial literacy. The continuing decline in the public’s savings, retirement planning and financial preparedness testify to the seriousness of this crisis. In response, the AICPA with the support of the state CPA societies launched the 360 Degrees of Financial Literacy effort (www.360financialliteracy.org) in 2004.

Across the nation, CPAs have enthusiastically supported the effort, volunteering tens of thousands of hours to help Americans get on the right financial track. Extending the reach of the 360 program, the AICPA in 2006 established “Feed the Pig,” a public service announcement (PSA) campaign with the Ad Council. The campaign aims to improve the financial knowledge and savings habits of 25–34-year-old Americans and features television, radio and PSAs and a web site, www.feedthepig.org.

Both programs’ enormous success — made clear in media coverage and traffic at both web sites — testifies to the CPA profession’s dedication to and active support of the public interest. Contact the MACPA for information on how you can get involved.

In the technical realm, the Auditing Standards Board approved eight new standards to help auditors assess the risks of material misstatement in financial statement audits. They are effective for audits of financial statements for periods beginning December 15, 2006, and show auditors how to focus on those areas where the risk of misstatement is the greatest.

The standards also make clear that the overall objective of an audit is to provide reasonable assurance the financial statements are free of material misstatement, and clarify the term reasonable assurance means a high, although not absolute, level of audit assurance.

These standards as well as resources such as the Employee Benefit Audit Quality Center, Governmental Audit Quality Center, the Center for Audit Committee Effectiveness, the Audit Committee Toolkit and the Audit Committee Matching System together form the cornerstone of the AICPA’s Antifraud and Corporate Responsibility effort. All work to help CPAs enhance their skills, perform high quality audits and protect the public interest.

Another way the AICPA serves the public interest is working to provide for a national uniform mobility system that would allow CPAs to serve their clients in more than one state while still protecting the state regulator’s rights to protect the public.

With the increasing globalization of the business community, business is not limited to geographic borders, nor should the CPAs that serve them. CPAs often continue to be needlessly hindered from practicing in more than one state. The AICPA and National Association of the State Boards of Accountancy are working together to amend the Uniform Accountancy Act so that CPAs can more easily practice across state lines and state CPA societies and state boards of accountancies have renewed their efforts to achieve a newly revised provision that will accomplish this goal.

The CPA Profession, Forging Ahead
The Four Ps represent some of the primary forces shaping the environment in which CPAs work today. Each underscores CPAs’ important public-interest role as providers of guidance to clients, businesses and consumers. They also represent opportunities. Whether through educating students about the benefits of being a CPA, reaching out to legislators, volunteering to improve Americans’ financial understanding or enhancing skills to better serve clients and employers, CPAs can take part in shaping a vibrant future for the profession so that America continues to rely on CPAs.