Driving Change--from the Chair
California CPA magazine: July 2008
by Greg Burke, CPA
From the day I joined my firm in 1984 as a CPA candidate, I have been impressed by its commitment to the profession. It’s pervasive in our culture, instilled by our firm’s founder, John S. Waddell, who was a former Sacramento Chapter president, as well as a member of the AICPA committee that drafted SSARS 1 in 1978. Today, serving as CalCPA chair gives me the opportunity to continue this legacy of service to the CPA profession, and it’s an opportunity I deeply appreciate.
I believe many great opportunities lie ahead for our profession. In fact, as we reach the midpoint of 2008, several trends continue to impact our businesses and profession that place us on the precipice of change. How we respond to and anticipate the opportunities created by these catalysts will pave our road for the future—and will be our legacy to our profession.
Influencing Factors
First, consider workplace demographics. Never before have four generations been in the workforce at one time, nor has human capital weighed so heavily toward those exiting and entering the profession. As a result, over the past several years, recruiting employees has become a Herculean task for businesses looking for CPAs. The good news is that it appears the market is softening; however, as this hurdle is cleared and millennials prepare to flood the marketplace, there is no one to teach them. Colleges and universities are facing a 20 percent shortage in accounting Ph.D.s and, as the Boomers continue to retire, the shortfall grows.
So, while colleges and universities are struggling with how to deliver any education to the next generation, leaders in business and the profession are beginning to demand changes to the scope of what is covered at those same colleges and universities. Specifically, as the centers of economic activity shift from the United States and Europe, market forces are driving the convergence of U.S. GAAP and GAAS with international standards.
Enter International Financial Reporting Standards.
To achieve worldwide comparability for financial reporting, it’s critical that businesses present their financial information using a single set of standards—and IFRS will be it. Public companies will be the early adopters of IFRS, either by choice or mandate, but all indicators point to private companies also making the transition from U.S. GAAP to IFRS.
But that’s not all. Technology also has a seat at the table and XBRL will soon become the standard for how financial data is presented. Currently the SEC is aggressively pursuing an XBRL mandate for public companies. And it will be sooner than you think that banks and others decide they want private company reports presented using XBRL to leverage its flexibility and opportunities for analysis (See pps. 14-15, for more on XBRL).
These trends are but a few of the drivers of change, and it’s critical to our profession that we set our sights forward so we can anticipate and respond to change. At CalCPA, this has resulted in renewed commitment to three strategic priorities:
• Advocate for members on issues that affect the profession.
• Enhance and promote the visibility of the profession and CalCPA.
• Attract, educate and support CPAs in their pursuit of professional and personal excellence.
“Dude, Where’s My Teacher?”
A cornerstone during my term as CalCPA chair is the launch of the accounting education initiative. The goal of this effort is to provide financial and human resources to address the growing shortage of accounting educators and enhance communication between practitioners and academia.
This will be done in a variety of ways:
• Educator-Practitioner Forum—To be held Nov. 14 in Southern California, this event will connect college and university educators with practitioners to discuss their shared needs and opportunities to collaborate.
• CalCPA Fellowship Program—CalCPA’s Accounting Education Committee is developing a program that would provide financial resources to California colleges and universities so that they can attract and retain tenure track Ph.D.s.
• Member involvement in accounting programs—A key focus here includes member participation on accounting department advisory boards.
• “Clinical faculty”—This includes not only identifying opportunities for CPAs to teach in college and university classrooms, either during their retirement years or when they are still active in the workforce, but also to provide the training necessary to make the leap from CPA to instructor.
Enhancing You and the Profession
In addition to these resources that focus on educators, students and employers, this year CalCPA will realign its state committee structure with the strategic plan and strategic priorities to better serve our membership. The board of directors, state committee chairs and staff will work together on this initiative. The strategic plan update has given the organization direction as to what members value, and the committee review process will seek to promote those activities—current and future—that deliver what members value, while identifying and eliminating inefficiencies.
Additionally, we will continue our commitment to enhancing the image of the profession through media and public relations, as well as our community outreach programs focused on CPA careers and financial literacy. Plus, we will actively continue to work with underserved member segments, including women, young and emerging professionals and members in business and industry.
Advocating for You
Advocacy has always been a top priority for CalCPA. Today, the most compelling advocacy issues that CalCPA must tackle are substantial equivalency and interstate mobility. They are, in fact, a natural outcropping of our global marketplace and a large, mobile generation entering the workforce.
Here’s the issue: California is not considered substantially equivalent, which means CPAs licensed here operate at a competitive disadvantage.
Currently, 45 states require that CPAs complete 150 hours of education prior to becoming licensed. Since California has two pathways to licensure, of which the 150-hour pathway is only one, it’s not considered substantially equivalent. As a result, in order to practice in many other states, a California CPA must either be dual licensed in a substantially equivalent state or provide documentation showing they meet the UAA licensing requirements. Over the next year, we will actively continue to advocate our position that California become a substantially equivalent state.
Hand in hand with the statutory change that would allow California CPAs to serve clients in other states are the mobility provisions that would allow out-of-state CPAs, who never set foot in California, to represent their clients’ interests here. These provisions ensure maximum consumer protection, while respecting the global nature of commerce today. For more on these issues, go to www.calcpa.org/mobility.
Other legislative issues that CalCPA is actively monitoring include a possible tax on professional services, mandatory peer review and full disclosure for CPAs with inactive licenses—i.e., CPAs who don’t maintain active status (80 hours of continuing education every two years), must modify the use of CPA to indicate “inactive” or “retired.”
Looking Ahead
Our profession is changing. So, whether it’s technology, globalization, millennials or something else that will have the biggest impact on you and your business, as CalCPA chair, I want to ensure that CalCPA, as it nears 100 years of serving the profession, is positioned to serve you and the profession for the next 100 years.
