Accounting Today - December 2011

BY PAUL B. W. MILLER AND PAUL R. BAHNSON
Some evidence that the
AICPA’s management
has lost its focus

THE AICPA MISSION

Without question, the AICPA’s justifying mission is serving its members, first, foremost, always and only. Pursuing this goal used to mean supporting the broader profession through the Journal of Accountancy, the CPA exam, CPE courses, the Accounting Principles Board, the Auditing Standards Board and ethics enforcement. Members’ access to inexpensive life insurance was a valuable bonus. For many years, these activities were offered with integrity and efficiency.

In our view, the management has somehow supplanted this mission to the point that today’s institute has become a revenue-ob-sessed juggernaut. We hate to say it, but the managers appear bent on concocting new ways to build a bigger empire, including, for example, a new certificate in management accounting in direct competition with the Institute of Management Accountants.

Further, we note how frequently they get in the news to promote one cause or another. However, the AICPA membership is so large and diverse that its members do not have only one point of view, thus making it highly doubtful that its managers can rightfully lobby for specific political positions.

Take an issue, any issue, and you’ll find CPAs in disagreement as to what to do about it. Thus, it strikes us as pretentious for the managers to wear the organization’s mantle as they announce one stance after another as if they’re shared by all members.

Take, for example, October’s aggressive campaign to swamp the Financial Accounting Foundation with uniform one-paragraph letters demanding a private company standards board. Besides being ineffective, this crusade lacked integrity because it didn’t provide the

The AICPA
has sup-
planted its
mission to
the point it
has become
revenue
obsessed.
“
”

We’re confident we’re not alone in witnessing a number of ques- tionable decisions by the AICPA’s managers. One or two poor choices can be overlooked as normal mistakes, but the pattern is clear, to the point that we wonder why people stay affiliated unless they feel management is advancing their special narrow interests.

equivalent option to send letters supporting the FAF. We don’t see how management, or anyone, can believe that all, or even most, members agree with them on this issue.

We have more to say about that effort, but first we’ll present evidence of other ways we think the managers have lost focus on the mission.

shortcomings. Just think what would happen if the FAA announced that a comparable percentage of passenger flights crash!

Out of the debacle came Sarbanes-Oxley and the PCAOB, which immediately took responsibility for auditing standards and ethics enforcement away from the institute because it had failed to adequately protect the public.

EXHIBIT A: COGNITORS

In 2000, current management tried to increase membership numbers by convincing CPAs to accept other kinds of information professionals into the guild. The crowning indignity was their proposal that all members, CPAs and others, would henceforth be called “Cognitors,” whatever that means.

To the managers’ consternation, the membership absolutely crushed this proposal with an overwhelming vote. The message was “stick to the basics.”

EXHIBIT B: CPA2BIZ STOCK

During the Internet bubble, management created CPA2Biz, an online business for selling CPAs all sorts of things, including CPE, computers, books, you name it.

Even if this idea had actually made sense for a nonprofit entity, it was contaminated by management’s self-serving motive. Specifically, they wanted cheap stock so they, too, could become Internet millionaires. Chief among them was CEO Barry Melancon.

As reported by the New York Times, he paid $100,000 for 1 percent of the shares that were valued at $5 million only two years later. In response to demands for his resignation, he tried to defuse the controversy by saying he was “thinking about” giving the shares to an unnamed charity, as if that would deflate the issue (“Audit Group’s Chief to Donate Disputed Stock to a Charity,” New York Times, March 30, 2002).

Paul B. W. Miller is a professor at the University of Colorado at Colorado Springs and Paul R. Bahnson is a professor at Boise State University. The authors’ views are not necessarily those of their institutions. Reach them at paulandpaul@qfr.biz.

EXHIBIT C: THE PCAOB TAKES OVER Enron’s collapse in 2001 caused AICPA management to scramble, to the point we recall hearing a representative try to restore confidence by telling a national television audience that only a small percentage of all audits had

EXHIBIT D: LOBBYING FOR IASB & IFRS With our ears to the ground, a widely believed explanation for the AICPA management’s unrestrained lobbying for embracing IASB as the source of reporting standards is that doing so could generate more revenue from training and certifying IFRS experts. Many also believe management is trying to help the largest audit firms gain market share. Either way, it strikes us that the managers are exploiting members instead of supporting them.

For example, these moves will surely cause smaller firms to lose clients. We don’t believe management can justify using the institute’s resources and influence to help some members succeed while impeding the success of others.

Indifference to especially defenseless individuals also appeared when AICPA management added IFRS topics to the CPA exam. This change was imposed over objections from state boards and to the detriment of neophytes who must master a topic that is nowhere near the mainstream of common knowledge. Management’s haste to promote adoption compromised the exam’s fairness by changing its content before practice evolves, instead of waiting to see what really happens.

Unfortunately for them, management is now heavily and publicly invested in a movement that appears to be grinding to a halt. As evidence, consider the virtual collapse of the trumpeted effort by FASB and IASB to produce numerous common standards before mid-2011.

Somehow, the managers missed seeing the clear obstacle that the SEC cannot legitimately anoint IASB without first convincing Congress to amend the Securities Acts and