BY PAUL B. W. MILLER AND PAUL R. BAHNSON
Some evidence that the
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 point it
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
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
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
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 firstname.lastname@example.org.
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
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
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
See SPIRIT on