State Board Report

August 2011

It was 1963. Two insurance companies had gone through a difficult merger in an unfriendly environment, where cultures and management styles clashed. Something significant had to be done to create more harmony and a smoother transition to the consolidated company. The company’s leadership engaged Harvey Ball to create a “friendliness campaign” to ease tensions between resentful workers. What a challenge! “How do I respond,” he must have thought.

Harvey immediately thought of the color yellow, which is cheerful. He started doodling and settled on a circle with a smiling face inside. That wouldn’t do, though, because if you looked at it upside down, it looked like a frown. Too much frowning was going on already. But he added eyes and the world’s most recognizable figure was born: Smiley – the ubiquitous grinning face.

Now I can’t draw a lick, but I can draw a smiley face and have done so hundreds of time. And my inspiration came from little known Harvey Ball, born in Worcester, Massachusetts. He was paid $45 for the design, and the first order was for 100 buttons. Within just a few months, they were selling by the millions. He never tried to copyright the design or expressed any regrets over not getting a cut of the profits, according to his son: “He wasn’t a money-driven guy. He used to say, ‘Hey, I can only eat one steak at a time.’”

What’s your or your Board’s “smiley face” response when questions are raised or you’re being challenged by the public, the profession, educators, legislators or even the Governor? A phone call response to an unhappy licensee about a disagreement on CPE credit is a far different response than when a legislative committee is reviewing your rationale for continuing to function under a Sunset provision. The Board’s response to someone inappropriately advertising as an “accountant” in the Yellow Pages is not in the same league with a carefully researched and delivered response to a major case involving millions of dollars lost in a pension fund due to incompetence or ethics failure in the audit. Robert Fulghum in his book, Uh-Oh: Some Observations from Both Sides of the Refrigerator, commented on perspective in this way: “Life is lumpy. A lump in the oatmeal, a lump in the throat and a lump in the breast are not the same kind of lump. One needs to learn the difference.”

Public responsiveness, the third in our “R” series of effective regulation (the other three are relevance, relationship and resilience), is not only critical in its timeliness, quality of its content and the method of delivery, but also assessing the relative significance of violations/discipline, emerging issues, licensing matters and public awareness. I will admit that being responsive to the public today in a quality and consistent manner is a challenge brought on by a struggling economy, Board funds being swept uncontrollably into the general fund of the state, and the usual political tensions that abound. Nonetheless, we still have our mandate to protect the public; we still have highly competent Boards of Accountancy; we have competent staffs; we have some resources; and you have NASBA. We are therefore compelled to function and meet our purpose by doing what we can with what we have and doing it in a timely fashion and well. Timeliness is vital. With technology and its proliferation of gadgets, gimmickry, and rapid communication, the public still expects people — warm bodies — to respond to questions and issues…and they want it today, not next month. We all know this and no matter our resource limitations the challenge is before us —timely response.

One great example of quality performance is the legislation enabling mobility of licensees throughout the country. What an achievement! And this was accomplished at a time when Boards were strained financially and with less than optimal staff numbers. This type of focus is similar to that being exercised in every state and jurisdiction every week and month: doing well with what we have. Boards continue to weigh in heavily on national and international issues affecting them: private company standards; IFRS adoption; PCAOB exposure drafts; international exam delivery; and a host of professional issues emanating from state CPA societies and the AICPA. We can’t do everything but what we do we can do in a quality way.

“Smiley” is a fitting symbol for how we respond to our public. Oh, I don’t mean to imply that we must always have a smile on our face and be whistling “Zippity Do-Dah.” But I do believe it’s important that we respond positively, constructively, and, yes, cheerfully to our public. Whether it’s a phone call, an e-mail, a face-to-face meeting or a hearing, we can exude the confidence that communicates to our trusting public that we’re on a “friendliness campaign” with them. This campaign of being responsive will provide for higher quality accounting and auditing practice, and will keep State Boards of Accountancy closely attuned to what is happening nationally and internationally that might affect their peculiar and dynamic roles.

Ad astra, Per aspera

— David A. Costello, CPA
     President and CEO

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