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State Board Report

November 2014

The future is the past. How can that be? What I mean is that, someday, your future will be the past. We are living in constantly changing times, but today we have the information-gathering ability, technical knowhow and resources that our predecessors ten years ago only dreamed of. We can make things happen!

This past April, NASBA, the AICPA and Prometric celebrated the ten-year anniversary of the computerized delivery of the Uniform CPA Examination. In the 1960s, who would have thought that the CPA Examination would go from paper-and-pencil to computer-based testing? Yet, in one decade, more than 2,000,000 sections of the Uniform CPA Examination have been delivered via computers.

Another example is CPA mobility, whereby a CPA who is licensed in one jurisdiction can enter another to practice public accountancy with no notice to a State Board, no fee to pay to a State Board and no escape from regulation of a State Board. When this idea was first discussed, many Boards of Accountancy had concerns and reservations. Today, 52 jurisdictions have mobility. It is a great example of working together to embrace the future – even though they couldn’t see it.

Today we use social media to communicate to our licensees and constituents – and especially our candidates. We use video conferencing and Skype for our committee meetings. Everything nowadays is in the “Cloud.” The only clouds ten years ago were the fluffy ones in the sky.

My message to you, for this year, is that to be effective regulators, we need to accept change and embrace the future – even without seeing it. We need to be ready to move forward confidently based on the strong knowledge that we have. To do this, we need to give special attention to three critical areas, besides the three E’s of licensure (education, examination and experience). Our critical areas are:

1. Enforcing our rules;
2. Educating for optimization;
3. Engaging talent.

To help us enforce our rules we have the Accountancy Licensee Database (ALD), which contains information on hundreds of thousands of CPAs in this country, and which gives the Boards of Accountancy the ability to identify licensees wherever they practice. It could even be more robust. Through enhanced technologies, we can also see who is complying with peer review and who is meeting continuing professional education requirements. No more are the days of Boards being able to audit only 1-2 percent of their licensees.

If we are going to educate for optimization, then we need to be sure that the 150 hours of education for initial licensing and 120 continuing professional education hours for license renewal are meaningful and not barriers to practice. We are seeing respected educational institutions offering Massive Open Online Courses (MOOCs) as well as other forms of on-line education, and targeted education delivered in short segments.In years to come you are likely to see a new set of CPE Standards that will allow for learning in 10-15 minute segments and recognition of competency-based learning. Board regulators will need to be ready to adjust for these changes.

Engaging talent is the area in which I am most passionate. We have to continue our efforts to assist Hispanic, Asian, African Americans and other minorities to become a larger part of our profession. We also need to encourage young women to enter this incredibly rewarding profession. In addition, having Accountancy Boards with diverse membership will lead to a better understanding and appreciation of the changing demographics and needs of the communities that we serve.

We need to reach out to young people to spark their interest in becoming CPAs, just as we’re considering what baby boomers can do as they move into the category of “CPA-inactive.” We are also doing more to help those outside the U.S. to become CPAs and to recognize professionals from other countries. Today the Uniform CPA Examination is offered in Japan, the Middle East and Brazil, and the number of countries where it will be offered ten years from now could be ten-fold.

The future will be here and gone before we know it. Change is inevitable. You are all future thinkers – whether you know it or not. You will make a difference by strengthening the accounting profession and your roles as regulators, now and in the future. And by doing so, enhance public protection. That is what we are all here for.

— Walter C. Davenport, CPA
Chair

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