State Board Report
Most of you know of my work background, which essentially has two parts: a career in law enforcement followed by a career in regulation. While different, both parts share a common purpose in that each has been dedicated to public protection. Now that I am in my last decade of service, I am seeing changes and challenges to both law-enforcement and the regulation of the accounting profession that are difficult to tackle. Frankly, I am concerned.
I certainly will always have an interest in law-enforcement, but now my focus is clearly on accounting and the Boards of Accountancy’s role in the protection of the public. In my last President’s Memo I raised some eyebrows and irritated a few colleagues by discussing the importance of the U.S. CPA and the possible dilution of the credibility of the CPA profession. It wasn’t my intent to annoy anyone, but it was certainly my intent to bring the discussion out into the bright light of day — and maybe to send a wakeup call to those who are either unaware of or apathetic to changes on the horizon.
Let me disclose that after nearly 20 years of regulating, studying and coming to know the attributes of the profession, I have determined that the U.S. CPA credential, both for individuals and firms, is the highest bar for quality, credibility and ethics. Whether the services provided are audit, taxes, public accounting, consulting or in business and industry, for all these, the education, examination, experience and continuing professional development, which are verified and regulated by Boards of Accountancy, make the CPA the premium benchmark.
So, what is the reason for my concern? We are at a point in time when a significant percentage of the population of U.S. CPAs are baby boomers who are retiring at an increasing rate. Although the enrollment of students in accounting education in our colleges and universities is at record numbers, we are seeing a decreasing percentage of accounting graduates sitting for the Uniform CPA Examination, resulting in the number of new CPAs being relatively flat. In effect, the number of new CPAs entering the profession neither fills the void created by the retiring CPAs nor the increased need for new talent in the robust accounting profession.
NASBA has devoted significant resources to both collect and analyze data to better understand the behavior of accounting graduates. We have developed strategies for addressing diversity in the profession so that we are prepared for the continuing demographic changes of the country. As I mentioned last month, the NASBA strategic plan mandates that we make growing the CPA licensing pipeline a high priority.
The potential of decreasing numbers of CPAs can have an impact on corporate/government requirements, professional association membership and, yes, even Boards of Accountancy. There is no doubt that we will all have to think outside the box. My concern is that some of the suggestions, reactions and remedies that I have been made aware of raise possible threats to public protection. There are proposals for altering everything including the amount and type of education, the toughness of the Examination and the scope of practice privileges. Even whether potentially confusing credentials can be used by non-CPAs and whether those non-CPAs should be allowed to join organizations that have been traditionally limited to CPAs are being proposed and discussed. Change is inevitable. I get that. But, I am concerned about choosing the best options.
I have always been, and will always be, a proponent of change. I championed CPA mobility, global reciprocity, diversity and other changes that were challenging for many at the time. To mitigate the concerns on those issues we worked with Boards of Accountancy, AICPA and state CPA societies to develop strategies, enforcement capabilities and compensating controls to make sure the public is protected. We have to exercise that same level of caution, review and due diligence as we consider proposed changes.
I think we can meet the challenges of the future, but, for now, I am concerned about how we get there.
Semper ad meliora. (Always toward better things.)
— Ken L. Bishop
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