President’s Memo: We Have to Take a Stand!

SHARE:

State Board Report

September

I recently had the opportunity to visit with some state government officials at the behest of the Board of Accountancy regarding the ongoing discussion of consolidation and reorganizing of the Board and its staff. I am always pleased when government officials are willing to discuss the potential risks associated with consolidation transitions. In providing some background information I began with a brief history of state-based accounting regulation.

While some of you may know that NASBA has been in existence in some form for nearly 110 years, you may not know that the state-based regulation of the profession had begun several years before the establishment of a national body, beginning in New York in 1896. Within the following 25 years, every state enacted a similar licensing program. It is important that we all remember the genesis of accounting regulation as it seems that the original arguments for a strong, independent regulatory system are too often forgotten.

In the early days, most states had very few regulated “professions.” Typically, they included the practice of law, the practice of public accounting and the practice of medicine. It had become clear that anyone practicing in those professions needed to be adequately educated, obtained practical experience and had rules for ethical behavior, and that the public needed to be protected from those who did not meet those qualifications. In well over a century, those premises have not changed. What has changed is the tremendous increase in the number of regulated “professions” from a few in some states to over 50 in others. By extending the category, I believe that the significance of a strong regulated accounting profession has been diluted.

Most Board of Accountancy members that I know are generally fiscally conservative. Probably most would agree that regulation has been overused and is often misused. That dilemma has created a situation wherein, when Board members and interested stakeholders fight to maintain a strong and viable Board of Accountancy, they are reproached as being out of step with reformers’ efforts to streamline government to become more efficient and accountable. This is hardly the case.

Looking back, lawyers and medical professionals have done a better job in protecting a strong and effective state-based regulatory system. For the past 30 years or so, the Certified Public Accountants have not fared as well: They have often been lumped in with those in other occupations including tattoo artists, hair braiders, parking lot attendants, private investigators and massage therapists, to mention a few. More importantly, many government officials making or recommending the diminution of Boards of Accountancy appear to consider CPAs and their firms to be no more important to the protection of the public than the hair braiders.

How did this happen? Frankly folks, we consciously or unconsciously let it happen, and “we” is not just Board members but the profession, state societies and national associations, including NASBA. In the state I recently visited, the profession and state society were not willing to make more than minimal efforts at protecting the Board of Accountancy’s abilities because they were trying to get a piece of legislation passed to benefit the profession and they did not want to spend political capital supporting the integrity of the profession nor its role in public protection. Regrettably, this is too often the case around the country. I have even heard Board of Accountancy members say that if they stand up and fight against what they agree is a weakening of their Board’s effectiveness, they will not be reappointed to the Board.

It is going to be hard to “un-ring the bell” and stop the misinformed position that Boards of Accountancy are just another regulatory body that may not be necessary. A few years ago, NASBA worked with the Georgia State Board of Accountancy when it was stripped of its leadership, staffing and funding capability to the point of being unable to effectively protect the public. As in other jurisdictions, it began with an articulated attempt to shrink government in order to be more efficient and accountable, and it had happened under the noses of the profession and the state society. The happy ending to this story is that the Board of Accountancy members and the leadership of the society worked together and, albeit under political pressure and resistance, were able to get legislation passed recognizing the important role of the Board of Accountancy and ensuring that the Board was adequately funded and staffed. The Georgia State Board of Accountancy is now among the strongest in the country and the relationship between the Board and society is stronger than ever.

Again, we recognize and support the efforts toward efficient and effective government. I have no doubt that the goal of eliminating arbitrary occupational hurdles has merit. But if Boards of Accountancy continue to be lumped in with what I would argue are not “professions” and treated as such, then the Certified Public Accountant credential and CPA firms will ultimately be weakened. We all have to take a stand!

Semper ad meliora (Always toward better things).

— Ken L. Bishop
President & CEO