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State Board Report

October

“Shaping the Future” is the focus of this year’s Annual Meeting. Last year’s focus was “Evolve.” Evolve means to grow and change and, as I look back on this year, I see an organization that has grown and changed, and is on the cusp of shaping the future. In my inaugural address, I spoke about the four “Be’s”: Be Relevant; Be Influential; Be a Community; and Be Trusted. I believe we have accomplished each of these.

We were successful in meeting and exceeding our budget and revenue goals. NASBA will end this year in the best financial position in its history. We have invested millions of dollars in software which will better serve our member Boards, licensees and candidates. And, we will also set a record for mission spending. Having a sound financial position is critical to remaining relevant and influential.

I believe we have made great strides in creating global pathways. We have put forth a pathway in the Uniform Accountancy Act to allow unilateral action, and revised our mutual recognition agreements to be more transparent, as well as to identify gaps and plans to mitigate those gaps. This is a vital part of our global relevance. As a community, we are working on increasing the number of CPAs who are people of color, Latinos and/or women. Some of our Boards have contacted the National Association of Black Accountants (NABA) for volunteers to serve as advisers to the Boards and then—hopefully—become Board members. We are also working on relationships with the Accounting & Financial Women’s Alliance (AFWA), the American Woman’s Society of Certified Public Accountants (AWSCPA) and the Association of Latino Professionals For America (ALPFA). Additionally, we formed a CPA candidate pipeline task force that has issued a white paper outlining issues and concerns, and we will be taking a deeper dive.

We have worked hard to ensure that our education and testing standards are world class. The Uniform CPA Examination was successfully redesigned to better assess higher level skills and critical thinking. We have commissioned a task force to study the educational process in the U.S. and they have issued a white paper. More in-depth study is currently underway. We made provisions in our continuing professional education standards for modern learning modalities. And we have begun the study of the CPA education model.
Our Compliance Assurance Committee has worked diligently to help improve the peer review process, which will lead to improved audit quality, which will strengthen the CPA profession and our reputation as effective regulators. We have also nearly completed our new CPE audit tool. This will assist State Boards in their monitoring of compliance as well as assist professionals in sharpening their skills.

We are living in a time when the pace of change is dramatically increasing. We are witnessing unprecedented developments in artificial intelligence, big data and robotics. But while machines are good at simulating, we need human insight and wisdom. We have formed a study group, networked with other regulators and engaged you in discussions of technological advances. We are committed to making sure that you have the knowledge and tools to effectively regulate as processes rapidly change.

As you may have noticed, I have used baseball as a theme throughout this year. As I wrote this memo, I was reminded of the classic Abbott & Costello routine “Who’s on First?” Honestly folks, I have felt as befuddled at times this year. However, from where I sat at the Regional Meetings, I saw more State Board engagement than I could recall in over a decade of association with NASBA and the Iowa Board. In my inaugural address, I asked you to be an umpire and call a “ball” or a “strike.” You did that with the use of titles. We have served as your collective voice in responding to over 20 exposure drafts and white papers, while bringing the most critical issues to you for your feedback.

We have been dedicated to providing legislation and political support to State Boards facing challenge, and offered education and research materials on a national basis. The behavior of special interest groups and introduction of legislation, like the RBI, indicate the need for this education. The “Restoring Board Immunity Act (RBI)” suggests two pathways: active supervision with periodic review, or judicial review. The bill’s sponsors are encouraging states to modify their licensing regulations in exchange for immunity. Education is needed.

As was noted at our Regional Meetings, NASBA’s Center for the Public Trust (CPT) has achieved continued growth in the number of student chapters. Ethics and integrity are the bedrock of our profession. And the ethics training modules that CPT offers are providing State Boards with CPE and remedial training for licensee discipline cases.

Just like Abbott & Costello, many State Boards and state societies have been confused as the largest association of accountants has transitioned from a sole focus on CPAs to a new organization. We have recently created the Reorganization Issues Task Force to address the resulting concerns.

NASBA had a very busy and successful year. And all of you, the committees, the NASBA board and the staff are to be congratulated on a productive year. The increasing pace of change is hitting us and, at times, we are going to feel like Abbott & Costello: Disruption is the new norm. We have accomplished a tremendous amount for the future — but we are evolving.

—Telford A. Lodden, CPA
NASBA Chair 2016-2017