I know that I have big shoes to fill in succeeding Chair Carlos Barrera and Past Chair Laurie Tish as they have done an outstanding job leading NASBA through the pandemic. I look forward to working closely with you and your boards as we continue to move through uncharted territory. And I am confident that this time next year, we will feel proud about what we have accomplished to strengthen the regulation of the profession.
Two years ago, I never would have imagined being the third chair to lead NASBA through a hybrid year of virtual meetings. My hope is for NASBA to transition back to live meetings next year.
I am extremely proud of what the NASBA staff, board members and you, the volunteers, have accomplished during the pandemic to ensure timely, effective communications while working through many important matters such as NOCLAR, CPA Evolution and continuing to ensure that Diversity, Equity and Inclusion remain in our focus.
As more than 650,000 licensees throughout the country, and throughout the world, reboot their professional lives under the always changing “New Normal,” there are procedures that we must follow in order to protect the public. Likewise, state boards will need to reconsider the crucial elements of operation, in this new and challenging regulatory environment. During my career, I experienced changes in public accounting resulting from the Savings and Loan crisis in the early 80’s, the implementation of Sarbanes Oxley as a result of Enron and World Com, the creation of the Single Audit act as a result of misuse of government funds, and increased regulation of the DOL over employee benefit plan failures. Recently, there was a Wall Street Journal article about perceived weak oversight of audits of billions of dollars of private assets. Personally, I am not sure that Sarbanes Oxley is the end all to large audit failures. A CPA can do everything according to professional standards and a business may still fail due to fraud or other irregularities.
As a profession and the regulators to that profession, we need to be able to adapt to address any criticisms that may come because of possible future failures. We need to ensure that professional quality, whether in performing an audit under PCAOB standards, a private audit, preparing a tax return or any other service, is supported by strong, relevant, professional standards. Next year, I believe the bar will be set even higher due to increased pressure for anti-regulation, enhanced oversight of the SEC and increased scrutiny of inspectors general on single audits, especially as audits of billions of dollars received under various stimulus plans become subject to special audit procedures.
In NASBA’s budget for next year, we devoted more funds to mission spending in support of state boards to help you with any of your needs. We all need to work together to address any criticism that may be directed at state board regulation the next time a major audit failure occurs…and to reboot if necessary. And I promise, NASBA will be there to assist you!
It is also critical that we continue to look for ways to increase the pipeline of new individuals into the profession. As shared during the Annual Meeting, the number of candidates taking the CPA Exam continues to decline. It is essential to the protection of the public that we, as regulators, look for ways to increase the number of candidates that ultimately become CPAs.
As the AICPA continues to work with state societies to demonstrate the value of the CPA license to potential candidates, we all need to look for new ways to encourage non-traditional students to enter the profession. As a matter of fact, AICPA Chair Bill Pirolli attended a community college, and I attended a branch campus of a university. I challenge each of you to explore non-traditional avenues when hiring new employees.
There is not one silver bullet that will solve the pipeline issue, but I believe that NASBA, state boards, state societies and the AICPA all working together can bring more talented people into the profession.
As we continue to work with other countries to renew or enter into mutual recognition agreements, one common, major hurdle, is the discussion around the experience requirement for individuals signing an audit opinion. Many countries have longer experience requirements than we have in the U.S., particularly for certified accountants performing attest work. We will continue to discuss whether a firm requirement should be considered requiring a CPA to have more experience prior to signing an audit opinion in the U.S.
All of us have seen how the world has changed in the past year. As the demographics of the U.S. continue to change, we need to shift our focus to find ways to become more diverse, inclusive and equitable. I have seen the NASBA Board of Directors grow more diverse over my years as a board member. In fact, the four previous chairs who succeeded me represent that initiative. NASBA’s 2021-22 board is also one of the most diverse boards I can remember.
Before I conclude, I would be remiss if I did not recognize the support and commitment of my wife and best friend, Phyllis, for allowing me to devote the time to serve as chair of this great organization. I would not be able to do what I am doing without her support.
In summary, our number one goal is to get back to basics to make sure that quality is evident in every professional service that is delivered to the public. Secondly, we need to all do our part to strengthen the CPA pipeline. Third, is to continue to move towards the implementation of the CPA Evolution so we are ready in 2024. Lastly, we need to keep our eye on the ball and move the needle as it relates to diversity, equity and inclusion.
If you will support me in my priorities for this next year, I am positive we will persevere and can adapt to strengthen the profession by enhancing state-based licensing and ultimately do a better job of protecting the public we serve. Thank you, and I look forward to working with you as we persevere through this “new normal” together!
W Michael Fritz, CPA
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