Another HatPosted: August 18, 2014
In the beginning all we had to be was a good accountant. Make your debits equal your credits and assemble income statements and balance sheets and life was good. Then we had to start becoming experts in lots of other areas.
First we had to become tax experts. Just multiplying net income by the tax rate was no longer enough. We had to determine what tax would eventually be paid and then decide what was a timing difference and what was a permanent difference. Now we have to report on aggressive tax positions and differentiate between degrees of aggressiveness.
Once we got taxes down we then had to become actuaries. In order to deal with pensions and other benefits we had to learn about mortality, demographics and many other topics in the prevue of actuary science.
We started getting that down, or our companies stopped providing those benefits, and we then had to learn to become valuation experts. The FASB decided we had to report the fair values of all our investments, but we all thought that just meant we had to get the information from an expert. Then the PCAOB and the SEC decided that if we didn’t understand and agree with the valuation techniques we weren’t doing our job.
Now we have to add Economist to our list of expertise. The new “principle approach” to revenue is all about reflecting the economics of the transaction. This new role will increase the business acumen of preparers and auditors. That is not necessarily a bad thing as it will continue to expand the opportunities available to our profession, but it will mean a few more bumps along the way as we learn to put on yet another hat.