Global Management Accounting Principles

The AICPA and CIMA recently released a document which they hope will lead to the creation of a set of Global Management Accounting Principles.  You can find the document along with other information on the effort here. The Principles are expected to help organizations make the best decisions and at the same time improve the understanding of the professionalism of the management accountant.

 The document defines three overarching principles:

  1. Preparing relevant information
  2. Modelling value creation
  3. Communicating with impact

 It talks about how they are relevant in the performance management cycle and business model and then focuses on how they apply to 12 management accounting practice areas which are:

  1. Budgeting
  2. Cost transformation and management
  3. External reporting
  4. Financial controls
  5. Investment appraisal
  6. Price and product decisions
  7. Project management
  8. Regulatory adherence and compliance
  9. Resource allocation
  10. Risk management
  11. Strategic tax management
  12. Treasury and cash management

 The AICPA and CIMA are asking for feedback, so if you have something to say on this topic they would love to hear from you by May 10, 2014.


The International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) recently held their Fall meeting in Beijing, China. Unlike New Delhi India which I visited in 2012, China is a thoroughly modern country in every way. The infrastructure is amazing, but it is so much more than that. The professional accountants I met understand their businesses, the global economy and the important role PAIBs can play in the future of both.

The China Institute of CPAs (CICPA) has over 200,000 members and is likely to rival the AICPA for the largest professional accounting body in the world in the next 10-20 years. Currently their focus is on developing a thriving and large public accounting industry. They are doing this through the resources offered by IFAC to every professional accounting organization in the world. IFAC sets international standards for audits, education and ethics. The CICPA has translated all of these into Chinese (no small feat) and has used them to create a true profession from nothing in in 25 years.

While the CICPA is not yet focusing on PAIBs, roughly half of its members are PAIBs. Those members are much like the AICPA PAIBs until a couple of years ago, a large unheard, under-appreciated section of membership. The AICPA took decades, but has finally delivered with the CGMA. The recognition and resources now afforded to PAIBs in the AICPA are only rivaled by those offered to PAIBs in CIMA, because after all we are all CGMAs – 140,000 strong. But if China can create an accounting profession in 25 years, then I have no doubt once they put their minds to helping PAIBs, they will do so with the same speed and efficiency that has propelled them to international prominence in everything else they do.

For now we are number one, but it is going to take significant continuing efforts by staff, volunteers and every credential holder to ensure that CGMAs remain the best Professional Accountants in Business.

AICPA Spring Council Meeting

The AICPA had its traditional Spring council meeting in Washington at the beginning of a new Congress, this time the 113th Congress.  We now have 10 CPAs in Congress with two more added to the mix in the 2012 election. We got to hear from these two newest CPA members of Congress at the Council meeting.  As you would expect from CPAs they are looking for ways to get the financial mismanagement of the Federal Government back under control and accomplish some of those basic things like actually passing a budget and brining attention to the long-term structural issues that we have to deal with if we are to truly put the Federal Government on a sound financial path forward.  It was actually heartening to see that one was a Democrat and one was a Republican.  Our fiscal crisis is a crisis caused by both parties and it must be solved by both parties.  Listening to their down to earth problem solving analysis one has to wonder if we would even be in this mess if instead of having 10 CPAs and 225 Lawyers, we had 225 CPAs and only 10 Lawyers in Congress.

Members of Council from every state “went to the Hill” to meet with their Congressmen and Senators and ask for their support for three pieces of legislation.

  1. The Employee Mobility Act to set a safe harbor period of 30 days before an employee working in another state becomes subject to that state’s income tax withholding and reporting requirements.
  2. The Tax Return Due Dates Act which changes dues dates for several forms and puts them in a logical order so that forms that are needed to file subsequent forms, such as K-1s are due before the subsequent forms are required.
  3. The Municipal Advisor Act which would exempt CPAs doing normal CPA work such as compilations and assurance work would not be considered advisors to municipalities issuing bonds.

We also offered our help on tax reform with a number of common sense suggestions like bringing together the 15 different education credits and the many different deductions and exemptions into one coherent system.

We did take care of some business at the meeting too.  The council voted to authorize the issuance of AICPA credentials such as CFF, PFS, ABV and CITP outside of the United States (the CGMA is already offered across the world).  We will work with our partner CIMA and other national accounting organizations that have comparable ethics, education and other requirements to the AICPA.  This is a way to increase the value of these credentials for all of our members by making them valued around the world.

Finally I had the privilege of being part of a panel that discussed the CGMA credential.  What it means, what it is worth and what CGMAs bring to a business that is different from other “accountants.”  Serving on the panel reminded me of the great career I have had because I joined a profession that is willing to look to the future and make the changes to stay relevant in this ever changing world.

Decision Time on CGMA

It is now time to decide if you really want to be a CGMA or not.  Since the roll-out on January 31, CPAs who met the experience requirements were able to try out all of the benefits of being a CGMA. From all of information on the CGMA website at  to weekly newsletters (you can sign up here) to an assortment of resources including white papers, research studies and specialized tools, there are a lot of tangible benefits to being a CGMA.

But time is running out on the free trial of being a CGMA.  With the 2012-13 dues statement you now have a choice to make.  Do you want to be a CGMA bad enough to be willing to pay for it?  Like all of the other credentials offered by the AICPA, the CGMA credential offered by the AICPA-CIMA joint venture now has annual dues.  If you are a member of a State Society of CPAs it will only cost you $100 (it’s an extra $50 if you are only a member of the AICPA).     

But deciding if the CGMA is worth it to you is more than deciding if the information, tools and resources are worth $100 a year. The question is do you also see the intangible benefits of being part of a specialized group within the profession.  Thousands have already started referring to themselves as CGMAs because it already means something to those that matter most (their co-workers, colleagues and employers).  It means they have a unique and valuable skill set.  Every day I meet people who express gratitude that they are finally being recognized by their profession for the important work they do to help businesses succeed while still embracing the professional responsibilities to the public whether it is to the stockholder of the company, their fellow employee stakeholders or the local banker making the loan to a privately held company.  These people are proud to be CGMAs. The certificate itself, and what it strands for, has more worth to them than any website, paper or tool could ever deliver.

I for one have already made the decision that the CGMA is worth it and proudly display my CGMA certificate on the wall in my office along with my CPA certificate.  Now its time for you to decide.  What are you going to do?

The Professionalism of Preparers

The dictionary defines a profession as a calling requiring specialized knowledge and often long and intensive academic preparation.  I would further say that another element of a profession is a code of ethics that is adhered to by all members of the profession.  By that definition I would say CPA preparers of financial statements are definitely part of a profession, and I want to make an important point that our fellow CPAs working in the public side as auditors and other service providers would readily agree (or at least most of them would) that preparers are an important part of the CPA profession.

Unfortunately, or fortunately, depending on your prospective, regulators do not seem to see CPA preparers as part of a profession, or at least they do not see any difference between a CPA preparer and a non-CPA preparer.  In many ways I think this is the biggest gap (pun intended) in our public company financial reporting model today.

CPA preparers have to abide by the same code of ethics as CPA auditors.  While independence is not required of CPA preparers, objectivity it required as well as the same requirement to put the public interest above one’s own personal interests.  If you don’t believe this, you simply need to ask a few CPA preparers out there about their own personal experiences.  Fortunately I work for a company that takes its ethical responsibilities very seriously and has no tolerance for those that would do anything but reflect the transparent truth in our financial results.  Some of my colleagues working for other companies were not so fortunate.  When talking about careers and jobs I’ve heard more than a handful of my colleagues mention that they left a good paying job because they just were not comfortable doing what they were being asked to do.

Ultimately, that is what CPA preparers have to be prepared to do – quit their job – along with other actions.  Those other actions usually start with simply using your own judgment and skepticism to ask questions of others in the company about why transactions are being accounted for in the way they are.   If those answers are not satisfactory, then it is incumbent on the CPA preparer to explain their position up the chain of command.  In a vast majority of companies the issues are resolved appropriately by this stage, but if they are not then the CPA preparer has to take the next step of continuing to escalate their concerns first to the audit committee and then the external auditors.  Now the SEC also has a process for whistleblowers to report issues, and if it’s big enough, even pay them a portion of any settlement.  The final step in the AICPA Ethics decision tree for CPAs in Business and Industry is to leave the company. 

CPA preparers are the front line in proper financial reporting and as shown above are ethically bound to do so, but nowhere is credit given for the professionalism of CPA preparers.  No auditing standard allows auditors to modify their risk assessment based on the fact that the preparers of the financial statements are CPAs and there is no mention by the PCAOB or SEC that having CPA preparers gives a different level of assurance when it comes to internal controls.  In fact the requirement that the audit committee have a financial expert doesn’t even mention the term CPA.

The launching of the new CGMA credential was a great start in highlighting the benefits of CPA professionals to business.  I think another great step would be to acknowledge the critical role that CPA preparers play in financial reporting system and give credit to companies that make sure their preparers are professionals of the highest caliber – CPAs.

CGMA Launch

I had the great privilege to attend the Launch of the CGMA credential live from New York last week. After years of asking for a credential that shows the unique expertise of business and industry CPAS, it is finally here – the Chartered Global Management Accountant or CGMA.  With me at the launch were numerous people who had worked tirelessly for this day from the first AICPA Chairman from Business and Industry – Olivia Kirtely to former chairman of the Business and Industry Executive Committee to members of the AICPA staff that have worked closely with CIMA to launch the AICPA- CIMA JV and the credential on this momentous day.

But launching the credential is only the first step.  If we are going to truly make the CGMA something that is valued by business executives – a credential they look for in hiring and promotion decisions, then we have to work every day to show the value of the CGMA.  The launch was a great first step.  The panels in London and New York emphasized the many important aspects of what it means to be a CGMA in today’s ever changing, fast paced world and I want to highlight a few here.

First off, CGMAs must bring the same core values to their job that are the core of being a CPA.  Ethics, Integrity and Objectivity are critical to the success of business and to your success at being a CGMA.  As one panelist stated speaking for many, “if you don’t have ethics, we don’t need you in our business.  A code of conduct is a cornerstone of any profession.  It is one of the key differentiator for CGMAs from your  average finance “professional.” 

Another key focus for CGMAs is transforming data into information, information into intelligence, and intelligence into insight.  It is no longer enough (was it ever) to crunch the data and put some numbers on a report and call it information.  To truly add value to your business you need to go further and determine what the information means to the business and what actions the business should take as a result. 

Successful businesses today cannot be run in silos – operations, HR, Finance, legal and so forth.  Leaders have to integrate all of those perspectives and that is exactly what CGMAs are here to do.  If we are to change the cycle of just focusing on short-term financial results, it is going to be up to CGMAs to lead the efforts in gathering and reporting on non-financial metrics that tell the whole story about how a business is performing – from information about employees to customers to intellectual property.  This is where the future lies and CGMAs will lead the way. 

I have and always will be proud to call myself a CPA.  Now I will be equally as proud to call myself a CGMA.

Bill Schneider, CPA, CGMA

January 2012 AICPA Board Meeting

The AICPA Board of Directors met January 18 – 20 and continued to explore a number of areas critical to the future of the CPA profession.  Major topics included such diverse subjects as the CGMA Launch, Private Company Financial Reporting, IFRS for Public Companies, Standards for CPE programs and the three-year strategic plan for the AICPA.  Let’s hit a few of these.

The Board received an update on the FAF proposals on Private Company Financial Reporting.  7,700 letters have been sent to the FAF with a vast majority supporting the position that the Blue Ribbon Panel recommendations need to be implemented in full.  That would mean a separate Board from the FASB that would result in differential standards for private companies.  The comment period has closed and the FAF is now conducting a series of 4 roundtable sessions across the country to gather even more detailed feedback.  The first session already took place in Atlanta and the last session will take place in Boston.  We should hear more from the FAF on the impact of this input on their proposals sometime in March.   I know this is a very important issue to many of you so I will continue to keep you updated as additional information becomes available.

We spent most of Friday morning reviewing, discussing and providing feedback on the AICPA’s three year strategic plan.  As I discussed in last weeks blog, the AICPA really does turn the strategic plan into concrete actions and goals. Those actions and goals and then assigned out to various direct reports to the CEO of the AICPA.  They are then measured, rated and compensated based on the achievement of those goals.  The strategic plan is the starting point for a whole performance management process.

The Board heard a proposal from the Personal Financial Planning Executive Committee on the possibility of granting standard setting authority to the committee.  With increasing regulation in this area, it is more important than ever to show that CPAs already have the right standards and processes in place and don’t need any additional regulation.  This topic will be discussed further at the regional council meetings in March and then again at a future Board meeting so there is plenty of time to give your input on the idea.  And if standard setting authority is granted, any standard would go through a full exposure and comment process before it was adopted.  Please feel free to share your thoughts with be directly or as a comment to this blog. 

Next week the AICPA and CIMA will be launching the Chartered Global Management Accountant (CGMA) credential.  This credential will be a game changer for CPAs working in the B&I space.  It will be a way for you to build on your CPA designation in differentiating yourself from other accountants and finance professionals in the workplace.  In conjunction with the launch, the AICPA-CIMA JV will issue a number of thought leadership papers and tools covering a variety of topics from risk and innovation to business models to the skills and talents needed to continue to be successful in your career.  In addition, the AICPA and CIMA will be there with practical ways to help your business and therefore your career. Please look for a blog covering the CGMA after it is launched.

The variety of issues the profession is dealing with can be mind boggling, but with the help of a great staff and great volunteers, the AICPA will continue to be there to serve you no matter what part of the profession you are in.