I attended the AICPA Council meeting last week. As expected a major topic of discussion was the FAF exposure draft on private company financial reporting, but before I get to that topic I want to list some of the AICPA’s accomplishments over the past year. The AICPA achieved record membership (372,000); Completed a major bylaw change better defining the categories of membership; Reached agreement with CIMA on forming a joint venture to issue the first Chartered Global Management Accountant credential; Successfully lobbied for the repeal of the onerous 1099 requirements and the elimination of the ability to patent income tax strategies; Resolved may problems with initial IRS proposals on Tax Preparer Registration; Completed the clarity project on auditing standards for private companies; Replaced and out of date and increasing unworkable SAS 70 regime; Successfully highlighted the CPA profession to the next generation resulting in record accounting majors and graduates; And completed an update of the vision for the CPA profession for the next 15 years. I would like to highlight two of these accomplishments before I address Private Company Financial Reporting.
The new CGMA certification for CPAs with expertise in Corporate and Management Accounting is scheduled to make its debut on January 31, 2012. The core purpose of a CGMA is to be “trusted to guide critical business decisions.” This is what CPAs in B&I do everyday, but now we will have a credential to recognize the unique nature of that service and differentiate us from non-B&I CPAs as well as other “accountants” that work in business. There are going to be additional focus areas on professional development, but it won’t be only about the individual CGMA taking the initiative. Our joint venture partner, CIMA, has extensive experience in working with employers to set up development programs for finance departments and we intend to bring this expertise into the U.S. along with the CGMA. This will not only enhance the skills of CPAs in business, but also elevate CGMAs in the minds of one of the most important influencers on our careers – our employers.
CPA Horizons 2025
The AICPA has spent time working with thousands of our members to update the Vision of the future of the CPA profession during the past year. The development has been a evolution of the existing vision rather an a revolutionary change in direction. The core purpose for CPAs remains the same, “ CPAs…Making sense of a changing and complex world.” In addition many of the core competencies such as Integrity and Objectivity remain the same. Some, however, have changed. For example, “technologically adept” is now gone as a distinct competency because the concept is so pervasive it now is really part of all of the core competencies. The final report on CPA Horizons 2025 will come out after inclusion of additional feedback from Council obtained at this meeting. Be on the lookout for it late this year.
Private Company Financial Reporting
As I reported in my last blog, FAF issued an exposure draft on private company financial reporting that did not follow the Blue Ribbon Panel recommendations. The Council was extremely disappointed in the FAF and as a result passed the following resolution at the meeting.
“Be it Further Resolved, That because the Financial Accounting Foundation’s proposal does not contain the establishment of a board under the Financial Accounting Foundation empowered to set differences in U.S. GAAP standards where appropriate for privately-held companies, which is the preference of this Council, and if the Financial Accounting Foundation’s proposal is not modified to include such a board under the Financial Accounting Foundation, this Council directs the AICPA Board of Directors to consider all options, including consideration of other independent standard-setting bodies as the standard setter for U.S. GAAP for private companies, the creation of a committee or board within the AICPA or a standard-setting body as a separate entity, to develop private company generally accepted accounting principles (PCGAAP) or comprehensive private company-specific basis of accounting that would deliver meaningful, lasting improvement to private company financial reporting consistent with the Blue Ribbon Panel recommendations.”
Just to be clear, let me repeat a statement made by our new Chair-Elect Richard Caturano. The AICPA Board, Council and members do not want to take control of private company GAAP. What we want is a separate Board under FAF as recommended by the Blue Ribbon Panel sponsored by FAF, NASBA and the AICPA, but if the FAF refuses to follow those recommendations, the AICPA Council and Board will have to act accordingly.