The American Institute of CPAs has begun offering a revenue-sharing arrangement to state CPA societies if they help market the new Chartered Global Management Accountant designation to their members.
The AICPA plans to launch the new CGMA designation at the end of January as part of a new joint venture with the London-based Chartered Institute of Management Accountants. The new credential has attracted some controversy, with a rival group, the Institute of Management Accountants, crying foul over the AICPA’s plan to market the new credential for free to members who have three years’ experience in management accounting during a six-month auto-enrollment period without any educational requirement (see IMA Ready to Compete with AICPA for Management Accountants).
The AICPA plans to charge CGMA holders a $100-$150 annual fee to renew the credential after the six-month period ends in July.
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“The CGMA will be launched January 31, 2012,” said the AICPA in a letter to the state CPA societies. “Qualifying members will be enrolled during a free introductory period that extends through July 2012, and will be asked to renew the designation beyond that period for an annual fee of $150. Those acquiring and holding the CGMA through the AICPA who are also members of a State Society will receive a $50 discount off the regular fee of $150, encouraging them to maintain dual membership.”
The letter goes on to say that state CPA societies who choose to participate in the agreement with the AICPA-CIMA joint venture will qualify for “royalty, revenue-sharing and co-branding opportunities.”
To qualify, the state societies need to designate a point person with responsibility for marketing the CGMA to members, and annually sign and return a form indicating the society’s commitment to deploying a specified number of marketing, communication, advertising and outreach tactics during the upcoming year.
In return, the AICPA will provide a variety of electronic and printed marketing and communication materials, host an online community group in which state CGMA marketing liaisons can share marketing best practices, and host periodic conference calls during the first nine months after the launch of the CGMA.
One observer is skeptical about the AICPA’s efforts to quickly build a base of CGMA holders. “I’m guessing the search through the membership database will turn up at least one or two hundred thousand people who have self-reported experience in financial or management accounting,” said Paul B.W. Miller, a professor at the University of Colorado at Colorado Springs, who co-writes “The Spirit of Accounting” column for Accounting Today with Boise State University professor Paul R. Bahnson. “What will they receive? You can’t call it a very exclusive recognition because this so-called credential has absolutely nothing to back it up. It’s no more meaningful than an invitation from Who’s Who that requires the ‘nominee’ to pony up for the dubious honor. Sure, some will display their CGMA one way or another, but the vast majority will move on to the next email, only to be surprised when they get billed $150 in July. Bottom line, I’m convinced the AICPA management aims to squeeze more revenue from its members by offering them this worthless bauble. Their plan to bribe state societies into exploiting their members makes the whole thing even more reprehensible.”
AICPA spokesman Gil Nielsen confirmed the existence of the co-marketing program, but declined to provide the specific revenue-sharing arrangement. “The AICPA has numerous revenue sharing arrangements with State Societies and other entities, the terms of which remain confidential to the parties,” he said. “We would not comment on the terms of those agreements.”
He also confirmed the $100-$150 fee after the six-month auto-enrollment period. “The dues for the CGMA will be $150.00 to renew after July 2012 for AICPA members and $100 for members who are both an AICPA and a State Society member,” he said in an email. “The period between the CGMA launch on Jan. 31, 2012 and July 2012 will be free.”
The Pennsylvania Institute of CPAs expects to participate in the program. “The Executive Committee took a look at it and will probably move forward with it,” said PICPA spokesperson Maureen Renzi. “They will let members decide whether they want to pursue it or not.”
The New York State Society of CPAs is still undecided at this point, however. “This issue is going to go before our Executive Committee in February,” said NYSSCPA spokesperson Colleen Lutolf.
10 Comments
The AICPA's endorsement of the new "CGMA," a designation which requires no expertise in management accounting makes one question the AICPA's competence. The indication that the AICPA is promoting a revenue sharing deal for endorsement of this worthless new "credential" makes one question the AICPA's ethics.
If an employer is in need of a proven expert in financial accounting, they should hire a State-licenced CPA. If an employer is in need of a proven expert in management accounting, they should hire a Certified Management Accountant (CMA) as conferred by the Institute of Management Accountants.
The AICPAs, CGMA designation provides no value to employers.
Posted by: CPA-CMA-CIA | February 2, 2012 7:30 AM
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dtdearman - That's a good idea but I think you mean state societies. Now, your question gets me to ask you and the otehrs if the AICPA is possibly infringing on a CMA's ability to earn a living? It sounds like a stretch even to me but if the AICPA can convince State Licensing Boards that the practice of management accounting should be regulated (i.e., increased revenues to the state) could they in essence be trying to drive the IMA out of business and in so doing, placing CMA's who are not CPA's in a quandry?
Some may give the AICPA the benefit of the doubt but I might have been born at night but it wasn't last night.
Posted by: Nstrait | February 1, 2012 12:57 PM
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Dare we write to our respective State Boards to note the ethical inconsistency for them to govern and at the same time benefit from a curiously cozy profit-sharing relationship with the AICPA?
Posted by: dtdearman | February 1, 2012 11:10 AM
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I am a member of the AICPA, IMA, IIA, and ACFE. I have a CPA, CMA, CIA and CFE. I was surprised to get the CGMA package in the mail with the only requirement being to pay a fee after six months. The appearance to me is that the start-up costs for this program are being funded by giving away the certification. This doesn't seem ethical to me, especially coming from a professional accounting organization. An accounting certification only has value when it's backed by professional competence, integrity and ethics and a commitment to continuing professional development. How are these objectives going to be met? If the plan is to have this ready in three years, then role the program out in three years and make people earn it.
Posted by: wantoku | January 31, 2012 7:40 PM
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Reply to - "To take this step to elevate management accounting ...."
I can hardly believe that the AICPA Code of Conduct has been proven to be superior to the IMA's Code. Furthermore, it is an insult to suggest that AICPA members possess more virtue than say IMA members. When one considers the recent financial frauds and related convictions you'd be hard-pressed to find a single CMA. As I recall, both the Enron and Madoff cases involved corrupt CPA's. So, please tone down this ludricous rhetoric and debate this issue on its merits. My reply is that both the CPA and CMA are outstanding credentials and that the AICPA's position to grand-father members will have negative short-term affects, however, in a few years it will be forgotten just as the CFE and CGFM initial certification processes were. The real question - what will the IMA do to protect its members?
Posted by: Nstrait | January 31, 2012 2:15 PM
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Mr. Miller needs to become a bit more informed prior to representing himself an expert.
The exam will launch within three years. There is also a comprehensive compentency assessment / development tool that will be an integral part of the renewal process. It appears to be a tool that will do a much better job of ensuring competence than the decades old, hours based CPE model.
Posted by: garybolinger | January 26, 2012 2:06 PM
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Dear Cliff -- what makes you think the institute's managers would impose an exam that would inhibit them from paying $150 a year? If an exam were to be required, all that revenue would dry up. And they can't let that happen, can they?
There is a whole lot more to this program than meets the eye. You can expect to hear more, much more.
Posted by: pbwmiller | January 25, 2012 10:20 PM
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When do the examinations for this qualkifcation start? Presumably after the 'free offfer' the AICPA/CIMA intend that future interested persons will have to sit and pass an examination?
Posted by: cliff567 | January 24, 2012 3:25 PM
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Mr. Bollinger is surely mistaken in characterizing my views as opposed to any change. In doing so, he shows he is oblivious to the fact that I have filled the literature for years with one call for change after another. In particular, my desire is for meaningful change that produces positive improvement and the delivery of increased amounts of useful truth to the users of both external financial statements and internal reports. Its accomplishment would benefit everyone, including accountants who now spend their valuable time, even careers, producing reports that lack such usefulness.
Thus, I oppose this change because it is meaningless. To make it worse, it is clearly intended to exploit AICPA members in order to fill the coffers of the AICPA.
Bollinger's illogical leap from the premise that the CPA, a well-established credential for expertise in financial reporting or tax accounting, can also become evidence of skill in management accounting is glib and unjustifiable. It's not as if there is no existing credential in this area; indeed, the IMA's CMA program has achieved credibility because of its rigorous examination and requirements for both documented relevant experience and ongoing CPE. All three of those factors are missing from the AICPA's plan that gives away a "global" certificate to anybody with self-reported experience and demands nothing in return but $150 a year.
I didn't say very much in the quote but I stand by every word while questioning each point offered by Mr. Bollinger.
Posted by: pbwmiller | January 24, 2012 11:54 AM
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It seems that Mr. Miller has a pretty narrow view of the future of the profession globally. Most of his writings seem to oppose any kind of change simply becuase it is different from what we now know. In the late 1800's / early 1900's how did the CPA credential come about? There was no model. There was no education requirement, no CPE, no peer review. But 100 years later, the CPA credential is highly regarded and widely respected in the US and around the world. To take this step to elevate management accounting for those who have demonstrated a committment to ethics, integrity and high professional standards through earning the CPA credential and demonstrating experience is positive and may lead to a widely respected credential in the next 100 years.
Posted by: garybolinger | January 24, 2012 9:03 AM
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