The arrival of 2004 marks the end of another eventful year for the accounting profession. As we welcome the year ahead, I thought I’d take a moment to reflect on some of the events that have shaped the profession during the past 12 months. Of course, if I tried to include them all, I’d be sitting here until 2005. So here, in no particular order, are what I consider to be a few of the highlights from 2003:
- To the surprise of no one, major changes were made to the tax laws, including a reduction in the long-term capital gains rate and a reduction in the top tax rate, promising to keep CPAs busier than ever during the coming tax season.
- All of the Big Four and some Group B firms were put on the hot seat for their role in promoting abusive tax shelters.
- Deloitte Touche Tohmatsu called off its plan to separate Deloitte Consulting through a management buy-out, leaving it the only Big Four firm with ties to its consulting arm.
- Well-known Wall Street figure and former head of the New York Stock Exchange William Donaldson was confirmed as chairman of the Securities and Exchange Commission, as the agency moved to regain its footing following Harvey Pitt’s resignation of amid a series of political missteps.
- Former president of the Federal Reserve Bank of New York William J. McDonough was named chairman of the Public Company Accounting Oversight Board. As of mid-December, the PCAOB had approved the registration of more than 700 accounting firms and had begun inspections of the Big Four. The board took over audit standard setting, and issued its first audit standard.
- Would-be CPAs saw the last paper-based CPA examination, and the profession readied for the April launch of the revamped computer-based test.
- The profession witnessed a flurry of merger activity at the regional level, including the announcement of a major merger by accounting powerhouses J.H. Cohn and the Videre Group, and the marriage of Dixon Odom and Crisp Hughes Evans.
- The deck was shuffled at the New York Stock Exchange with the departure of former chairman and CEO Richard Grasso amid outrage over his pay. Sweeping reforms followed, the chairman and chief executive jobs were split, and former Goldman chief John A. Thain took over as the Big Board’s CEO.
- The American Institute of CPAs initiated sweeping changes of its own, including replacing its SEC Practice Section with a Center for Public Company Audit Firms, creating two new audit quality centers, voting to retain its three specialty credentials after a contentious debate, and appointing a task force to look at the role of its ruling Council.
- The mutual fund scandal exploded. Accusations of market timing and late trading at dozens of fund companies and expected lawsuits turned the fund industry on its head.
- Italian food group Parmalat collapsed into bankruptcy amid a still-unfolding accounting scandal that includes allegations of market rigging, false auditing, fraud and misappropriation of funds, and a falsified bank account that supposedly held almost $5 billion in cash and securities.
No matter how you cut it, accountants have weathered some significant changes to the profession and to the way they do business over the past year.Here’s hoping 2004 will be a prosperous one for the profession. Have a safe and happy new year.
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