New York (Feb. 6, 2004) -- In a decision that drew mixed reactions from its membership, the board of the American Institute of CPAs voted to extend the term of president and chief executive Barry Melancon through 2010.
The controversial Melancon has headed the 340,000-member group since 1995. His term was set to expire July 31, 2005.
"I'm not surprised -- there were indications that it was going to happen," said Mitchell Freedman a Sherman Oaks, Calif. -based CPA and a prominent member of CPAs for Reform, a group dedicated to reforming and refocusing the AICPA. "I wish that those who had been involved in making the decision had made a different one."
"He's been controversial certainly, but I would say Barry has done what his board has asked him to do," said Susan Waters, chief executive of the California Society of CPAs.
Over the past several years, Melancon has drawn heavy criticism from institute members for a series of marketing initiatives including the failed global credential and the online portal CPA2Biz -- of which he was a stakeholder before agreeing to tender his shares to a charitable arm of the AICPA.
Both Melancon and the institute weathered a barrage of criticism from the media as well as industry observers for not taking the lead in audit reform during the spate of major accounting scandals.
As a result, its self-regulatory powers have been largely usurped by the Public Company Accounting Oversight Board -- the regulatory body created by the passage of Sarbanes-Oxley.
"After the AICPA lost its powers to self-regulate and set standards it doesn’t look like any change is going to happen,” said Lynn Turner, former chief accountant at the Securities and Exchange Commission and now managing director of research at Glass Lewis & Co. “Now investors will have to look to the PCAOB to see the kind of change that they need.”
In addition, Melancon’s lavish compensation package of nearly $1 million also drew ire from some AICPA members, who complained that it was significantly higher than the heads of other major trade groups.
Scott Voynich, 2003-2004 chairman of the institute, indicated that all past controversies were taken into consideration and in the end, it was a question of performance and leadership at a time when the institute is engaged in a series of new initiatives.
"We concluded that he was the right leader for this organization," said Voynich. "Barry has an unusual grasp of the issues and now is a time when we're involved in projects like fraud detection, enhancing ethics and setting audit standards for private companies. He is the right guy to have in place going forward."
"Ultimately he [Barry] works for the board, and for an awful lot of what was directed at him, the board needed to stand up and be counted as well," said Ted Flynn, executive director of the Massachusetts Society of CPAs. "He does not operate in a vacuum. The decision shows that they [the board] have faith in Barry. "
Prior to joining the AICPA, Melancon spent eight years as executive director of the Louisiana Society of CPAs.
“The problem was the uncertainty of leadership and whether Barry would stay and this obviously clears it up. That’s a good thing. We’ll now and see if the board was right,” said Lou Grumet, executive director of the New York State Society of CPAs. “I wish him luck.”
-- Bill Carlino
