While lawmakers on Capitol Hill were embroiled in a heated filibuster debate, not far away, members of the ruling Council of the American Institute of CPAs passed a much less contentious vote, agreeing to support the development of standards for private and nonprofit entities.
At the institute's Spring Meeting of Council here, members overwhelmingly passed the motion supporting the development of generally accepted accounting principles for those entities, "based on concepts and accounting that are appropriate for the distinctly different needs of the constituents of private-company financial reporting."
"This is not the end of the process, it is merely the beginning," AICPA chairman Bob Bunting told Council members following the vote. He told attendees that they have "voted to begin what may be a very historic and important process."
The motion also mandated that the institute work in tandem with such standard-setters as the Financial Accounting Standards Board "to identify and implement a process to develop GAAP for privately held, for-profit entities that would result in recognition measurement and disclosure differences, where appropriate, from current GAAP as applied by public companies."
AICPA president and chief executive Barry Melancon said that the board would update Council members at the institute's Fall Meeting in California.
Meanwhile, former AICPA chairman Jim Castellano, who headed an institute task force to determine the need for differential standards via user surveys and town hall meetings, noted that any standards eventually born out of the vote would not be a requirement, but rather "market-driven."
Meanwhile, on the Web ...
At the meeting, the management of CPA2Biz, the AICPA's online portal, projected that the four-year-old entity would turn a profit in fiscal 2006.
CPA2Biz president and chief executive Erik Asgeirsson said that the portal is projecting a loss of roughly $375,000 in fiscal 2005, versus $3.14 million in red ink the prior year.
"We had two profitable quarters this year," Asgeirsson said, "and we've been cash-flow positive for two years." He said that some $1.5 million has been plowed back into the portal, and that more than 13,000 firms are now enrolled in CPA2Biz's Business Solutions Program, which offers banking and payroll services, among others.
However, CPA2Biz's historical financials and the institute's 2006 budget came under heavy criticism from the activist member group CPAs Reforming Our Profession, known as Crop.
The group distributed a seven-page document titled "Test Your Financial Literacy," and forwarded it to the AICPA board, several past chairmen and several members of Council, saying that despite several dues increases, the institute's net equity and liquidity has plunged over the past six years.
The Crop document also presented readers with a timeline of historical transactions regarding acquisitions made by CPA2Biz - such as its failed 16-month merger with financial consulting firm Capital Professional Advisors, or CapPro - and questioned what criteria determined the selection of Nationwide as the preferred provider for the institute's retirement program.
The group also cited the continuing and ballooning deferred costs of the computerized CPA Exam, and the fact that the institute has $30 million drawn on a credit line that as of roughly 18 months ago was at zero.
Crop also has asked to see the consolidating workpapers, and the guidelines by which a vendor is conferred preferred-provider status.
Group members accused the institute's board of directors of not abiding by their fiduciary responsibilities, but the AICPA responded by saying that they had met with members of the group recently and made auditors at J.H. Cohn and Grant Thornton - auditors for the AICPA and CPA2Biz, respectively - available to answer their questions.
Bunting took umbrage at Crop's fiduciary accusations, saying that it was not that the questions should not have been asked, but that the report intimated "an innate distrust of the volunteer membership."
Fewer members, bigger dues
Council's budget for the next fiscal year includes another hike in member dues - anywhere from $5 to $35 contingent on the type of membership - and a $50 spike in fees for the institute's three specialty credentials - the Personal Financial Specialist, the Accredited in Business Valuation and the Certified Information Technology Professional.
The institute also showed that membership had declined about 4,000 to roughly 331,000.
However, the membership comfortably passed the 2006 budget.
Keynote speakers for the spring session included Treasury Secretary John W. Snow, and Ari Fleischer, former press secretary to President George W. Bush.
Snow, whose speech highlighted the two centerpieces of President Bush's domestic agenda - the overhaul of Social Security and tax reform - opined that whatever solution is agreed upon for Social Security will probably contain some form of the president's plan for private accounts.
"It [the Social Security solution] won't be easy and it won't be pretty," said Snow.
America does count on CPAs
On an upbeat note, research commissioned by the AICPA showed that the reputation and image of CPAs has rebounded from the dark spate of accounting scandals of 2001 and 2002.
A poll by Penn, Schoen & Berland Associates surveyed 420 general business decision-makers, 110 C-suite executives and 506 investors. Ninety-seven percent of business decision-makers, 95 percent of executives and 89 percent of investors rated their attitude toward the CPA profession as favorable, according to the results of the March 2005 poll.
The poll results showing the image enhancement came just months after the institute rolled out a new tagline, "America Counts on CPAs."
The institute also used the spring meeting as a launching pad for the latest enhancement to its "360 Degrees of Financial Literacy" program, to unveil a component designed specifically for women.
"360 Degrees of Financial Literacy for Women" focuses on educating and empowering women to assume control of their personal finances, and noted that financial illiteracy particularly impacts women, accompanied by such factors as divorce, the death of a spouse and poor retirement planning.
A new Web site, www.360financialliteracy.org/women, features articles and financial planning tools targeted to women's financial issues.
(The institute also gave out a number of awards; for details, see the box on page 33.)
