by Bill Carlino
New Orleans -- As the profession’s future continues to be defined by reform, attendees at the American Institute of CPAs’ Fall Council meeting enacted a number of changes to institute committees that signaled a not-so-subtle shift regarding the organization’s role in the era of federal oversight.
While Council’s decision to retain the institute’s trio of specialty credentials was perhaps the marquee event of the two-day confab here, Council members also voted to allow the Auditing Standards Board to include non-CPA members from the user, regulatory and public communities, and also approved a resolution to restructure the SEC Practice Section.
Council overwhelmingly okayed retaining the Personal Financial Specialist, Certified Information Technology Professional and Accredited in Business Valuation designations, and also approved a resolution to eliminate an annual review process for the credentials. However, all three remain subject to break-even and membership quotas. (For more on the PFS, see page 18.)
The CITP and the ABV must hit break-even by July 31, 2008, while the PFS must reach that target two years earlier, on July 31, 2006. At their break-even dates, the PFS must have 3,600 holders, while the ABV and CITP must have 2,700 and 1,700, respectively.
“I think this shows that there’s enough interest in the programs, and we listen to our members,” said Robert Harris, managing director of Harris, Cotherman & Associates of Vero Beach, Fla., and chair of the National Accreditation Commission, which oversees the institute’s credential programs. “Council obviously feels there’s a lot of value in them.”
Harris added that for the CITP, which currently has the lowest membership numbers with 527, each credential holder would be responsible for bringing in at least one new member.
“I think it shows the AICPA Council and board are trying to keep in touch with the membership and its needs,” echoed Kendall Wheeler, of Moore, Grider & Co., in Fresno Calif., and a holder of the CITP designation. Wheeler is also a member of the group CPAs4Reform. “Even though only a small percentage of members have the [CITP] credential, I believe that those who have the credentials will enhance the profession and allow members to draw from a pool of CPAs with various specialties to help serve their clients’ needs.”
Jim Metzler, the institute’s recently installed vice president of small firm interests, said that he gauged a higher level of interaction between the membership and the institute at the Fall meeting.
“That allows necessary changes to be made,” said Metzler. “And that wasn’t always the case here. I feel [the meeting] ended up in a good place. Maybe I have new-guy enthusiasm, but I feel the ship is turning.”
Meanwhile, the ASB measure expanded the board from 15 to 19 members and added five representatives from state boards of accountancy to the lineup. The ASB will continue to set audit standards for private companies, as audit standard-setting for public companies has been taken over by the Public Company Accounting Oversight Board.
In addition to the five state board members, the ASB will include five public members, up from two, four members from the Big Four, and five members from local, regional or non-Big Four firms, AICPA vice president of professional standards Arleen Thomas told Council members. The resolution authorized the ASB to include up to 25 percent of non-CPAs as members.
Thomas said that the new state board members would be chosen the same way as other committee members. Recommendations will be solicited from the membership and a list of names will be given to AICPA vice chair Bob Bunting for approval.
With the PCAOB commandeering much of the self-regulatory activities of the SECPS, Council voted to restructure the unit to an entity called the Center for Public Company Audit Firms.
Scheduled for a Jan. 1, 2004, launch, the reformatted body would consist of a voluntary membership, and would seek to help enhance audit quality though best practices and solutions for its SEC audit partners, as well as act as a liaison between regulators, lawmakers and such ancillary groups as stock exchanges.
Sue Coffey, vice president of self-regulation for the SECPS, said that dues for the new group “would be contingent on the size of the firm and the number of SEC issuers it audits.” The group’s senior executive committee would consist of members from small, midsized and large-tier firms.
In his bi-annual state of the institute presentation, AICPA president and chief executive Barry Melancon reiterated the institute’s strategy toward being the standard-setter for non-SEC issuers, but pledged the group’s cooperation with the PCAOB.
“We will continue looking at the non-issuer community,” Melancon told the over 400 attendees. “There are about 500 firms registered with the PCAOB, but there are 45,000 accounting firms. And the majority [of their clients] are in the private sector.”
Council members approved a resolution to allow up to 25 percent non-CPA membership on the Accounting Standards Executive Committee, the senior technical committee of the AICPA authorized to set accounting standards and to speak for the institute on accounting matters.
Members also okayed the establishment of two new audit quality centers in employee benefit plan audits and government audits as part of efforts to shore up audit quality in those areas — the two largest practice areas in the audit world.
Ian MacKay, AICPA director of professional standards and services, noted that more than 3,500 AICPA member firms perform employee benefit plan audits, and more than 7,000 member firms conduct government audits. The proposal authorized the formation of senior executive committees to oversee the centers. Each committee will be charged with establishing the centers’ budgets and dues and membership requirements.
“This is an attempt to do two things — to enhance the practices of participants in these sections and to send a clear message to practitioners about the need for improved audit quality,” Michael Weiser, a spokesman for the institute, said. “It is not intended as a regulatory answer.”
The AICPA will fund the initial cost of establishing the centers, which is estimated at less than $500,000 annually for each center. Membership will be firm-based, not individual, so all audit partners of a member firm would be required to be AICPA members. Dues will be based on the size of the firm and the number of audit clients. MacKay estimated that dues for a small firm would probably be a few hundred dollars.
The employee benefit center is expected to be operational by April 2004, at which point development of the government center would begin. Institute leaders noted that other centers could be formed on an as-needed basis.
The fall meeting also saw S. Scott Voynich, managing partner of the Columbus, Ga.-based firm of Robinson, Grimes & Co., succeed William F. Ezzell Jr. as AICPA chairman for the 2003-2004 term.
“As leaders, we have to rethink how we can drive positive change and serve our members,” said Voynich, who added that his tenure as institute chair would be governed by a code similar to the one he employs at his firm: “Let’s discuss, let’s debate, and let’s decide.”
Voynich is the first chairman of the institute to hail from Georgia. In handing over the chairman’s mantle, Ezzell joked that “in one year, Scott, you’ll understand just how good I feel,” referring to the prodigious amount of traveling the job requires.
Separately, the institute awarded Stuart Kessler, partner at New York-based Goldstein, Golub Kessler, its Gold Medal for Distinguished Service, citing his 40-plus years of service to the profession, including his contributions to student recruitment and scholarships for minority students.
Kessler urged attendees to become more outspoken on key issues, get involved in grass roots movements and work toward encouraging students to enter the profession.
— Melissa Klein contributed to this report.
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