New York - In a decision that erased speculation as to any change in leadership at the American Institute of CPAs, the board of the professional membership organization voted 21-1 to extend the term of president and chief executive Barry Melancon through to 2010.
The decision drew some mixed reactions from members, as Melancon, who has held the top post at the 340,000-member group since 1995, has not strayed far from controversy — particularly over the past several years.
His term was set to expire on July 31, 2005.
“We are in a difficult time to make a change and I see it as a positive thing,” said David Costello, president and chief executive of the National Association of the State Boards of Accountancy.
“The problem was the uncertainty of leadership and whether Barry would stay, and this obviously clears it up. That’s a good thing. He obviously has the full support of his board. We’ll now see if the board was right,” said Lou Grumet, executive director of the New York State Society of CPAs. “I wish him luck.”
“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 Reforming Our Profession, 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. But hopefully, with some of the new directions Council seems to be taking, the institute will be more responsive.”
Over the past several years, Melancon had drawn the ire of institute members for a series of marketing initiatives, including the failed global credential and the online portal CPA2Biz — of which he was a major shareholder before subsequently agreeing to tender his shares to a charitable arm of the AICPA.
Both Melancon and the institute also weathered a barrage of criticism from both the media and regulators for not taking the lead in audit reform during the spate of major accounting scandals such as Enron and MCI — although they did unveil a fraud education initiative in the fall of 2002.
As a result of the scandals, the institute’s self-regulatory powers have been largely usurped by the Public Company Accounting Oversight Board — the regulatory body created by the passage of the Sarbanes-Oxley Act.
In addition, Melancon’s lavish compensation package of nearly $1 million also drew the ire of 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, said that all the past controversies were evaluated 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. “This is the appropriate time to be dealing with it [Melancon’s contract extension]. 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.”
However, Lynn Turner, former chief accountant at the Securities and Exchange Commission and now managing director of research at proxy advisory service Glass Lewis & Co., said that the board’s decision deferred the possibility of real reform at the institute.
“After the AICPA lost its powers to self-regulate and set standards, it doesn’t look like any change is going to happen,” said Turner, a frequent critic of both Melancon and the institute. Turner and then-Securities and Exchange Commission chairman Arthur Levitt were often at odds with the institute during the regulator’s fight to implement more stringent audit independence rules.
“Now investors will have to look to the PCAOB to see the kind of change that they need,” Turner continued.
In contrast, some state CPA society heads were less critical of Melancon’s tenure.
“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.
“Ultimately, he 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 have faith in Barry.”
Prior to joining the AICPA, Melancon spent eight years as executive director of the Louisiana Society of CPAs.
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