Among the hundreds of professional standards set by the American Institute of CPAs, two stand out in my mind as being particularly important to improving the image of the CPA.The standards fall under the category of quality control, and say that a CPA firm should have policies and procedures in place to provide reasonable assurance that it:

* "Undertakes only those engagements that the firm can reasonably expect to be completed with professional competence;" and,

* "Appropriately considers the risks associated with providing professional services in the particular circumstances."

Although these standards may sound like nothing more than common sense (of course firms should consider risks and undertake only those engagements they can complete with professional competence!), I fear that they may be so fundamental ... so seemingly simple and obvious ... that they can easily be taken for granted. As we've seen too many times - especially with public interest clients - it's easier to win a bid than it is to do the job right.

At their core, the standards are about ensuring quality, and the consequence of overlooking them is far-reaching and severe. CPA firms need to realize that winning a bid for which they are unable to perform the highest-quality work is nothing more than a Pyrrhic victory.

Because when a firm performs work that is anything less than the highest quality, everybody loses: the firm, the bidder and, most important, the profession itself.

For better of worse, each time a firm undertakes an engagement, it is representing not only itself, but the entire profession, as well. Millions of hard-working CPAs learn this lesson the hard way whenever the profession is painted in broad strokes. Because when it comes to the profession's reputation, one bad apple can spoil the bunch. It may not be fair, but it's the truth.

That is why, before even bidding on a project, firms must perform their due diligence. If they do not have all the necessary resources to perform the job at the absolute highest quality, they should walk away. I know that may not be easy - especially in today's hyper-competitive market - but taking on an engagement simply for the paycheck just won't cut it in today's environment.

When government and business collide

The simplicity of standards can also be obscured by the complexity that results when the government and business worlds collide.

Case in point: Over the last few decades, budget cutbacks have resulted in understaffing at many government agencies. Some agencies, trying to ensure accountability, therefore require CPAs to provide opinions on cost reports in connection with the agency's financial statements.

Consequently, many nonprofits and government agencies increasingly require audit-related services, but don't want to pay for them. CPAs are then put in the difficult position of walking away from engagements that would require them to underperform (and violate ethical standards), or to provide services without pay. CPAs who accept a low rate need to be willing to perform the work at a high level of professionalism and absorb the costs.

For example, in New York State, many CPA firms are having to significantly expand the services they provide to school districts. Even before that, the New York State Department of Health and some related agencies had been requiring CPAs' attestations in health-related cost reports that made many CPAs feel caught between a rock and a hard place: If a CPA did not sign the certification, he could face financial or other penalties. But signing it would violate a CPA's ethical standards involving attesting to work he didn't perform.

When the New York State Society of CPAs learned of these long-standing issues and contacted the agencies involved, we helped reach an interim resolution specifically affecting the CPA attestation of capital schedules in the relevant cost report. We're continuing to work with the state to bring about a permanent solution that will affect other cost-reporting systems in several health-care-related agencies.

CPAs should always be careful to perform their professional responsibilities before signing any attestation in cost reports. The NYSSCPA has developed a platform for negotiating with New York State on a permanent solution for these attestations. These negotiations have provided us with a model for working with government agencies at the federal, state and local levels, so that we can participate in effecting solutions before problems become crises.

In the meantime, CPA firms that bid on government projects must submit realistic bids based on the nature of the engagement. In addition, governments, government agencies and nonprofits must be willing to pay fair compensation for the services they need.

I encourage every CPA to become familiar with the AICPA's professional standards. Read them, learn them, practice them. They are vital not only to individual CPA firms, but also to the continued improvement of the profession's image and the overall quality of the work that it does.

Firms need to be absolutely sure that they can not only do the job, but that they can do the job well. The profession's reputation depends on it.

Lou Grumet is the executive director of the New York State Society of CPAs and publisher of The CPA Journal.

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