by Bill Carlino and Melissa Klein

Savannah, Ga. - The impact of post-Enron oversight legislation, the status of the controversial CPA2Biz Web portal and an update on a student recruitment effort to cultivate the next generation of accounting professionals, topped the agenda at the American Institute of CPAs spring meeting of council, here.

Yet, despite the ripple effect of the Andersen/Enron debacle on the profession’s image, the specter of increased government oversight and the controversy surrounding several institute initiatives, the conference mood appeared subdued compared to past meetings of council, where the open forums generated lines of questioners and comments from members.

"I think they [attendees] were in more of a receive mode, than a questioning mode," said one attendee. "So much has happened, they didn’t know where to begin."

One subject that did raise members’ interests however, was an overview of the much-talked-about Web portal CPA2Biz, which has been a firestorm of controversy, even prior to its June 2001 launch.

AICPA chairman Jim Castellano opened the discussion of the status of CPA2Biz by saying, "A lot has changed in the world and in the economy since council approved CPA2Biz. It has not yet achieved what we had hoped."

In light of that, the AICPA requested a reworking of its marketing and distribution agreements with the portal to allow the AICPA to support Shared Services LLC, and both the institute and the portal have appointed special committees to oversee those negotiations.

Negotiations between the SSLLC, the entity representing the state CPA societies, and

CPA2Biz broke down in March. The portal’s contract with the state CPA societies expired on May 31. However, CPA2Biz chief executive Brett Prager said that he hoped to be able to "re-open the door" on discussions with the states at some point.

CPA2Biz is in the process of developing a revised business plan that will take into account the restructuring of its relationship with the AICPA and the February acquisition of Rivio. The revised business plan is expected to be presented at the next AICPA board meeting, AICPA finance chairman Michael Mountjoy said.

Mountjoy also explained that AICPA executives, including president and chief executive Barry Melancon, agreed to donate their personal shares of the portal to an institute foundation.

Meanwhile, Prager said that the portal, which debuted a new look and rolled out a payroll referral program in May, has garnered nearly 80,000 registered users, and that traffic has jumped by 25 percent since the re-launch. He also noted that CPA2Biz has averaged over $75,000 a week in online sales. And by virtue of its recent $7.5 million funding by Nationwide the site now offers a 401(k) program.

At the end of its current fiscal year, which ends June 30, Prager revealed that the portal would have $10 million in cash.

However, addressing concerns over the portal’s tenuous cash position, Prager admitted that CPA2Biz would need some $10 million to $15 million in additional equity to reach a break-even point. He hopes to reach that point by the end of its 2003 fiscal year or the first quarter of 2004.

Of that, Prager said that $10 million would be made available contingent on the site reaching a series of performance criteria, and an additional $5 million would be generated from potential future transactions, which he declined to identify.

However, not all attendees were as optimistic about the portal’s future benefit. Robert Israeloff, principal of Valley Stream, N.Y.-based Israeloff Trattner & Co. said that portal management was missing the boat.

"They keep guiding us toward small business services, such as payroll, but do they really think the small CPA is going to abandon ADP and Paychex for CPA2Biz? That’s not going to happen," Israeloff said.

During a session focusing on the push for a new financial reporting model, Alan W. Anderson, the AICPA’s senior vice president of member and public interests, stressed the need for coordination between companies and standard-setters if a new reporting model is to come to fruition.

"The climate for change is right," said Anderson. "The current financial model we have used is the foundation, but now we have to figure out the walls and the doors."

He cited the current joint movement between the AICPA and the Canadian Institute of Chartered Accountants, titled VMRC - Value Measurement Reporting Collaborative, which identifies best practices, debates existing concepts, tests existing and new concepts and subsequently modifies concepts of disclosures.

Meanwhile, as various House and Senate subcommittees prepare to offer post-Enron reform legislation, Melancon reviewed the potential impact of several pending legislative and regulatory proposals that are aimed at strengthening the disciplinary and peer review processes for public company auditors.

The implosion of Enron has given rise to more than 20 proposed bills that would impact accountants if passed, relating to issues of federal oversight and restrictions on the scope of services, among others.

Melancon said that the institute supported legislation offered by Rep. Michael Oxley, R-Ohio, which contains more moderate restrictions than another bill proposed by Paul Sabanes, D-Md., whose measures includes the creation of a Public Accountability Board.

Meanwhile, discussion on the values of the profession’s next generation of leaders and an update on the status of the AICPA’s $25 million student recruitment initiative kicked off the three-day confab.

In the nine months since the launch of the five-year student recruitment campaign, the effort has reached more than 10,000 high school and college students, Ann Friedman-Ryan, senior vice president of group accounts at Wunderman, the firm tasked with overseeing the effort, told council members on the opening day of the meeting.

The campaign, thus far, has drawn nearly 43,000 responses, with over 24,000 students registering with a Web site dedicated to the effort, www.startheregoplaces.com, and some 10,389 opting for further contact.

The institute has also embarked on a separate effort to keep members who are already in the profession engaged. In a move to do some succession planning of sorts for the profession, the AICPA is taking a close look at its members who are under the age of 40.

"Our society is older, our profession is older, our membership in the institute is older," said John Hunnicutt, AICPA senior vice president of public affairs. "We need to be able to speak to the next generation so they will assume the leadership of the profession."

Hunnicutt noted that more than 35 percent of the institute’s membership falls into the under-40 category.

And a survey of those institute members showed that most of them aren’t actively involved in committees or leadership roles within the profession.

In a move to identify the particular needs and expectations of that faction, the AICPA said it will hold a forum for members under 40 this month, in Phoenix.

"The focus is on understanding who this segment of our membership is, how different they are, how well we’re meeting their needs and what their concerns are for the profession and their aspirations," said Janice Maiman, AICPA director of communications. The aim is to get members who are not currently active to participate, she said.

The institute is sponsoring the cost for one member from each state to attend the two-day forum, to be held June 13-14 in Phoenix. Additional members who are interested in attending the forum should contact their state societies.

Council members also received an update on the institute’s own efforts to strengthen the disciplinary process for all of its members from Michael Mares, a member of the Professional Ethics Executive Committee and Catherine Allen, the professional ethics technical manager. In addition to strengthening the disciplinary process, PEEC’s 2002-2004 agenda will focus on tightening the rules on employment with attest clients, the significance of client fees and modernizing/restructuring the professional code of conduct.

During the meeting, council members participated in strategic planning sessions that focused on the discussion of several proposed changes that included additional sanctions for violations of the professional code of conduct, such as the assessment of fines and additional publication of disciplinary actions and granting PEEC the ability to deny deferment of investigations under extraordinary circumstances.

"One of the issues was deciding whether our disciplinary process should be more transparent," said David Lifson, a moderator of one of the strategic planning sessions and a partner at New York-based Hays & Co. "Right now, the process is designed to make CPAs better, not necessarily to use punishment as a deterrent."

"The general conclusion the groups came to was that fines and letters of admonishment would not change people’s behavior. Business and legal penalties are far better deterrents than any kind of penalty the AICPA could apply," Lifson said. "Our efforts at self-regulation should be directed at making our professional practices better and reducing the need for fines and penalties. We need to be more vigilant in our peer reviews."

Lifson said that the thinking regarding whether to further publicize minor disciplinary actions was that "if the comments are kept private and corrective, they’ll keep practitioners from making mistakes down the road. If they are more openly disclosed, it could prevent people from getting the education they need for self-improvement."

"We have to harmonize - and I don’t mean conform, I mean harmonize - the self-regulatory process with the legal environment in which CPAs and other business people work," Lifson said. "The overall conclusion of the sessions that everyone began to realize was what we had perhaps forgotten - that the problem is far more complex than we thought it was," he said. "There’s no single thing you can change. You have to treat three or four things."

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