Nobody elected chair of the American Institute of CPAsgets to pick their agenda.
Robert Harris, who was sworn in as chairman just weeksago at the AICPA Fall Council meeting in Las Vegas, was, however, well aware ofthe challenges ahead.
"You're dependent upon what shows up in the paperthe next morning," he said. "You have ideas on what you'd like tofocus on, but what you get to focus on and what you don't get to focus on isdriven so often by what's happening within the profession brought on bycrisis."
Harris, who will serve in the position for the 2009-2010year, is well known for his work with the organization's National AccreditationCommission, where he was instrumental in getting the Certified in FinancialForensics credential approved. When he's not traveling, talking with statesocieties and universities about the shape of the profession, Harris works asthe managing director of Harris, Cotherman, Jones, Price & Associates CPAs,in Vero Beach, Fla., where he consults and testifies across the country onprofessional standards and malpractice issues.
The AICPA is going back to a chair with firm roots aftera year with Ernie Almonte, who was the first-ever chair from the governmentsector. How does your leadership style differ from Ernie's and how is itsimilar?
Harris: He and I have, over the years, become very closefriends and work very well together. I don't know if our styles will be allthat different. We both support each other very much and have become very closein this whole process.
It's really probably our backgrounds. Ernie is running agovernment CPA firm. His office, other than the fact that it is 100-percentaudit, is not different than many of the traditional CPA firms. In the last 14years, I've spent about 60 to 70 percent of my time in litigation revolvingaround defending CPA firms who have had actions brought against them. I spend alot of time with a lot of firms. I've seen them in some of their weakestmoments. I've spent times with CPAs who are going through a lot of hardship intheir career because they've been sued. Whether they've been rightfully orwrongfully sued, it's still very difficult. I've been fortunate because so manyof my clients are CPA firms and I enjoy working with CPAs.
How do you think that will help your new position aschair?
Harris: It just gives me a feel for what goes on infirms, how the people work, what are the issues they are dealing with. And ofcourse, with this economy, we are dealing with all new issues. It's a bigtoss-up. We have massive re-regulation going on. I look at this economic timeand say the profession is in really great shape. You're not seeing the hitsbeing taken by firms. You're not hearing people say, 'This is all the fault ofthe CPAs.' I certainly got my share of calls on fair value like we all did, butin the end fair value won out and no one has shown us a better alternative.
You recently testified during the House Small BusinessCommittee hearing regarding enhanced financial consumer protection. How doesthe AICPA specifically think this legislation is going to affect CPA firms?
Harris: While this committee doesn't control the ConsumerFinancial Protection Act legislation, their role is to have input on how thelegislation would affect small business.
Here's what we're asking for and I am hopeful we will besuccessful. CPAs who are providing what we consider to be the usual andcustomary tax services such as tax preparation, tax and financial planning andadvice to consumers, we would ask that those services be exempt.
We are not anti-consumer protection and we support theconcepts that the legislation is attempting to achieve. We just don't believethat subjecting firms who are providing these services to another layer ofbureaucracy - whose cost would ultimately be borne by the consumer - helps theconsumer. We do recognize that those CPAs who are selling financial products toconsumers will ultimately be covered by the legislation.
The AICPA just announced the launch date ofComputer-Based Testing evolution - Jan. 1, 2011. What sort of challenges do youanticipate as this new electronic exam is rolled out?
Harris: I think anytime there is something new, there arechallenges, I don't see any negatives, though. As with anything new, thechallenge will be communicating the extent of the changes.
Having CPA candidates in my own firm, I like the new examquestion types. While I haven't seen the questions - the chairman never does -the new exam improves the psychometric and operational quality of the CPA Exam.It emphasizes short, task-based simulations and will replace the longer formatwe currently use. Also, a new research task format will be introduced. A newrelease of authoritative literature, including codified FASB accountingstandards, will be included on the examination.
I know many of the exam takers will appreciate that theessay questions will now be concentrated in one section - Business Environmentand Concepts. They will appreciate the shorter scoring cycles and a newperformance report, which will highlight their strengths and weaknesses. Onenew thing that will be tested on the new exam will be International FinancialReporting Standards.
Do you think the U.S. is any closer to adopting IFRS?What moves will the AICPA take in the upcoming year to get this process a moretop-of-mind agenda item for the Securities and Exchange Commission?
Harris: Yes, I think the SEC is, in fact, closer toannouncing their planned roadmap. The new chief accountant at the SEC, JamesKroeker, has stated that they will again be focusing on the roadmap. I believethe SEC has rightfully been focusing on its regulatory function. We supportChairman [Mary] Schapiro's efforts to enhance transparency and reporting byhedge funds, broker/dealers and investment advisors.
The AICPA will continue to speak out on the subject, andIFRS.com (the link on the AICPA Web site) will continue to provide our membersup-to-date advice. Members can also sign up to receive the IFRS report thatkeeps them up to date on all changes and things happening with IFRS. Despiteeverything we are doing, this will still be the most massive re-educationeffort that all members will have ever seen. We are already seeing the changeson college campuses this year with the introduction of IFRS in the principalsand intermediate courses.
Aside from the issues you're going to have to address aschair, what are some initiatives you'd like to do?
Harris: Accounting sustainability is certainly somethingwe're going to be introducing. The AICPA has already started the process ofdoing things in more of a green way, being more sustainable as an organizationfrom a standpoint of being more environmentally sustainable. We will launchingsome tools to help firms and businesses actually become more green.
Then, more importantly, starting to focus and get theprofession understanding the whole concept of accounting for sustainability andrecognizing that around the world this is a big issue. This is much bigger inEurope and China than it is here at this point. But we're going to end up withstandards, I have no doubt in my mind, which will require accounting for thesustainability efforts that are going on around the world by differentcompanies.
What are some other areas you'll be working on?
Harris: One area I tend to emphasize is private companyfinancial reporting. We have worked very hard these last three years with,honestly, in my opinion, very little success with the Financial AccountingStandards Board, with the movement towards IFRS. We now have a perfectopportunity for the development of private company financial standards.
Obviously, we are looking at a two-to-three-year timeframe in that area. We are not the standards-setter, we don't write thereporting rules, but that's an area we hope to get a lot of traction on thisyear, but I now we won't get it resolved by the end of the year.
Another area is development of youth, in the sense ofleadership. I've asked that we have someone under the age of 36 on every AICPAcommittee, and we're very close to being there.
What's the AICPA stance on tax preparer registration?Should CPAs be included in this?
Harris: No, the AICPA is against tax preparerregistration. CPAs are already educated, tested and are regulated by boards ofaccountancy, the AICPA and the Internal Revenue Service. We do not supportregistration of any preparers if it allows them to advertise that they areregistered tax preparers by the IRS. We see too many opportunities for abuse bynon-CPAs. We have made this known to [IRS Commissioner Douglas Shulman] twice duringour visits with him this last year.
The CFF credential has been around for over a year; howhas it fared among CPAs?
Harris: The designation has been just out of theballpark. We predicted 3,000 holders by three years. We hit 3,400 at the end ofthe first year and we are at 3,500 right now. Originally, we predicted that atthe end of five years we might have 4,000.
The big thing holding it back is the five-yearrequirement [practicing accounting for a minimum of five years]; we getrequests from people under 35 but they don't have the experience yet toqualify. I tell them to go master an area. Be great at audit, be great atunderstanding internal control. You need that to do a good job to do forensics.
Having spent five years as chair of the NationalAccreditation Commission, what has been the biggest take-away for you inworking with niches?
Harris: That we have to build pathways. We have to lookvery carefully at what people want in the credential area. We've learned it'sabout building a community with the people involved, not just a credential andthose communities bring people together.
Those of us who are in forensics said that we don't needa credential, but the credential is not about us, it's about the future andabout those who want to do more in this area. Students all want to go intoforensics, it's the hot topic on campus. Ever since we launched the CFF,universities are setting up programs in Masters in Forensics. This generationhas grown up with CSI. Most people didn't have any clue about forensicaccounting until the show CSI built that whole concept of the forensic lab. Ithink young people and older people see that as exciting.
