With the start of 2006 here, we took a look at replies from industry leaders when asked in the fall of 2005 if they felt the profession had successfully burnished its reputation and moved beyond the scandals of a few years ago.

Throughout January, WebCPA will post new comment collections each week, featuring thoughts from many of the individuals who made Accounting Today's 2005 Top 100 Most Influential People list.

This week, among others, thoughts from Deloitte & Touche USA chief executive James Quigley; John Sharbaugh, chief executive and executive director of the Texas Society of CPAs; president and chief executive of the National Association of State Boards of Accountancy David Costello; and Barry Melancon, president and chief executive of the American Institute of CPAs.


"The profession is moving beyond the scandals. The process of compliance with Sarbanes-Oxley has reduced the possibility of fraud and provided a foundation for improved corporate governance. The strengthened governance model has been very helpful to the profession.

"To enhance this positive direction, Deloitte & Touche LLP is constantly improving audit processes based on new standards, as well as its internal inspection programs, and will continue to do so. Deloitte & Touche also concentrates on developing our people's professional skills and specialized competencies, and in providing the latest audit tools and technology.

"While costs of compliance, particularly for Section 404, have come under fire, we estimate that going forward, total costs incurred by the registrants will decline in the 40 to 50 percent range. When considering total costs of Sarbanes-Oxley compliance, surveys indicate that registrants spend three dollars inside for every dollar spent on the outside auditor.

"The profession has been strengthened, accountability improved, and confidence in our capital markets has been strengthened. Surveys indicate the image of the profession is on the mend, with confidence levels returning to pre-scandal levels."

-- James Quigley, CEO, Deloitte & Touche USA LLP

"Absolutely! New independent research commissioned by the AICPA strongly supports that we have regained our respect to where it was pre-Enron. In addition, the profession is growing, student enrollment in accounting is booming and firms are busier than ever."

-- James Metzler, Vice President of Small Firm Interest, AICPA

"The profession is still in the news, and not in a good way. We keep hearing about tax shelters sold in the 1990s, and many think the profession was involved in things that were unethical, if not criminal. Apparent attempts to stonewall tax shelter investigations have not helped. Some say that the accounting and tax shelter scandals were the work of a relatively few bad apples. Maybe. However, the profession has to look itself in the mirror and ask, 'Why did we tolerate the presence of these people?' Obviously the people who ran the bad audits and the people that sold the flimsy tax shelters were tolerated, and perhaps even lionized within their firms, because they brought in money."The CPA franchise -- that is, the license to perform audits -- is precious to us as a profession. The right to exercise that franchise, however, assumes a high level of professional integrity, a higher level than most other professions. We have to ask ourselves, is the money culture, which makes profit the No. 1 organizational goal, and which seems to have been the culture of the 1990s, consistent with the level of integrity required of us? Obviously not. The profession will never get its reputation back until it puts integrity first."

-- David Hardesty, Vice President, Wilson Markle Stuckey Hardesty & Bott

"Based on the recent research conducted by AICPA as well as surveys compiled in Texas, it appears that the CPA profession has rebounded from the hit its image took after the financial scandals a few years ago. I think the public understands that while some CPAs may have played a role in those scandals, they were not solely responsible. Many other professionals, members of the business community and regulators also fell short on their duty to shareholders and the public at large. I believe that the majority of the public see the profession as continuing to adhere to its core values of ethics and integrity. Those who know and use CPAs have a high level of trust and view them as both ethical and professional. They also perceive the CPA profession as playing a significant role in helping to avoid future scandals and fraudulent activities. Recent statistics on accounting enrollments indicate that young people also view the CPA profession positively and as a good career choice."At the same time, however, the profession must be ever vigilant to make sure it lives up to the high standards and expectations of the public and to carry out its role of oversight and transparency of financial information. The profession's image could be easily damaged again if similar scandals were to occur and the profession was viewed as being complicit or responsible in some way.

"Most members of the public are reasonable and are not inclined to blame the profession for one instance in its history where it fell short. But a repeat of this scenario would do much greater long-term damage to the profession. So, it is critical that CPAs work to avoid any recurrence of this type and aggressively seek to police the profession's members and take appropriate action against those who do not live up to its standards."

-- John Sharbaugh, CEO and Executive Director, Texas Society of CPAs

"Considerable changes have occurred in the industry, and the industry's image appears to be improving. Increased legislation and awareness have raised the bar in terms of holding both companies and their management teams accountable. The requirements of Sarbanes-Oxley have certainly had an impact, although the high costs associated with SOX compliance and its impact on shareholder value still remains to be seen."

-- Michael Lister, Chair, President and CEO, Jackson Hewitt Tax Service Inc.

"'Burnish' is an interesting word, which simply means to make smooth or glossy. In that sense, the profession has improved, but loss of reputation is not so quickly reversed in a couple of years. Significant scams attributed to a few CPAs (e.g. tax shelter hoaxes) continue to plague the profession. It's regrettable that so few people and firms affect the profession so negatively. That's one of the principal reasons NASBA launched the NASBA Center for the Public Trust, so that a spotlight can be shown on the CPAs, attorneys, other professionals, corporate chief executives and others who conduct themselves with integrity, decency and honor."

-- David Costello, President and CEO, NASBA

"Simply stated, yes! Not only do the surveys show this, but my experience tells me that the profession has taken the problems of the recent past to heart and continues to work diligently to regain the publics' trust and confidence. For all CPAs that I work with, the question of independence, objectivity, and trust are always top of mind."

-- Louis Matherne, President, XBRL International; Director of XBRL, AICPA

"If we look back over the past few years, we've seen that the public has gained a greater understanding of and appreciation for the talents and skills that the CPA profession contributes to the U.S. capital market system. In fact, the results of a spring 2005 survey of business executives and investors reveal that CPAs are held in higher regard by these individuals than other financial-services-related professions. Moreover, enrollments in accounting programs are increasing, because students see that accounting offers a vital, exciting career. I believe the profession can take pride in what it has accomplished over the past few years."

-- Barry Melancon, President and CEO, AICPA

"Yes, I do. For two reasons.First, I think the vast majority of the business world - the people in the trenches like the business owners, bankers, lawyers, vendors, etc., never did allow their esteem of CPAs to suffer that much because they know that the people they deal with, day in and day out, are outstanding people, highly intelligent, with strong morals and ethics, totally committed to legally helping their clients. Every survey that I have read since the scandals indicated that the integrity/reputation of CPAs took a short-term hit, but recovered quickly and is as strong as it ever was.

Second, people have short memories. It's unfortunate, but true. Time heals just about everything. I don't think the scandals of a few years ago are even on most people's radar screen today."

-- Marc Rosenberg, President, The Rosenberg Associates

"The United States, Europe, Asia and South America have all suffered through scandals of their own that have negatively impacted public confidence. Public opinion surveys still rank accountants very low compared to other professions in the area of trust. Both in the U.S. and abroad, progress has been made in restoring confidence by emphasizing the principles central to the profession, like integrity, independence, transparency and accountability. This vigilance must be ongoing in order for accountants to continue to secure the integrity of the profession."

-- Nancy McKinstry, Chair and CEO, Wolters Kluwer

"No, I do not. It is not sufficient just to be taught technical ethical requirements, as is done in current courses. Most accountants facing a true ethical dilemma often do so without their education ever hinting at the possibility of the ethical dilemma they are facing at the time."Accordingly, I strongly support CPE courses that allow participants to engage in roundtable discussions with experienced professionals and their peers. Through these interactive conversations, individuals can learn from the experience of others, not just their own. In nearly 25 years in the profession, I have never participated or even heard of such roundtable discussion. Most courses on ethics deal with the detailed regulations, rather than the broad brush of ethical behavior. "

-- E. Martin Davidoff, Chair, IRS National Tax Liaison Committee, AAA-CPA

"I think the profession has come a long way, but this will be a work in progress for some time to come. The bad news is that the public is subjected to constant reminders of the audit failures as the fraud cases wend their way through the court system. The good news is that the high-profile cases for the most part have been brought against the chief executives and chief financial officers who were not CPAs, and have not been brought against the accountants who served in the attest function. I think the general public is beginning to understand that most of these scandals involved criminal activity at the highest levels of the companies, which made it particularly difficult to uncover."I do have concern that we could see additional adverse publicity if the litigation spotlight turns on promoters of abusive tax shelters.

That said, speaking for the tax professionals, we at the AICPA have taken important steps to further strengthen the ethical standards of our members. Our standards, which previously were "best practices," are now enforceable and automatically enforceable if the IRS, SEC or PCAOB disciplines any of our members. This will go a long way towards enhancing our credibility as these policies become more widely understood and appreciated."

-- Tom Ochsenschlager, Vice President of Taxation, AICPA

"Yes. The overwhelming majority of CPAs have always been beyond reproach. They have worked hard and countless hours "doing what is right" to protect the public interest. After the scandals, these professionals gathered their energies to set the record right, by demanding constructive changes in the profession, and by working with the regulators to implement new systems and processes to regain the confidence of the public."

-- Carl George, CEO, Clifton Gunderson

"I believe the 'scandal' did little damage to local and regional firms and their CPAs. CPAs are still very much the trusted advisor to the business owner. Most firms are not at all focused on this any longer; there are more pressing issues to address, such as succession planning and building a quality team to be part of that succession."

-- Rita Keller, Shareholder, Brady Ware

"I believe that the profession has made tremendous inroads over the past 18 months toward repairing the damage done by the scandals exposed beginning a few years ago.And the number of scandals has clearly diminished over the years ...

"On a positive note, the profession has embraced the PCAOB. Ethics programs are in place and appear to be functioning very well. And ethics has been added to accounting major curriculums at the college and university level -- in spite of debates about what ethics to teach, and at what age ethical tendencies are actually developed.

"In addition, the question of independence -- the single most important factor affecting the perception of the public -- has been alleviated by the changes. The bottom line is that the profession has taken the scandals, and the resultant impact on the profession, very seriously ...

"But the most interesting outcome of the scandals is that the media attention and the resultant sweeping changes may have actually helped improve the image of the profession. We knew that the interest of young talent to enter the profession and remain with it as a life-long career was diminishing dramatically throughout the 1990s. And we also knew the four major reasons behind it, as noted by the Taylor Research study of 2000 ... Now the perception of the importance of the profession has drawn attention and resulted in dramatic increases in the number of accounting majors nationwide, and even globally. The scandals have helped shed the image of the boring accountant, with the role of the profession now viewed more as advisors than simply as auditors, and interest has been generated in exploring problems in the current accounting system and resolving them."

-- Jonathan Baron, President and CEO, Creative Solutions

"Yes. After all, Arthur Andersen is gone, duly punished for its wrongdoing. And, I might add, punished by the free market long before the government did so. Throughout the history of accounting, there seem to have been major scandals every decade or so, and after each one legislation is passed to "make sure it never happens again."I think the deeper issue, which the profession has not gotten over, is not so much fraud or malfeasance, as irrelevance. The profession continues to be historians with bad memories, coming in after the battle and bayoneting the wounded with lagging indicators -- the traditional financial statements (a.k.a., the three blind mice).

"While there is certainly a role for these types of indicators, the profession also needs to be innovating leading indicators, actual theories that have predictive capabilities for a company's operating results ...I realize I am in the minority with the following opinion, but I will state it anyway: Emphatically, the organization that has not burnished its reputation as a result of the accounting scandals is the Securities and Exchange Commission. This regulatory body is increasingly not just irrelevant, but actually does net harm to investors, as has been proven by many of the economists who have done extensive studies on it ...

"If the profession had any backbone, it would establish a think tank to take on these increasingly harmful securities acts, battle in the arena of ideas for major SEC reform and the repeal of SOX, and promote free market solutions to these issues. Unfortunately, the profession is a major beneficiary of the make-work of SOX, so it has little incentive to change. However, the more this profession is regulated, the less innovative and relevant it will become. This is the real legacy, and threat, of the accounting scandals.

-- Ronald James Baker, Founder, VeraSage Institute

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