We're back because a momentary lull allowed us to produce a new column about an old issue.

Our readers know we've often expressed concerns about the American Institute of CPAs' governing elite that consists of management, Council, and others who lend their influence. Of course, it's hard to know what's on their minds, but we think they've lost focus to the point that their actions are destroying CPAs' reputation and image.



We assert that the institute's primary, if not only, mission should be to promote that which makes CPAs unique compared to other accountants and business professionals. Officially, that uniqueness includes authority to perform audits and represent tax clients before various bodies, especially the Internal Revenue Service. Less formally, our distinction (as a group) involves above-average competence, experience, dependability and integrity.

We who are licensed would benefit from a professional association that promotes these qualities so that potential clients and employers will seek us out. In effect, the letters "CPA" constitute a valuable brand that the AICPA should explain, advance and protect.



Alas, that's not what the elite is doing. A sequence of AICPA actions leads us to conclude they have not strengthened the brand at all. Instead, they have downplayed our uniqueness and denigrated what it means to hold the license. It's as if the elite doesn't seem to realize that the AICPA is significant only because its members are CPAs; perhaps they mistakenly think CPAs are significant only because they're members of the AICPA.

We have already described the damage that the Chartered Global Management Accountant designation will do to the CPA designation ("CGMA ploy brings Cognitors back as CoGMAtors; is AICPA 2.0 next?" March 2012). We're convinced the elite is paving the way for merging the AICPA with the Chartered Institute of Management Accountants. It's clear as day that admitting those non-CPAs into a redefined institute will dilute the CPA brand's value like adding a gallon of water to a spoonful of fine Cabernet. No one should allow the elite's myriads of illusory claims of special proficiency to divert their attention from these disastrous consequences.



Next, there's the elite's strongly challenged effort in June 2013 to assume a standard-setting mantle by issuing what they call a "Financial Reporting Framework for Small and Medium-sized Enterprises" to accommodate CPAs and managers who want to provide statement users with much less than the best available information. To us, it shows they want to dumb down accounting principles, even though major reform is obviously needed to make GAAP better.

While pushing this "FRF for SMEs," the elite seems to think that institute members are merely "SMURFS for FEEs" because they immediately began offering training courses and toolkits for them to buy.

However, we speculate this effort is not just another attempt to boost revenues. Rather, it also looks like an in-your-face strike back at the Financial Accounting Foundation for not creating the autonomous private company standards board the elite badly wanted.

In any case, the framework's release prompted stern negative, even chastising, responses from the Financial Accounting Foundation, the Institute of Management Accountants, and other groups that questioned the elite's claim that the institute has sufficient standing to create authoritative guidance. We offer two points to ponder.

First, the framework was not taken through a legitimate external due process. Second, keep two past events in mind: The Financial Accounting Standards Board replaced the institute's Accounting Principles Board in 1973 because it lacked independence, and Congress created the Public Company Accounting Oversight Board in 2002 in part because the institute failed to adequately regulate public company auditors. Why do they think they'll get it right this time?

This hullaballoo obviously tarnishes our CPA brand.



In May 2013, the elite announced that accountants in other countries can obtain the AICPA's credentials in valuation, forensics, personal finance, and information technology. They obviously want more revenue but we suspect they're also greasing the skids for merging with CIMA.

So, what happens to CPAs who worked to achieve these credentials? Their reputations and market value are diminished because they'll be perceived as equivalent to non-CPAs who have them. This program only devalues CPAs' uniqueness.



Then there's the recent lobbying blitz that convinced the House of Representatives to pass a bill to prevent the PCAOB from implementing mandatory auditor rotation. The plan sent a horde of faithful acolytes to Washington to "explain" that the board isn't sensitive to the needs of poor and helpless corporate and Big Four managers.

Do you think this result happened without, uh, "inducements" from the AICPA Political Action Committee? Possibly, but consider the following facts we learned about the PAC's activities at opensecrets.org.

First, we found many transactions dated March 26, 2013, only two weeks before the bill was introduced. Specifically, six House members received in-kind donations for food ($1,809), lodging ($550), and parking ($80), all at the Willard Hotel. Two also received $3,500-plus in cash "gifts" dated that day. In addition, the PAC contributed a combined total of $57,000 to the six of them for 2012.

As disappointing as the PAC's outflows are, there's more to learn about its inflows. (Note: it's deucedly hard to penetrate contributions from entities.) We've gone through the reports for the first six months of 2013 and found that about $30,000 was contributed from, shall we say, a non-representative sample of the membership. These donors included people such as Council members, AICPA and CPA2Biz officers, and even the CEOs and executive directors of large state societies.

Perhaps the elite thinks this sort of political maneuvering is justified by the ends, but we're confident that it only reveals how they prefer to manage and, if we're right, that's more damage to the CPA brand.

Even if no money had been involved, we would condemn this crusade because it is a poor political strategy and inherently unfair to many institute members to boot.

We think the PCAOB is rightly concerned about perceived and real independence, because auditees pay their auditors and also because long-lasting relationships cannot possibly boost independence. We contend the elite could have really promoted the brand and demonstrated above-average integrity by instead encouraging the PCAOB and cooperating in its project. If the board eventually concluded that independence needs bolstering, the institute would be positioned to lead the effort. Or, if it found no problem, it could have celebrated and elevated the brand.

Alas, the elite chose to besmirch our image because the lobbying blitz screams that they frantically used PAC money to shut down the PCAOB since they knew it would find problems.

The unfairness twist comes about because they also slammed the door to economic opportunity on all but the Big Four by greatly restricting the other firms' access to the public company audit market. Think about this point: The elite protected the Big Four to the detriment of other members who are ready to bring new blood into the market!

Nothing, absolutely nothing, can justify this shortsighted effort. Thank goodness it hasn't produced a law yet.



Although it may be grandiose thinking on our part, perhaps this column will spur members to act. As for us, we expect the elite's minions will write to our editor to attack us without addressing the issues. No sweat here, because that will prove our criticisms hit close to home and validate them at the same time.

Paul B. W. Miller is a professor at the University of Colorado at Colorado Springs and Paul R. Bahnson is a professor at Boise State University. The authors' views are not necessarily those of their institutions or Accounting Today. Reach them at paulandpaul@qfr.biz.

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