by Paul B.W. Miller and Paul R. Bahnson

The June 17-July 7, 2002, issue of Accounting Today published a letter concerning our May 20 column in which we listed 12 reasons for changing the AICPA management. We obviously did not expect everyone to agree with us. Thus, we were not surprised when the writer, Dr. Nita Clyde, expressed contrary views. Although we virtually never respond to letters, Dr. Clyde’s extensive comments were sufficiently off-base and misdirected to cause us to answer her charges.

To begin, she created the impression that she was writing merely as an institute member by failing to mention that she is a member of the AICPA Board of Directors (according to the Web site for the Texas Society of CPAs). In fact, it turns out that she is one of those who ought to move on.

Before responding point by point, we want to make it clear that we did not and are not attacking the institute. Rather, we are confronting those who hold its leadership positions. We’re not picking on Dr. Clyde, either - we figure that her mistakes are shared by others.

She started by claiming that we ignored the Jenkins Committee Report as evidence that AICPA managers have not resisted change in generally accepted accounting principles. Not really. Indeed, the management has virtually ignored the report and has not used it (or any other report) to cast a new vision for reforming GAAP.

She also failed to acknowledge that the managers who appointed the committee failed to pick anyone from the user community. Although the committee (mostly auditors) interviewed users, their calls for change were dismissed as too costly. Importantly, the management has stood by while the system degraded to the point characterized by Andersen/Enron, WorldCom and others. We are not chastised.

As to Dr. Clyde’s claim that management doesn’t affect ethics rules, we are scratching our heads. She said that the Ethics Executive Committee does the heavy lifting and that we besmirched its members by claiming that management has power over their work. Excuse us, but who appoints the committee, approves its budget and hires its staff?

We aim no insults at rank-and-file CPAs. We do question the integrity of those who use the enforcement process to maintain the status quo while protecting the profession against the public. She missed again.

She also misconstrued our point by claiming that great specialties have arisen within public accounting. What we said is that auditing - the very lifeblood of our profession - lost its value under the neglect of the so-called leadership. It’s not that specialties are bad.

What is bad is offering specialization as the main response to watching our profession’s prime service go down the drain. We’re reminded of Marie Antoinette’s ill-conceived admonition that peasants should eat cake if there isn’t enough bread. Never mind that audits aren’t working, let CPAs render elder care opinions. Never mind that non-audit services destroy independence, let auditors provide more of them. She whiffed.

As to her claim that enrollments and CPA passing rates have increased, we see different results in the institute’s supply and demand survey. The 2001 report puts combined undergraduate and graduate accounting degrees at around 45,000, the lowest level since 1975, and down from more than 60,000 in 1995.

With regard to CPA candidates, the survey shows a sharp downward trend to about 115,000, only slightly above the number for 1979 and down from the peak of 143,000 in 1990. The AICPA managers have done little more than just watch these precipitous declines. Her uninformed pitch was out of the strike zone.

Clyde then said, "there is no doubt some academic accountants blame the 150-hour requirement for their various ailments," and goes on to accuse us of denying our faults. If she had read more of our columns, she wouldn’t have missed so badly again.

To refute our assertion that AICPA management pushed the 150-hour requirement, she claimed she did so on her own. Good for her - regardless of how misplaced her conviction might have been, at least she acted on it. The fact remains that the management backed it through the Model Accountancy Act. That some members, even many, joined the campaign doesn’t relieve the managers of their responsibility for forcing students to endure more academic preparation to enter a profession that dishonors that time and effort with insufficient compensation to overcome the imposed cost.

Clyde also didn’t realize that both of us were at the University of Utah when the 150-hour movement was born there. We have heard hackneyed arguments for two decades, including her contention that five-year graduates have higher passing rates than four-year graduates.

Has she bothered to compare passing rates for candidates with five years of education against those with four-year degrees plus one year’s experience? Has she examined what this barrier to entry has done to the quality and quantity of entrants, especially from traditionally underrepresented groups? Has she done a present value analysis of the cash costs and benefits of the fifth year? Another swing and another miss.

With regard to Clyde’s response that the recruiting CD-ROM wasn’t created by management, we say, "Great!" At their salaries, the managers shouldn’t be designing detailed presentations. However, they surely did provide the budget to produce and distribute the CD. Our main point was, and remains, that this promotional strategy is flawed.

High barriers to entry into the profession cannot be removed by ads. Until true leaders recognize, address and remove systemic flaws in the practice and governance of accounting, efforts to recruit students are essentially false advertising. While we appreciate her work, she didn’t lay a glove on us.

We’re also inclined to question her admission that the "institute’s more recent initiatives" have faced "numerous attacks." Specifically, we fault her for both understating the criticism and for perpetuating the myth that these initiatives came from the institute. Rather, they came from the managers, who are not the institute.

Dr. Clyde and the full-time managers work for the members, not the other way around.

Finally, Dr. Clyde cited Harvey Pitt as an authority on wise behavior, a status that we’re not ready to impute to him. She labeled us as people "who seek to take advantage of" a crisis as opposed to those who "seek to solve the problems." We’re not sure what she’s thinking. We have certainly proposed a partial solution to the confidence crisis by urging that inept managers give way to people we can call "leaders" instead of "people who hold leadership positions." We don’t see how we’re taking advantage of this situation. As a newcomer to this debate, she badly missed again.

We write "The Spirit of Accounting" to identify wrongs that need to be made right. It’s inevitable that stepping on toes and goring sacred cows will cause criticism to come our way. Keep it coming, but halfhearted complaints like these won’t faze us. Besides, we’ve received many more words of support and encouragement from the rest of you.

In any case, thanks, Dr. Clyde, for entering into the debate. Next time, though, don’t try to defend the indefensible.

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