Define ‘CPA’

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Consider the following two questions: What is a CPA? And what is a CPA firm?

Just consider them; don’t answer yet — wait at least until you finish this article.

These are not trick questions (mostly). But nor are they simple ones, the kind that can be answered by spelling out the acronym or citing the relevant statutes. To be sure, CPAs and their firms are to a large extent defined by regulations, by the state and federal rules that give them a monopoly on certain assurance services, and require them to pass a rigorous exam to claim the license.

But when you think about the fact that the vast majority of CPAs will never touch a public company audit, and that accounting firms’ most common shared service is tax preparation, and that the profession can play a major role in shaping (and reshaping) the CPA Exam, it becomes clear that there is an equally large extent to which the CPA profession can define itself.

While regulation created CPAs as auditors, they have taken their roles as tax experts and business advisors upon themselves, and they have expanded their firms to do much more than just the public company audits they were originally envisioned to supply.

I bring all this up because both CPAs and the broader accounting profession are approaching something of a crossroads, where they will be able to change their own definition of themselves. And I’m not making that up on my own: At a meeting hosted by CPA.com and the American Institute of CPAs in January, institute president and CEO Barry Melancon asked, “What will it mean to be a CPA firm in the future?”

Noting that CPAs make up only around 20 percent of client service staff at the Top 100 Firms (down from a third in 2011), and that almost a third of M&A among large CPA firms in 2018 involved non-CPA firms, Melancon posited a future profession built on a widely diversified portfolio of services, and a very different skill set.

The technical skills that CPAs prize so highly now won’t necessarily continue to enjoy that primacy, he suggested. “I am not a believer that every CPA needs to be a GAAP and GAAS expert,” he said. “Some do, but not every one.” Similarly, the core service buckets of the profession, tax and accounting/audit, need not hog the spotlight anymore. “Neither of them are very old — not much more than a century in the U.S. The core changes — the definition of the profession changes.”

That new definition is being written now, by the soft skills young accountants are learning, by the technology-enabled tools they’re being given, by the value-added services firms are launching and the non-accountants they’re hiring to run those new practice areas. It’s being written in changes to the CPA Exam and revamped curricula that include data analytics — and by the choices of thousands of CPA firms and hundreds of thousands of CPAs.

Melancon was quick to point out that it’s a redefinition, not a diminishment: “The profession is going to be fantastic,” he said. “It’s just not going to be fantastic in the way it’s always been.”

So if it’s going to be fantastic in a new way, forget the questions I asked at the start, and consider these, instead: What should a CPA be? And what should a CPA firm be?

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