Economy

The long-existing gap between what the public thinks the profession's responsibilities are when it comes to fraud and what the profession's actual responsibilities are, is getting wider, rather than narrower, the chief executive of the American Institute of CPAs warned. In an update to AICPA Council members at their meeting here Monday, CEO and president Barry Melancon said that, in the post-Sarbanes-Oxley world, "the expectation of the public has changed," particularly in the area of audit function. "New gaps are developing, and in the area of fraud, the gap is widening," Melancon said. "The public's expectation that the profession has an obligation to detect fraud has moved to an expectation that maybe we ought to be preventing fraud," he told Council members. Melancon added that a new expectation gap is developing in the area of internal controls assessment, an issue that falls under SOX Section 404. At issue is what the public's -- and the courts' -- expectation is of what attestation will mean when something goes wrong.

Member response to the American Institute of CPAs' recently formed audit quality centers has been favorable, an institute vice president told Council members here, noting that the Employee Benefit Plan Audit Quality Center has attracted nearly 700 firms since its launch in March. As of last week, some 690 firms have joined the voluntary center, with five to 10 additional firms enrolling daily, Susan Coffey, AICPA vice president of audit quality and professional ethics, told Council members in an update Monday. The Governmental Audit Quality Center, which launched on Sept. 27, has just begun recruiting members. Coffey noted that some 6,300 firms practice in that environment, which includes the audits of state and local governments and nonprofits, as well as certain for-profit entities that receive government funds. In addition, Coffey noted that 950 firms (auditing 96 percent of all SEC registrants) have joined the Center for Public Company Audit Firms. That center, a revamped version of what used to be the AICPA's SEC Practice Section, launched in January of this year.

One year since being given the green light by the American Institute of CPAs, its trio of specialty credentials - the Personal Financial Specialist, the Accredited in Business Valuation and the Certified Information Technology Professional - have made steady, if not spectacular, membership gains, while the committee charged with their progress has deployed a grass-roots strategy to improve their value proposition.

Despite another year of red ink, executives at CPA2Biz, the online marketing portal of the American Institute of CPAs, maintained optimism that the site's new features and a rising user base will keep the vehicle cash-flow positive, a trend that eventually will lead to profitability.

Leaders of the American Institute of CPAs' national effort to improve financial literacy among the American public called on members of the institute's ruling Council to get involved as the institute unveiled a consumer Web site tied to the educational initiative.

Stating that it is in a "strong financial position with excellent liquidity," and aided by a reversal of nearly $2 million in pension liability, the American Institute of CPAs reported a $290,000 excess in operating revenue for fiscal 2004, versus a deficit of $1.25 million for its prior fiscal year.

J. Thomas Higginbotham, vice president of congressional and political affairs at the American Institute of CPAs, announced plans to retire in January 2005, after 15 years of service.

Cynthia Cooper, the former WorldCom vice president of internal audit who exposed the $11 billion fraud at the telecommunications company, is among three CPAs who will be inducted this month into the 2004 American Institute of CPAs Business & Industry Hall of Fame.

The American Institute of CPAs has named Sandra Johnigan the recipient of its 2004 Forensic & Litigation Services Volunteer of the Year Award.

After three years in development, the Committee of Sponsoring Organizations of the Treadway Commission has released its finalized Enterprise Risk Management - Integrated Framework.

The American Institute of Certified Public Accountants has launched a dedicated Web site for its members who specialize in business valuation and forensic and litigation services.

The American Institute of CPAs has launched the third of its planned Audit Quality Centers.