Confident & expecting change: California CPAs weigh in on what's important and how it's going.

CALCPA serves 28,000 CPA, associate, CPA candidate and student members. While we often have the opportunity to hear from members in leadership, we value the benefit of checking in regularly with all California CPAs--members and nonmembers--to ask these simple, yet critical, questions: "What's important to you and your business?" "How is your business doing?" and "What can we do to help?"

In July, Voter/Consumer Research conducted a telephone survey of California CPAs-both CalCPA members and nonmembers. The survey was weighted toward nonmembers, who represented 403 of 706 respondents. The survey firm reports a margin of error for the results of +/- 3.7 percent.

As expected in this post-Enron environment of increased legislation and regulation, virtually all CPAs expect changes to the profession, but there are differences of opinion about how major those changes will be.

CPAs in public practice and industry viewed the possibility of change similarly, with 61.4 percent in industry and 62.3 percent in public practice expecting major changes. However, within public practice the perception of change varied by firm size.

Of the Big Four CPAs, 71.4 percent expect major change, as compared with the 61 percent of regional firm members. And although large local firm members expect major change to a lesser degree (56 percent), 62.5 percent of local firm CPAs anticipate major changes for the profession.

It's not surprising that those who practice in the largest four firms have the greatest expectation of change, given that they continue to be in the spotlight as a result of the Sarbanes-Oxley Act and the new regulatory environment it created.

IN YOUR OWN WORDS

It was important to us to know what you and other California CPAs perceive as the major issues or problems facing the profession. While you might expect the responses to such an openended question to be quite varied, some trends emerged that provide us with a clear mandate.

CPAs said the major issues facing the profession are credibility (25.8 percent), ethics (21.5 percent), independence (15.4 percent), regulations (15.3 percent) and auditing and accounting standards (12.2 percent).

The order of concern remained fairly consistent between members and nonmembers, with members placing slightly higher importance on auditing and accounting standards (14.5 percent), than regulations (13.5 percent). Additionally, while 27 percent industry CPAs still named the profession's credibility as their top concern, a greater percentage was concerned about ethics--25.1 percent--as compared with their public practice peers--19.3 percent. This leads one to pose the question, Are ethical pressures greater in corporations than in public practice?

WHAT'S IMPORTANT TO YOU?

After learning the major concerns of California CPAs, the results of what was most important to you wasn't surprising.

According to the respondents, the most important issue is improving the image of accounting, followed by strengthening the profession's voice in the regulatory process, electing more officials who understand the profession, and more information about laws that affect their business and the profession.

These results differ from those we have seen in prior research, when CPE was rated as most important. CPE is still seen as important, but it is overshadowed by the need to restore faith in the profession, represent the profession before the Legislature and regulators, and keeping informed about laws and regulations that govern what you do.

The rating on these issues did not vary significantly between members and nonmembers, between those in public practice or industry, or based on age or years of experience.

The message for CalCPA is clear and strong: Work on these issues for the profession and keep focusing our efforts where they have been. That is, on strengthening the profession, assuring our members' success and keeping CalCPA strong so that it can accomplish these goals.

Consistent with the ranking of problems reported above, when asked what organizations representing CPAs should focus on, the respondents said keeping them informed was the most important, followed by government representation and, in a fairly distant third place, providing CPE.

CPAs in the Big Four firms rated government representation most highly at 74 percent, while industry CPAs ranked keeping them informed as their highest priority at 60 percent. Providing benefits, marketing opportunities and practice management assistance were rated lowly, with fewer that 20 percent of the respondents finding those things important.

HOW'S BUSINESS?

Since we last asked members in 2001, "How's business?" the state and country have gone through an economic slump and major scandals have scarred the profession. That said, our survey results perhaps give us a glimpse as to why students are flocking back to the accounting majors at colleges and universities statewide.

When asked how their business is doing financially compared with five years ago, a plurality of the CPAs report they are doing better, and about two-thirds expect to be doing even better five years from now. Most others reported that they are doing about the same as five years ago, and expect to be financially equivalent in five years.

Members report better results over the past five years than nonmembers, by 56.4 percent as compared with 42.7 percent. Members in industry do not report as much improvement in financial performance as members in public practice, and those providing financial services and non-traditional services rate their financial performance at the same level.

When looking to the future, though, all CPAs in the survey were similarly optimistic. The differences just reported in their financial performance over the past five years disappear when they project their financial performance over the next five years.

WHAT CHALLENGES YOU?

When asked what major problems were facing their businesses, the largest response was none at 17.4 percent. However, significant differences arose between CPAs in public practice and industry. While, more than 21 percent of CPAs in public practice reported no major problems, only 13.5 percent of industry CPAs reported no major problems.

Of those CPAs who reported major problems, 17.7 percent of those in industry cited the economy as a problem, compared with only 9.2 percent of those in public practice.

Of greatest interest perhaps is that only 4.2 percent of those in industry cited keeping and finding good staff as a problem, compared with 15.3 percent in public practice, and 19 percent in the Big Four firms. Only 9.4 percent of CPAs from local firms named recruitment and retention as a major problem.

The final problem cited with large agreement among the responding CPAs was following the new regulations, at 11.2 percent. CPAs at the largest firms are most challenged by the new regulatory environment, with 19 percent considering it a major problem, as compared with 17.4 percent of CPAs in regional firms and between 9 percent and 10 percent of CPAs in large local and local firms.

A surprisingly small number of the respondents cited reporting requirements, companies going bankrupt, independence issues, complex laws or workload as problems. Workload or overwork was cited more often by those in public practice than those in industry, and more by those providing traditional financial services in the smallest firms than any other practice setting.

DOING SOMETHING RIGHT

Of greatest interest to CalCPA leadership, the survey shows that all CPAs, members and nonmembers, view CalCPA favorably. Of members, 74 percent view CalCPA very favorably, and 26 percent view the organization favorably. The favorable rating is lower among nonmembers as you would expect, but still totals 86 percent, an extremely high number from those who choose not to join. Interestingly, 43 percent of the nonmembers reported that they are CalCPA members.

The AICPA was viewed favorably by 87 percent of the respondents, lower than the favorable rating of CaICPA, but still a remarkably high number. By comparison, the California Chamber of Commerce was rated favorable by 56 percent of the respondents.

So, what can we conclude? California CPAs expect major change, want representation and information to be delivered to them, and are optimistic about the future. They rate their professional organizations very highly and have given us a clear mandate for the future focus of CalCPA: Strengthen the profession, contribute to the success of our members and ensure the success of CAlCPA so that it can accomplish the first two areas of focus. CPA

Susan B. Waters, CAE, is CEO of CalCPA. You can reach her at [e-mail] or [phone].

TOP 5 MAJOR PROBLEMS
facing the profession

 (1)    Credibility                          25.8%
 (2)    Ethics                               21.5%
 (3)    Independence                         15.4%
 (4)    Regulations                          15.3%
 (5)    Auditing & accounting standards      12.2%


just the facts

How is your business doing financially
compared with five years ago?

                        Members     Nonmembers
Much better               28%          21%
Somewhat better           29%          22%
About the same            22%          23%
Somewhat worse            8%           10%
Much worse                2%            5%

What's Important to CPAs

* Improving the image of the profession

* Strengthening the profession's voice in the
regulatory process

* Electing officials who understand the profession

* Information on laws impacting your business

* Information on laws impacting the profession

* Opportunities to meet clients and potential clients

Member's Perspectives

CalCPA
Very Favorable            74%
Somewhat favorable        26%

AICPA
Very Favorable            53%
Somewhat Favorable        35%
Somewhat unfavorable      8%
Very unfavorable          2%