Regulators face technology's changes to accounting practice and uniform CPA exam.

New practice modes, the changing of the traditional audit, more precise measurement standards for continuing professional education, computerization of the Uniform CPA Examination and adoption of the Uniform Accountancy Act were among the critical issues state boards of accountancy were urged to consider by speakers at the National Association of State Boards of Accountancy's 88th annual meeting, in Atlanta.

The assembled members, administrators and legal counsels of 48 state boards and representatives of professional associations from the United States, Canada, Ireland and the United Kingdom heard speakers call for a reassessment of current regulations in response to changing business and practice environments.

The changing profession

"The impact of technology will become a severe problem for us if we do not deal with it before it deals with us," said Ronnie Rudd, 1995-1996 chair of NASBA. "We still regulate based on physical presence of the accountant, although computer links allow professionals to work on assignments from anywhere." As an example, he described a CPA with clients in four different states--none of which she ever visits. "It may be that no state has the right to regulate that person. Because the business climate is changing--and the accounting profession serves business--the way the profession is regulated must also change," Rudd said. "This is a critical issue that we need to get on top of right away."

Sandra A. Suran, chair of the communications and change management subcommittee of the AICPA assurance services special committee, said the committee's research has shown that greater use of technology increases the amount of information consumers demand. Thus, while the audit was of value to the business entity in the industrial age, today it is a mature product that in the long-term may be replaced, she said.

Suran's committee has identified several CPA assurance service areas it believes have potential value to clients in the technological age. These include internal systems for measuring the reliability of information, tools for evaluating the importance of information in decision making, studies of management competence and comparisons between performance and strategic plans and among competitors.

As CPAs move from issuing the one-size-fits-all type of opinion to providing information in individualized formats, Suran, a NASBA past president, urged the regulators to consider issues of public protection that new assurance services might raise, such as changes necessary in the licensing examination, CPE and entry-level education.

Both NASBA and the American Institute of CPAs are addressing these issues. Rudd announced the formation of a new NASBA committee on future licensing, litigation and legislation, chaired by Frank Maresh; AICPA board chair Ronald S. Cohen cited a similar body, the AICPA special committee on regulation and structure of the profession, chaired by J. Curt Mingle. The Institute committee's charge was "to review the current regulatory environment and structure for CPAs in the face of changing competitive and economic conditions," he noted.

The AICPA and NASBA were frustrated over their attempts to convince the state societies and state boards that they should adopt the Uniform Accountancy Act, according to Cohen. "Lack of uniformity is confusing to those who enter our profession and to educators who must design college curriculums relevant to our needs. It ignores the impact of technology on how we do business today; creates a hardship for those CPAs who move from one state to another, whether in industry or with multistate practices; and results in different standards of quality and enforcement of those standards," Cohen said.

Measuring CPE

AICPA president Barry C. Melancon challenged the boards to take a critical look at CPE. While he didn't think the boards should back away from the concept of mandatory CPE, he questioned the appropriateness of measuring learning by the time spent attending a program. "I think that with the technology we have today, we should be leaders in the way we identify how we achieve continuing education."

Sarah G. Blake, NASBA director-at-large, also questioned the efficacy of measuring learning based solely on time. "Shouldn't someone who can move through a computer-based program quickly receive the same credit as someone who takes longer to show proficiency?" she asked. "As we regulate the profession, we have to be sure that we are protecting the public and not looking at an antiquated requirement." Methods of education are changing, she said; interactive programs are making self-study more effective. She cited as an example New York University's "virtual university" which never requires its students to enter a classroom but electronically affords them continuous interaction with an instructor.

The AICPA's educational management exchange subcommittee (EDMAX) is researching learning assessment and interactive self-study, said subcommittee chair Jamie M. Lane. EDMAX, composed of training directors of the large public accounting firms and representatives of professional organizations, regularly meets to exchange innovative ideas about CPE.

Educators have found that the two key factors in training are relevancy and timeliness, said Lane. Yet, typically, firms' staff members attend training sessions in April through July and may not use what they have learned until January or February. At Lane's firm, Arthur Andersen, a transition is taking place as the firm strives to develop a "continuous learning environment in which the right training is delivered to the right people at the right time," she said. Andersen is looking into teaching both technical and nontechnical skills via computer-based training.

Changing the CPA exam

Another critical issue receiving attention from both the state boards and the AICPA is the Uniform CPA Examination, and Rudd stressed the need for the boards and their administrators to work with the Institute. During the past year, NASBA officials engaged in several cooperative efforts with the Institute to meet the boards' concerns. Projects the AICPA has initiated in response to the boards' requests, according to Stephen M. Walker, AICPA board of examiners chair, included the Uniform CPA Examination computerization effort, consideration of a single score for all four exam sections and placing examination standard-setting on a fast track.

"The joint development process is the way to get what we want," said Welling W. Fruehauf, NASBA's 1994-1995 chair. He urged all the state boards to respond to the board of examiners' Invitation to Comment: Conversion of the Uniform CPA Examination to a Computer Based Examination. The invitation cites benefits such as enhancing exam quality, lessening the workload of the state boards, improving examination security and making the exam more user friendly through flexible test dates, a shorter testing time and faster grading. NASBA's CPA examination review board supports the decision to have a nondisclosed examination and has offered suggestions for improving the exam, such as discontinuing essay questions, evaluating new methods for establishing a passing score and considering the feasibility of a one-score exam.

Other issues

Looking ahead, Rudd said, "Litigation against state boards will be a major issue for years to come because of the lack of uniformity in state statutes, which allows challenges to the weakest laws to set precedent for all, and because we as a profession have been unwilling or unable to get laws changed to reflect what has happened in the business community."

Also at the meeting, the 1995 William H. Van Rensselaer Public Service Award was presented to Wilbert H. Schwotzer, NASBA 1987-1988 president and past chair of the Georgia state board of accountancy.

1995 Uniform Act and Rules Available

A reprint of the AICPA and NASBA Uniform Accountancy Act and Uniform Accountancy Act Rules, 2nd Edition, Revised, which replaces the 1994 version, has been distributed to state CPA societies and state boards of accountancy. The reprint is on the AICPA Accountants Forum in the library, under "government." Copies also are available, free, from the AICPA order department (product no. G00404JA); [phone], menu #1; fax no. [phone].

Louise Dratler Haberman, editor of NASBA's State Board Report.