The Proposed Global Credential: Answers to What, Why and How.

Later this fall, members will be asked to vote on the establishment of a new global business credential being developed by an international consortium of accounting organizations that includes the AICPA. New and distinct from any current professional credential, this proposed credential is rooted in strategy and knowledge integration across multiple disciplines. Those who hold this credential, which is designed to complement and extend existing professional credentials, would be facilitators of organizational change, entrepreneurial in nature and globally aware.

This special CPA Letter supplement is intended to help CPAs understand the concept of the credential, its potential benefits for those who would choose to obtain it, and the mechanism for administering the credential in the United States and in other participating countries should it become available. This supplement also provides information on upcoming communications efforts as part of the member education and response campaign mandated by the AICPA governing Council.

To keep up to date on the credential initiative and related information, members are encouraged to visit www. globalcredential.aicpa.org or contact the Global Credential Member Information Center (phone [phone] or e-mail globalcredential@ aicpa.org). You may also want to pull out and keep this supplement for future reference.

Frequently Asked Questions

The following are answers to some of the most frequently asked questions that the Global Credential Member Information Center has received from CPAs around the country. A more complete list of questions and answers can be found on the Web site.

Q1. Can the AICPA briefly explain the concept of this new global business credential?

An international consortium of professional accounting organizations, including the AICPA, has been studying the development of a new interdisciplinary business credential characterized by its breadth of knowledge and strategic focus. The concept originated with the AICPA's Strategic Planning Committee and its deliberations on how best to help the profession realize the full potential of the CPA Vision.

Sometimes referred to by the placeholder name "XYZ," the credential would be administered and developed by a new international organization, which would establish global standards of ethics and competency. The responsibilities for supporting and marketing the credential would fall to the global institute. The AICPA would remain focused on its advocacy for the CPA profession.

Credential holders would be broad-based business professionals who help people and organizations achieve their objectives through the strategic use of knowledge. The credential would be accepted and enforced equally in all participating countries. Since it is grounded in the CPA profession and its values, the hurdle to entry would be significant. But so would the potential benefits. Holders of the new credential would have access to a broad-based online learning platform and networking opportunities among an elite group of interdisciplinary professionals working around the globe.

While the global business credential is intended to validate diverse business-analysis competencies and both complement and extend existing professional credentials, there are some who believe it would open up new sources of competition and confuse the marketplace. These issues are part of the grassroots dialogue taking place across the country fight now.

Q2. What is the current status of the proposed credential?

In May 2001, the AICPA governing Council passed a resolution presented by delegates of the California and Texas state societies authorizing a member mail ballot (to be mailed following the Oct. 2001 Council meeting) to decide whether the AICPA should help create a separate, self-funded organization that would develop the infrastructure for the new credential.

The resolution passed by Council also directed the Institute to launch a member information and response program. As a culmination of that effort, Council has also mandated that a statistically valid member survey, with a focus on non-CPA eligibility for the credential, be conducted under the supervision of the leadership of the AICPA and three state societies.

Q3. Have the sponsoring organizations decided on a name for the new credential?

Members may have previously heard the credential referred to by the name "Cognitor." That name did not appeal to members, and was discarded. The current strategy, which was reviewed by the AICPA Council, calls for a descriptive identifier (e.g., "Strategic Business Advisor") and an approach that highlights an individual's affiliation with an international network of elite business professionals. A specific recommendation will be made later this summer and communicated widely. Until a permanent name is decided upon, the credential is being referred to as the global business credential and, occasionally, by the placeholder title "XYZ."

Q4. We aid the AICPA administer and support the proposed global business credential?

No. The credential would be administered by a new international organization, which would establish global standards of ethics and competency. National credential granting organizations (NCGOs) would be created to issue the XYZ credential in accordance with global standards for admission. The AICPA would remain focused solely on its advocacy of the CPA profession. Dues to the new organization will only come from those individuals who choose to obtain the credential.

Q5. If the global credential is successful, will students choose to pursue the credential rather than become CPAs?

This question was one of the chief concerns of the AICPA Council during its early deliberations on the credential. Since then, an independent research study has indicated a strong interest in the credential among students and suggested that the existence of XYZ would actually have a positive effect on the number of students interested in pursuing the CPA.

According to the research data, when the CPA Vision is described to accounting and other students, the appeal of attaining a CPA increases. When the XYZ is explained to students in conjunction with the CPA Vision, the data indicates that interest in the CPA credential is further increased, especially among undeclared students. In fact, the study suggests that offering both the Vision-defined CPA and the XYZ represents an opportunity to keep students on the CPA-track who would otherwise be lost.

More specifically, 78% of AICPA student members support the Institute's launch of XYZ, and 83% of all college students see XYZ as a complement to the CPA. Only 8% of all college students surveyed see it as a substitute.

Q6. Will CPAs be required to add the new XYZ credential?.

No. Adding this credential is an option that many CPAs may wish to consider. Recent surveys conducted by both the AICPA and several state CPA societies have all indicated that approximately 25% of CPAs would be interested in pursuing the global credential. This percentage far exceeds the number of CPAs who have pursued other accreditation or new service programs offered by the AICPA, and is a threshold generally deemed by market researchers to indicate that a new venture has a high likelihood of success.

Q7. Why is the CPA profession taking the lead in the creation of the credential rather than the legal or any other profession?

By seizing the early advantage on this marketplace opportunity, CPAs will have the greatest penetration in the credential arena as brand equity begins to reach critical levels. It also means that the ground roles will be consistent with our frame of reference and culture. The CPA profession will set the bar for entry, and ensure that its core values, such as a strong ethical foundation and a commitment to continuous learning, will set the tone for the XYZ. If some other profession or group launches this type of global business credential, the value set of the CPA profession will be less likely to be incorporated into its design. In fact, this is happening already. A new organization for multidisciplinary practice was recently formed. Its mission is to educate and credentialize professionals working within the estate and wealth strategies.

The bottom line is that the proposed global business credential is rooted in the CPA profession and would set equally high standards for admission and maintenance of the credential. In this way, the CPA's time-honored reputation for integrity and competence would be preserved and extended. The only non-CPAs eligible for the credential would be those willing to jump the professional hurdles set by the CPA profession and live by the same exacting professional commitments.

Q8. A number of nations that were involved in the coalition to bring about the XYZ have withdrawn their support. Is the AICPA prepared to create this credential without the support of international partners?

No, the United States is not prepared to go it alone. One of the hallmarks of the new credential is its global reach and perspective. Having partners around the globe and among other professions is essential in making this a credible credential in the market.

While it is true that several of the original sponsoring Institutes have, at least for the moment, withdrawn from the coalition, other English-speaking countries such as Canada, Australia and New Zealand are our active partners. A number of representatives from other countries (e.g., France, Germany, Italy, Netherlands, Hong Kong and Japan) participated in the early planning meetings scheduled last year in New York. Thus far, France and Italy have expressed interest in joining the initiative, while South Africa is among those interested in continued involvement.

Q9. What are the results of the XYZ market research among "buyers" of professional services in the United States?

Here are just a few of the key findings from the demand-side research, conducted by one of the world's leading research firms:

* Overall receptivity to the XYZ concept among decision-makers in organizations of all sizes is significantly above the norms for a successful launch of a program of this kind. An overwhelming majority (83%) of employers, for example, say they would be more likely to hire someone who had this new credential for a strategic business planning position in their company. A majority would be willing to pay a premium (14% more, on average).

* Among professional services firms, nearly two-thirds (63%) say clients' perceptions of their firm would be at least somewhat enhanced if they hired people with the XYZ credential.

* 63% of demand-side respondents say that if CPAs held the new credential, it would increase their opinion of the CPA profession. Virtually no one (1-3%) in a position to hire an XYZ believes the new credential would in any way diminish any other existing professional credential, including the CPA.

* The very creation of the XYZ credential, and its early population and association with CPAs, appears to cause potential employers to look more favorably on CPAs as strategic business partners.

Q10. Why were the results of research conducted by some state societies different from what the AICPA-commissioned researchers found?

First, the state society research focused on member response, not marketplace or student response. The differences in research findings come on the supply-side, especially in the area of member reaction to the proposed credential.

The research results have been subject to considerable discussion within the profession. To understand the discrepancies between the AICPA research and the research findings of two state societies, New York and Illinois, CPAs need to understand the different approaches taken by the AICPA and those two states. Neither approach is "wrong." The AICPA used a standard random telephone survey, while the state societies used a combination of mail and Web-based surveys, which generally draw a self-selected response group. The questions themselves also differed greatly, which makes a direct comparison of results extremely difficult.

But while there were some differences among the research methods and results, they did offer some comparable findings. Perhaps most significantly, in all three surveys about 25% of respondents indicated they might seek the new credential. (A 20% acceptance rate is generally recognized by researchers as indicating sufficient interest for a new brand to succeed.) All the member surveys also indicated that most CPAs did not know enough about the credential to make an informed decision. This finding was a critical factor in launching the member information and response program.

Q11. How much of the members' money is being spent on developing the new global credential?

The Institute has spent less than 1.8% of its total budget on this initial effort, essentially equivalent to what the AICPA typically spends on its long-term strategic planning initiatives. The other members of the global consortium have also shared in these early development costs on a proportionate, per capita basis. Moreover, if the global credential is launched, the newly created and self-funding global institute has projected repayment to the consortium members (including the AICPA) of these development costs.

Q12. What are some of the characteristics that will be used to differentiate an XYZ from a CPA?

In today's business climate the lines between formerly distinct disciplines are fading, and business professionals need to understand a variety of disciplines. Accordingly, the proposed new credential is interdisciplinary, requiring that applicants integrate knowledge from a variety of business disciplines and cultures. It is not a license to deliver a specific set of services, but rather a measure of the credential holder's knowledge and skills. It is also experience-based, requiring that applicants have several years of real-life working experience, demonstrating an ability to apply knowledge to provide strategic business insight.

The CPA has an unparalleled depth of knowledge in finance and business. This expertise, coupled with a reputation for trust, is what distinguishes the CPA. The proposed global credential stands for a breadth of high-quality knowledge and skill, similar to that associated with the MBA. But it would go further than that degree by adding international consistency and recognition, adherence to ethics, continuous learning, a worldwide professional association and access to an exclusive learning platform.

Perhaps most significantly, unlike the state-licensed CPA designation, the XYZ will be market-driven and self-regulated, not government-regulated.

For CPAs who choose to add the XYZ credential, the intent is to allow them to position themselves in the marketplace as individuals who combine the depth of financial understanding signaled by the CPA with the breadth of interdisciplinary knowledge and networking signaled by the global business credential.

Q13. If non-CPAs are allowed to become XYZs, wouldn't that just be helping our competition? Wouldn't stretching the CPA brand allow CPAs to maintain a better competitive advantage than sharing a credential with other professionals?

This is one of the most difficult issues to be considered by members of the profession. CPAs are already competing against non-CPAs, particularly in service areas outside the CPA's attest franchise. However, CPAs are also working with non-CPA professionals where it is to their advantage. Including non-CPAs along with CPAs who are already playing in the strategy and knowledge integration market space is important to the success of this credential in several ways. First, it adds credibility in the marketplace to the idea that this is not simply an attempt to re-brand the CPA with another name.

Second, bringing in other highly qualified professionals who meet very rigorous standards in terms of experience, competence, ethics and a commitment to continuous learning, will enable the creation of an unparalleled knowledge resource and professional network available to those CPAs who choose to add the global credential. (Don't forget that if the CPA profession takes the opportunity to lead this effort, CPAs can be in the best position to set the rules for entry.)

As far as stretching the CPA brand, there is no question that many individual CPAs have successfully gained market permissions beyond the attest franchise. However, the process of gaining those permissions for the profession's brand name is complicated by a number of factors.

While the AICPA and state CPA societies remain committed to expanding the brand, it cannot be achieved in isolation. Changing a stereotype is extremely difficult. It is even harder to selectively excise elements of a stereotype (e.g., CPAs are narrowly focused and concerned with historical financial data), while simultaneously preserving the advantageous market attributes (or stereotypes) that CPAs are noted for (i.e., integrity, trust and competence).

Even altering the self-perceptions among CPAs themselves remains a great challenge. Many individuals, as well as small and large firms, no longer use the CPA to identify themselves or to build a brand. In fact, the CPA Vision process found that many CPAs who have moved outside the attest and tax functions believe that it is often inappropriate to identify themselves as CPAs since they are no longer "working as CPAs."

Market research conducted thus far suggests that by CPAs taking a leadership role in creating the global business credential and by being the first to market in the new credential arena, the new credential can help to accelerate the expansion of the CPA brand.

CPA/XYZ proved very attractive to those who employ or engage professionals in strategic roles and among students considering their future career path.

Communications Efforts Under Way to Inform Members and Obtain Feedback

To enable every member to make an informed decision about whether the proposed new global business credential is in his or her best interest and in the best interest of the profession as a 1 whole, a comprehensive grassroots outreach program has been developed. Council authorized this communications campaign in light of research showing that more than half of all AICPA members are either unaware of the credential initiative or do not understand the concept of it.

Every available channel to disseminate information in a comprehensive and balanced manner will be used during the next few months to ensure members have adequate opportunities to learn about the global credential in time for the member vote later this fall. The communications effort will include videos, face-to-face meetings, articles and special supplements in several AICPA publications, and frequent updates to the global credential Web site (www.globalcredential.aicpa.org). The state CPA societies will also participate in the information and response campaign and have been provided a member forum toolkit, among other materials, for their use. In addition, a speakers bureau has been established so that people familiar with the new credential will be

available to discuss it with members at various forums, meetings and conferences being held during the summer and early fall.

Media relations is an important component of the communications initiative as well. As noteworthy developments occur, such as when a new name is proposed for the credential or when new international partners come on board, the Institute will issue press releases to the media. In addition, articles and editorials in the trade and general media will be generated through ongoing media contact regarding the progress of the credential.

All written materials are being kept current on the Web site, so a visit there is the best way to inspect both a brief description of the new credential, and more detailed information, such as the business plan and competency map. Materials that can be found at the site include:

* Brief summary of the new credential

* Commonly asked questions, and their answers

* Competency framework

* Several PowerPoint presentations

* Business plan

* Research results of surveys among potential employers and clients of the new credential holders, potential credential holders (including AICPA members), and students

* Press releases

* News articles from various trade publications

* Streaming video of the pro-con debate held at the May Council meeting

* Views of those who are skeptical or opposed to the credential

Alternatively, members can obtain the same information by emailing the global credential information center at [e-mail] or by calling 202/434-9293.

Among the other items members can expect to become available during the summer months include:

* A special supplement in the September issue of The CPA Letter, as well as articles in all future editions until mailing of the ballots.

* Special supplements in the August and September issues of the Journal of Accountancy.

* Numerous articles in state society newsletters and other publications, as well as forums being hosted by the states.

* The results of additional research being conducted by the AICPA in collaboration with the California, New York and Indiana state societies.

* Materials being prepared for CPE credit by KeepSmart.com, a leader in online and offline continuing education products, such CPA Report and CPA Report Online (www.cpar.com) for the public accounting marketplace, and Financial Management Network and FMN Online (www.fmnonline.com), which provide subscription-based video or online service to corporate financial managers.

Stay tuned to future AICPA and state society communications materials and the global credential Web site to find out how, where and when you can learn more specifics about the new global credential initiative and provide comments on the proposal.

Global Credential Advisory Group Consists of Members from All Segments, With Different Views

As part of Council's member information program mandate, a group of 16 AICPA members have agreed to act as a sounding board for ideas generated by AICPA staff. The individuals who make up this advisory group represent a broad cross section of the Institute's overall membership, as well as different points of view on the possible creation of the new global credential. The group is routinely provided drafts of the various pieces of information before they are made available to all AICPA members. Both as a group and on an individual basis, they have been the source of numerous ideas and suggestions.

The Infrastracture for the Global Business Credential: How It Will Work Around the World

While the AICPA member information and response program continues throughout the summer, the global consortium is taking steps to ensure that the infrastructure to support the global business credential will be poised for implementation should the member referendum pass.

Global Institute, National Credential Granting Organizations

Implementation of the proposed global business credential will be the responsibility of a newly created Global Institute. Its purpose will be to advance the value of the credential by creating a vision, defining strategy and setting policy. This international body will develop global standards of ethics, admission requirements, assessment processes, and a robust online knowledge resource. It also will implement a comprehensive global branding and marketing strategy to build awareness and market demand across the globe.

The global institute will license national credential granting organizations (NCGOs) to oversee admission policies and the maintenance of ethical and professional standards in individual countries and regions. The global institute will be operated and managed separately from the AICPA, which will remain the national organization of CPAs, committed solely to the CPA profession.

Funding

The largest source of initial funding is projected to be approximately $70 million in royalty advances from strategic partners, who will provide curriculum-based education programs for the credential. The business plan also anticipates a revenue source in license fees from the national credential granting organizations.

Ongoing funding will come from dues from actual credential holders and from fees for services in which credential members choose to participate, such as exam assessment fees and publications. AICPA and state society members who do not wish to obtain the global business credential will not pay dues to the global institute.

The current estimate, which takes a conservative approach to the "supply side" (credential holders) market research already conducted, is that more than 200,000 professionals worldwide would gain the credential by 2003. A vast majority of those would be CPA/CAs.

Admissions Requirements

The purpose of the admissions policy is to ensure that members meet consistent global standards for competency, experience and integrity. It is designed to present a rigorous hurdle for those who seek the benefits that come with this credential.

If the proposed global business credential becomes available, CPAs will have an accelerated pathway to obtaining it. During an interim period, CPAs with at least five years of relevant work experience can earn the credential by completing a detailed assessment, subject to audit on a random basis, in lieu of the credential's standard entry point, a high-level examination. The evaluation will cover the candidate's:

* Understanding of a rigorous Code of Ethics.

* Ability to integrate knowledge from multiple business disciplines.

* Ability to apply this knowledge to provide strategic business insight.

* Ability to demonstrate professional competencies that exemplify high-level decision-making.

Re-certification Requirements

It is fundamental to the concept that credential holders commit to maintaining the currency of their knowledge and competence. This will be achieved through a continuous learning and professional development requirement.

To maintain their certification, all credential holders will complete evaluations at specified intervals, currently every five years. These evaluations will reflect both maintenance and enhancement of business knowledge and will be subject to audit. Credential holders whose evaluations reveal significant shortfalls in knowledge will be required to pursue appropriate learning to address gaps, or risk the loss of the credential.

Online Knowledge Resource

All credential holders would have access to a world-class knowledge resource provided by a global technology platform available on a 24-hour, seven-day-a-week basis. This resource would create an unparalleled global online learning platform and include networking opportunities among professionals in diverse disciplines around the globe. The concept of e-learning would support the self-directed study and philosophy of the global business credential.

The online knowledge resource will include a comprehensive and continuously updated database for competency, business problem solving and knowledge enhancement. Among the features of the knowledge resource will be a powerful search engine, interactive communication and a mechanism for tracking completion of evaluations.

Marketing Strategy

The global business credential will be established as a new and distinct brand, one that complements and enhances the value of a variety of professions. The credential marketing program is predicated on a co-branding platform, a key message being that the combination of the CPA and the global business credential creates a powerful and unique business proposition. Because of this, the CPA profession will ultimately receive exposure through the global institute's advertising and marketing efforts, paid for by the dues revenue of the global institute.

Global Outreach

One of the hallmarks of the new credential is its global reach and perspective. Having partners around the globe and among other professions is essential in making this a credible credential in the market.

Canada, Australia and New Zealand are already active partners in the effort to create the new credential. France, Germany, Italy, the Netherlands, Hong Kong and Japan all participated in the early planning meetings held last year in New York. Thus far, France and Italy have expressed interest in joining the initiative, while South Africa is among those interested in continuing involvement. Additional meetings with professional bodies in these and other countries, including Mexico, are scheduled for this summer.

It will also be important to include the participation of other professional disciplines. Involving other professions in the short term will be critical to ensure that the credential is interdisciplinary over the longer term. Another key outreach target is the academic community. The global institute will seek strategic alliances in academia to collaborate in the development of the online knowledge platform and in identifying potential credential holders.

Key Components of the Proposed Credential

Features                      Description

Portable                      Recognized in all participating countries.
Cross-Disciplinary            Working knowledge of accounting, business
                              law, IT, HR, change management, and
                              marketing, and ability to integrate and
                              apply knowledge from multiple disciplines.
Ethics Criteria               Governed by a consistent international
                              code.
Experience-and                Requires knowledge obtained through work
Competency-Based              experience. Mandates continuing learning
                              and periodic assessments.
Linked to Global Knowledge    Provides access to worldwide knowledge
Resource                      resource and unique network of elite
                              professionals.
Complements Existing          Responds to market demand for strategy
Credentials                   professionals who can offer breadth of
                              generalist with depth of specialist.

Pro-Con Debate on New Credential Available for Viewing

The May Council meeting was the scene of a lively debate on the new global business credential, with member panels presenting positions for and against the proposal. Acceptance of non-CPAs as XYZ credential holders and whether additional credentials provide value were the two most frequently debated issues. To help members gain an understanding of the views of those either in favor of or against the credential, the Institute videotaped the debate and has made it available to the membership. Unedited and unabridged, the video runs about an hour.

The debate can be seen as streaming video via the Internet at www.globalcredential.aicpa.org (click on "Credential Information"). To view the debate online, you need to open your video player (the streaming video works best with the latest versions of the free Real Player or Windows Media Player--and a 56K modem or higher capability). A VHS copy can also be obtained free of charge by contacting the Global Credential Member Information Center ([e-mail]; 202/434-9263).

Global Credential Member Information Center

The Global Credential Member Information Center's frequently updated Web site provides access to the business plan and a competency framework document, summarizes research results, offers frequently asked questions, and features a feedback section. In addition, through this Web site members can view a video of a pro-con debate that took place at the May Council meeting.

www.globalcredential.aicpa.org

202/434-9263

202/737-7410

[e-mail]