XYZ.

The Great Debate

CaICPA Members and the AICPA Offer Their Best Shots on the Proposed Global Credential

Reason and passion. The combination can be riveting in any debate. The following point-counterpoint on the global credential includes both of these elements.

A group of CalCPA members: Andrew B. Blackman, CPA/PFS, Shapiro & Lobel LLP, New York, NY; Mitchell Freedman, CPA/PFS, Mitchell Freedman Accountancy Corp., Sherman Oaks; Karen Goodfriend, CPA/PFS, Goldstein-Enright Financial Advisers Inc., Menlo Park; Sheryl Rowling, CPA/PFS, Rowling, Dold & Associates LLP, San Diego; and J. Ben Vernazza, CPA/PFS, Overseas Oversight Group LLC, Aptos, have started the debate by responding to several of the AICPA's talking points, or key statements, on the global credential. These CPA financial planners also are members of the All-Star Financial Group, which discusses and takes positions on matters that affect the CPA profession.

Cynthia S. Lund, AICPA vice president of state society affairs and strategic planning, penned a rebuttal on the AICPA's behalf.

As California CPA went to print, CalCPA's Council and Board of Directors had taken no stance on the proposed global credential other than to provide members with balanced coverage.

For this piece, the two opposing sides were offered equal space and approximately the same length of time to compose their arguments. The views included here are those of the authors only.

We anticipate that considerable news on the global credential will be generated during the next month. CalCPA will keep you informed via updates on CalCPA Online (www.calcpa.org), and in BUZZ, our e-newsletter. If you don't receive BUZZ, please send us your e-mail address at [e-mail].

AICPA TALKING POINT

XYZ is an additional optional credential for members who want it. Results of the U.S. supply-and-demand research indicates that the combination of CPA and XYZ could hold significant marketplace value.

ALL-STAR FINANCIAL GROUP RESPONSE

"Members," as used here, means AICPA members. However, it turns out, it eventually will mean anyone attaining the XYZ credential including non-CPAs! The fact that the new global credential will be open to anyone who can attain the as-yet-unspecified requirements is probably the single biggest reason many CPAs oppose the concept. Page 20 of the August issue of The Thusted Professional, the monthly newspaper of the New York State Society of CPAs, reported that state societies are finding from their members that "many are adamant that the global credential should only be available to CPAs."

The AICPA is chartered to further accountancy and to benefit certified public accountants, not non-CPAs. The irony of the expensive educational exercise to convince CPAs to support a credential available to non-CPAs is that dues paid by CPAs into an organization that is supposed to have the aforementioned mission are funding it. Opening the door to non-CPAs is a betrayal of the membership by the management and leadership.

The promises that "the AICPA's investment" will be repaid by the Global Institute (to be formed when XYZ passes) are akin to placing the cart before the horse. What if XYZ does not pass? Who will reimburse the AICPA then?

At an August NYSSCPAs chapter forum, John Hunnicutt, AICPA senior vice president of public affairs, said that if XYZ passes, the new credential would be financed by a $70 million infusion from unnamed sources, such as businesses that would provide services to XYZers. Who? He told the chapter, "I can't remember the names off the top of my head." Seems very convenient, but moreover alarming.

Barry Melancon, AICPA president and CEO, has stated that he would "grandfather" in all CPAs who request XYZ when the designation becomes available. There are two problems with this proposal. The first is that all those grandfathered will not necessarily be qualified to be a global expert/generalist, cognitor, international business adviser, or whatever XYZ might be called. It takes years of learning, hands-on experience, and international networking to be globally competent. Having a grandfathered group that presumably will include inexperienced CPA/XYZs (not to mention the newly-conferred XYZs who are not CPAs) holding themselves out as experienced and qualified, will likely make the XYZ designation the laughing stock of the real international professional community, thereby negating any "significant marketplace value."

Competency is one of our important professional ethics. We should not allow that to be given away so carelessly. The second problem is that grandfathering appears to be a pandering for yes votes, lest any CPA feel left at the station when the XYZ train pulls out.

AICPA REBUTTAL

The AICPA appreciates the opportunity to respond to the comments raised by the California CPA/PFS authors. It's important to note that much of the commentary includes editorial comment, rhetorical questions and personal opinion, which is part of the healthy debate of any professional issue, and with which it is best not to tamper.

However, there are several items included in the commentary which are wrong, out of context or at the least, misleading to readers.

The AICPA encourages all members of the California Society and AICPA to exercise the due diligence for which this profession is noted by taking time to become fully informed on the new global business credential proposal. A careful reading of the material available in the September 2001 Journal of Accountancy, the July/August issue of The CPA Letter, the letters to each member from AICPA Chairman Kathy Eddy, and the information on the global credential Web site, www.globalcredential. aicpa.org, is an exercise of that all-important due diligence. These materials also were provided to all state CPA societies.

From the previous commentary: "The fact that the new global credential will be open to anyone who can attain the as-yet-unspecified requirements is probably the single biggest reason many CPAs oppose the concept."

The admission requirements have been specified repeatedly in member information materials. They include:

* A degree from an institution of higher learning;

* A rigorous credential examination;

* Five years of experience (if applicant already holds a recognized professional credential, such as the CPA);

* Eight years of experience, plus attestations by two credential holders (if applicant does not hold a recognized professional credential);

* Commitment to uphold ethical standards, as set forth by a new credential governing body; and

* Commitment to continuous learning, as required by new credential governing bodies.

CPAs who, by December 2005, possess five years of relevant work experience, plus the other qualifiers above, could exercise an "early adopter" opportunity. They would be able, until December 2008, to obtain the credential by completing a rigorous self-assessment, which would be subject to a random audit. Additionally, "early adopters" would need to demonstrate a commitment to uphold the ethical standards and continuous learning required by new credential governing bodies.

In addition, the August 2001 Journal of Accountancy included an eight-page insert devoted entirely to the competency framework developed by the Global Credential Steering Committee. It is posted in its entirety at www.globalcredential. aicpa.org.

To find out how AICPA members feel about the proposed concept, and specifically the inclusion of non-CPAs in the population of eligible credential holders, the AICPA'S governing Council mandated in May that a survey be conducted to gauge those sentiments. The survey s charge is as follows:

1. Determine the sentiment of AICPA members regarding the new credential;

2. Find the leading arguments both in favor and against the new credential; and

3. Understand member reaction regarding non-CPA eligibility for the new credential.

The survey is being conducted using a national random sample of MCPA members and is designed to solicit representative points of view.

The member survey began in early September; results will be available to the MCPA Council before its October meeting.

From the previous commentary: "The AICPA is chartered to further accountancy and to benefit certified public accountants, not non-CPAs."

The AICPA's bylaws state: "The name of this organization shall be the American Institute of Certified Public Accountants. In keeping with the Institute's certificate of incorporation, its objectives shall be to unite certified public accountants in the United States; to promote and maintain high professional standards of practice; to assist in the maintenance of standards for entry to the profession; to promote the interests of CPAs; to develop and improve accounting education; and to encourage cordial relations between CPAs and professional accountants in other countries."

The Institute will continue to look for and develop ideas to promote the interests of CPAs, such as the proposed global business credential. Thus, if the members vote to proceed with the proposed global business credential, they will be amending the bylaws to recognize the AICPA's authority to create a separately funded organization to grant the credential in the U.S. This is the question that will be included in the member ballot later this fall.

From the previous commentary: "The irony of the expensive educational exercise to convince CPAs to support a credential available to non-CPAs is that dues paid by CPAs into an organization that is supposed to have the aforementioned mission are funding it."

The member information and response program was mandated by the AICPA Council at its May meeting, in the resolution introduced by the California Society of CPAs and the Texas Society of CPAs, which stated, in part:

BE IT FURTHER RESOLVED that the Board and management should continue with a program to inform AICPA membership on the potential for a new global credential, how it will benefit CPAs, its implications for the CPA profession and to obtain member and state society comment in anticipation of a membership referendum authorized by Council on the proposal.

A full copy of the resolution is available on CalCPA Online at www.calcpa.org/california/newstrends/2001/resolution.html.

The monies spent on the information and response program at the behest of Council have been used to help each member make a fully informed, well-reasoned decision on what the proposed global business credential is, and why it might benefit them and the CPA profession.

Several items are important to note:

* AICPA's governing Council, not a small group of individuals, mandated that the Institute undertake a "membership information and response program." It is critical to note that the resolution was introduced by the California and Texas societies of CPAs.

* It also is important to note that Council, before approving the resolution referenced above by a voice vote, had voted 79 percent to 21 percent against a New York Society-sponsored resolution to immediately cease all work on the global credential initiative.

From the previous commentary: "What if XYZ does not pass? Who will reimburse the AICPA then?"

The July/August issue of The CPA Letter states: "The Institute has spent less than 1.8% of its total budget on this initial effort, essentially equivalent to what the AJCPA 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."

However, if the membership does not approve the bylaws amendment in the fall ballot, the investment in R&D costs will be absorbed by the AICPA as part of its ongoing duty to bring new ideas to its membership. This initiative has generated indepth research into the markets for CPA services in industry and publlc practice, student attitudes, etc. These lessons, and the important and extensive member dialogue that has occurred, have given members and the Institute invaluable data for future pathways and initiatives to fulfill the vision for the profession's future.

From the previous commentary: "Barry Melancon ... would 'grandfather' in all CPAs who request XYZ when the designation becomes available."

In early discussions about the proposed credential, grandfathering was considered, discussed and rejected for the reason that the authors provide. At least five years of experience has been one of the entry requirements from the early stages of the proposal. CPAs who qualify would have an "early adopter" advantage through December 2008 since they would be required to submit a rigorous self-assessment subject to random audit. This is not grandfathering--it is a market advantage that accrues to the members of the profession that has taken the lead in creating the new credential. CPAs who wish to acquire the credential will not automatically be granted it.

Readers should note and remember that although it is a natural tendency to want all the details before making a decision, this proposal cannot be fleshed out in its entirety unless the membership approves the ballot later this fall. The Global Steering Committee has worked to provide AICPA members with as much information as possible for them to make a decision.

AICPA TALKING POINTS

Estimates regarding the market potential for the XYZ have been validated by detailed U.S. market research results.

The overall level of interest in obtaining the credential is approximately 25 percent. This compares favorably to benchmarks used in standard market research. An 18 percent to 20 percent positive response to a new concept is highly indicative of future success.

Research among students indicates that introduction of XYZ will not adversely affect the number of students choosing the CPA track. In fact, it has the potential to greatly increase the number of students interested in both the CPA and XYZ.

ASFG RESPONSE

All of these talking points in support of XYZ have some foundation in research conducted by the AICPA. The AICPA research, which we consider was engineered to support XYZ until proven otherwise, ought to be regarded with skepticism by the membership. Market research by nature is not infallible and is prone to support the desired outcome of the party who contracted for it.

"Keep in mind that every survey is one-sided because the questions are slanted to go in one direction," stated an article on Page 21 of the August issue of The Trusted Professional. The AICPA arranged these research projects and is attempting to use the results to gain membership support to pass XYZ. Consequently, our profession, which is based on a foundation of seeking documentation of results, must look at these findings with a healthy dose of professional skepticism. Before any credence should be given to this research, all of the underlying details should be published for member scrutiny. Since the AICPA paid for this research, wouldn't it be reasonable to ask that an equal allotment of funds be made available to a member contingent that is against the XYZ to conduct a research project of its own?

Also, please note that because the research is based on future possibilities rather than historical data, it's stated in a speculative vein. Qualifying words such as "could hold," "market potential" and "compares favorably" are inconclusive at best.

The New York State Department of Education (SED) surveyed every New York CPA on the global credential, and more than one-third responded, which is an extremely high return rate in any survey. More than 90 percent of the respondents were against the concept of a global credential.

How do we as a profession reconcile the AICPA statement that their research shows 25 percent interest in XYZ, when a state as populous and diverse as New York returned so many replies with such a highly negative opinion?

Undoubtedly, the AICPA would probably cite the SED survey as one-sided. It has been reported, however, that surveys of the memberships in Illinois, New Jersey, and Washington, D.C. yielded similar results to those in New York. In fact, a limited survey of CalCPA's leadership and members also yielded results that indicated that the majority of CPAs do not support the initiative. Can the AICPA refute all of these grassroots surveys, done independently of one another, as slanted?

AICPA REBUTTAL

From the previous commentary: "The AICPA research, which we consider was engineered to support XYZ until proven otherwise, ought to be regarded with skepticism by the membership. Market research by nature is not infallible and is prone to support the desired outcome of the party who contracted for it."

The AICPA Council in October 2000 specifically requested that market and student research be conducted. The extensive market supply and demand research was commissioned by the Global Steering Committee, not the AICPA. The global task force, of which the AICPA is a member, hired the Interpublic Group of Companies, Inc. to investigate the market appeal of the proposed new credential. As the world's largest advertising holding company, Interpublic brought an international, broad-based perspective gained by participating in new product launches within virtually every industry.

Those who are strongly opposed to a concept or idea are likely to question the pedigree of any research, regardless of its validity.

From the previous commentary: "Before any credence should be given to this research all of the underlying details should be published for member scrutiny."

The AICPA and the Global Steering Committee stand firmly behind the statistical validity and methodology of the research for the proposed global business credential. Please go to the global credential Web site to see research results, which have been posted since early spring and which were reported to the AICPA Council. The URL is: www.globalcredential.aicpa.org/ content/info/xyzsupplydemand_files/frame.htm.

From the previous commentary: "The New York State Department of Education surveyed every New York CPA on the global credential, and more than one-third responded... More than 90 percent of the respondents were against the concept of a global credential."

Based on a review of the survey sent by the Department of Education on its Web site, www.op.nysed.gov/home.html, the survey questions did not include any mention of the proposed global business credential. Therefore, it is unclear what the authors are citing.

From the previous commentary: "It has been reported, however, that surveys of the memberships in Illinois, New Jersey, and Washington, D.C. yielded similar results to those in New York. In fact, a limited survey of CalCPA's leadership and members also yielded results that indicated that the majority of CPAs do not support the initiative. Can the AICPA refute all of these grassroots surveys, done independently of one another, as slanted?"

As stated on Page 9 in the July/August issue of The CPA Letter: "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 MCPA 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 [percent] of respondents indicated they might seek the new credential. (A 20 [percent] 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."

AICPA TALKING POINT

The credential represents an opportunity for CPAs to get in early on a significant market opportunity and set the ground rules in a manner consistent with our profession's values.

ASFG RESPONSE

We are not convinced that the proposed XYZ credential truly represents any market opportunity to the typical CPA. Most CPAS are not part of large firms and, thus, do not deal in the international marketplace. An "international" credential would be meaningless to the typical client of a typical CPA. Therefore, why would the typical CPA have any interest in supporting such a credential with their dues and why would the typical CPA have any interest in obtaining it?

Lack of market, lack of support and lack of numbers add up to a lost cause. To those who say this credential will have value to our clients in 20 years, we question the clarity of their crystal ball. Most guidance given by large international businesses is that they do not have any clear visibility of their business prospects for the next quarter! We are expected to trust that our leadership can see 20 years into the future.

All of the authors have earned the AICPA PFS (personal financial specialist) credential (currently there are more than 3,000 CPA/PFSs). We believed that this designation would represent an opportunity to CPAs performing financial planning services.

Almost 15 years later, we find that this credential is not familiar to the general public. The AICPA was supposed to promote this specialty credential along with others (ABV and CITP) to capitalize on market opportunities, yet they are all virtually invisible to many consumers. These designations are all easy to understand and they identify specialties that should have been a cinch to promote. We question how the AICPA (or the new Global Institute) will be able to do better with a non-specific and overly broad generalist tag.

We also question the statement that this is an opportunity to "set the ground rules in a manner consistent with our profession's values." Our profession emphasizes integrity, fairness and avoidance of conflicts of interest. These proposals, which include allowing non-CPAs to attain this new credential, largely have been met with opposition and, at best, apathy from the AICPA membership. So, now those in positions of power at our membership funded nonprofit organization have decided to spend the membership's money on an "educational"' campaign to "enlighten" the unappreciative. Is this "in a manner consistent with our profession's values?"

AICPA REBUTTAL

From the previous commentary: "To those who say this credential will have value to our clients in 20 years, we question the clarity of their crystal ball."

Those readers who continue to have questions also should consider the research released by Robert Half International, which is available on its Web site at www.nextgenaccountant. com/research_hili/research_sum.html. This research was not commissioned by the AICPA nor the Global Credential Steering Committee. This research further verifies trends underlying the concept of the new credential.

The AICPA again encourages members to take time to read, study and analyze the research results, and to consider the strategic imperative to explore changes today that will set the stage for future growth.

AICPA TALKING POINT

The new credential is market-based and free of government regulation.

ASFG RESPONSE

The new credential has not been named yet because the first attempt, cognitor, was an utter failure. Further, the criteria for obtaining this credential has not been fully disclosed (or possibly not even developed) and we are not clear as yet who, besides CPAs will qualify. How can it be market-based when it has not been fully described (developed) and the market does not know it exists? We know. This is all based on some vague research. (Please see our earlier comments.)

We all come from relatively small firms. Our practices have significant non-traditional components. Some of us also have global clients. None of them have ever informed us that our CPA licenses are insufficient to service them. They certainly know what a CPA is and respect the underpinnings. The "market" has not given us any indication that it would pay any more for our services if XYZ were added to our credentials. Our hourly rates probably rank in the upper fifth percentile, and our clients already believe we are worth it.

As for the credential being free of government regulation, we are not sure that is necessarily a good thing. One of the principal reasons that CPAs are atop the list of the most trusted advisers is that we are regulated, both by the profession and by government. This regulation, although cumbersome at times, helps to ensure that our services are for the good of our clients. Even under XYZ, there still would be professional self-regulation and governmental units still will regulate many of the service providers. So, unless we drop our CPA licenses, we still will be regulated. Where is the huge pay-off?

AICPA REBUTTAL

From the previous commentary: "The 'market' has not given us any indication that it would pay any more for our services if XYZ were added to our credentials."

Although the authors discount the market supply and demand research, it shows clearly that the proposed credential creates value over time--but only if members approve going forward with the concept. It's unrealistic to think that today's market would be able to ask the authors for something that doesn't yet exist. However, the IPG research shows that when presented with the potential of the proposed credential, the respondents volunteered that they would pay a premium to holders of both a CPA and a global business credential.

All new concepts take time to grow their value and market awareness, and if the membership approves this initiative, much of the separate Global Institute's early efforts will be focused on creating that awareness and value. It's interesting to consider the advances this profession may have foregone if in earlier years others hadn't laid the groundwork for new opportunities.

AICPA TALKING POINT

The XYZ credential is interdisciplinary and credential holders will operate under rules that are internationally consistent.

ASFG RESPONSE

The two points, "interdisciplinary" and "internationally consistent" do not seem to be reasons to support the XYZ credential. Multidisciplinary practices are evolving and already are in de facto existence. Certainly the Big Five and other large firms employ non-CPAs of various disciplines and are multinational. This structure is addressing the marketplace demand for such services. How will a new moniker for interdisciplinary members enhance the value of the CPA license any differently than the existing paradigm?

The fact that there will be members of many disciplines under the banner of the XYZ will likely dilute the value of the CPA credential rather than enhance it. If there are many XYZers running around the world, how will the marketplace determine who is qualified in any particular discipline? The answer? The marketplace will stick with what already works.

As to consistent governing rules, it is highly unlikely that professionals from various disciplines, different countries, with diverse cultures, and varied educational backgrounds will agree on international rules. Even generally accepted accounting principles vary throughout the world and the U.S. rules are not in accordance with international GAAP.

It is arrogant to believe that the Global Institute, which will be established principally with the efforts (and possible funding) of the AICPA, will be able to achieve consensus from all of these diverse professionals unless the rules are exceedingly general in scope. In such case, they probably will not have any meaningful teeth.

AICPA REBUTTAL

The AICPA did not directly respond to these comments.

AICPA TALKING POINT

The concept that XYZ is being driven by the Big Five is false. The most significant short term beneficiaries are likely to be industry CPAs, CPAs in non-traditional service areas, such as IT consulting, and Group B and the next level of firms that are expanding service offerings and taking on e-commerce as well as global clients.

Industry CPAs and CPA consultants in non-traditional areas should find most immediate value in the credential as a validation of the interdisciplinary competencies that they have developed.

ASFG RESPONSE

We never viewed the XYZ as a Big Five initiative. We believe that this is merely stated to ensure that any anti-Big Five sentiment is not the cause of any NO votes on XYZ. Frankly, the Big Five already have effectively built XYZ into their structure. They simply hire whatever experts they need in any part of the globe. If you are part of the Big Five, XYZ is a just a big yawn.

The Big Five will neither benefit from XYZ nor be threatened by anyone who might attain the credential. PriceWaterhouseCoopers went so far as to publish its own statement of disinterest in the global credential.

The balance of these points attempts to identify the CPAs that the AICPA believes will benefit from XYZ. We already have stated that all of us fit within the description of an XYZ and we have spoken with many other CPAs who also fall into such a group. Many of us already have been pioneers of new credentials to advance our position in the marketplace and to validate our lifelong learning expertise.

We certainly are not the rearview mirror oriented CPAs that the AICPA would suggest are afraid of something new and different. It is virtually universal that none of us see the value to XYZ and know with even greater certainty that our practices would not benefit at all from XYZ now or in the future.

AICPA REBUTTAL

From the previous commentary: "It is virtually universal that none of us see the value to XYZ and know with even greater certainty that our practices would not benefit at all from XYZ now or in the future."

Is the authors' crystal ball any more prescient than the one they accused the AICPA of using earlier in the commentary?

Here's a partial list of AICPA member groups and other constituencies that have endorsed the proposed global business credential:

* AICPA Business & Industry Executive Committee, which is charged with promoting the interests of the 147,000 Institute members working in companies of all sizes

* AICPA Members in Government Executive Committee, which is charged with promoting the interests of the 13,700 Institute members working in government and government agencies

* PCPS (Private Companies Practice Section) and MAP executive committees--the groups promoting the interests 6,300 firms and 77,800 individual CPAs in those firms

* The Michigan Association of CPAs' Board of Directors

* The Ohio Society of CPAs' Board of Directors

* The Indiana Society of CPAs' Board of Directors.

While it's true that other state societies have gone on record as opposing the credential, it's important to not be misled by statements that are purported to be "virtually universal" or that state "none of us see the value to XYZ ..."

AICPA TALKING POINT

The Global Institute, which will administer the credential will be self-supporting and the AICPA's investment will be repaid. The Global Institute will not be funded by AICPA or state society member dues, but by dues and fees paid by XYZs.

ASFG RESPONSE

We've addressed earlier the problem of assuming that XYZ will happen (the cart before the horse) and that reimbursement will occur. If there is a Global Institute, are we sure that the AICPA will get a fair shake? Will this new organization repay all direct costs as well as indirect costs and allocated overhead? Who will monitor that this occurs?

Additionally, how will this or any organization ever be able to repay the lost opportunities to AICPA members because AICPA executives and staff devoted significant amounts of time to this initiative rather than enhancing the CPA credential?

AICPA REBUTTAL

The AICPA did not directly respond to these comments.

AICPA TALKING POINT

The XYZ in no way replaces the CPA. In fact, the AICPA recently allocated $1 million in matching funds for state societies to increase their 2000-01 image enhancement spending by 25 percent--or more! The AICPA has allocated $25 million for a new student recruitment campaign.

Research and development of the XYZ credential is only a very minor part of what we are doing at the AICPA and state societies.

ASFG RESPONSE

That "the XYZ in no way replaces the CPA" is simply a defensive statement and diversion designed to subvert the real issue in these two points, which is the tremendous amount of AICPA funds being spent to force-feed XYZ to the electorate.

Shouting about how much AICPA is spending on valid initiatives does not remove the stigma of what has been spent on XYZ. Qualifying that XYZ R&D "is only a very minor part of what we are doing at the AICPA" (not forgetting how they drew the innocent state societies into this one, as if they are allies), does not excuse the absolute amount of funds that we believe has been wasted.

"The American Institute of CPAs this month stepped up its campaign for the controversial XYZ global credential, as the three-year, $5 million initiative hurdles toward a November vote," reports Page One of the August issue of The Trusted Professional. Considering it has been widely acknowledged that there is a strong vocal opposition to XYZ, a more reasonable and prudent course would have been to reconsider the measure with members' input rather than an expensive media blitz to spin the proposal in hopes of ramming it through.

AICPA REBUTTAL

From the previous commentary: "... they [AICPA] drew the innocent state societies into this one, as if they are allies ..."

State society leaders and staff always have conducted their own analysis and due diligence when determining whether to enter into any collaborative effort with the AICPA.

The AICPA has asked state societies to participate in informing members about the global credential to whatever extent each society is comfortable. Some state societies have participated to a great degree; others have chosen not to play a role in informing members. For example, the Nebraska Society recently stated in its newsletter that "the Society membership this summer voted against the use of Nebraska Society resources to support and promote the AICPA's proposed XYZ global interdisciplinary credential."

From the previous commentary: "Considering it has been widely acknowledged that there is a strong vocal opposition to XYZ, a more reasonable and prudent course would have been to reconsider the measure with members' input rather than an expensive media blitz to spin the proposal in hopes of ramming it through."

There has been no "expensive media blitz;" in fact, the AICPA has not purchased any paid advertising, nor has it conducted its information and response program in the media. Instead, it has engaged in professional and respectful dialogue with its members through its and state society publications, face-to-face meetings, and direct communication to its members.

AICPA TALKING POINT

The AICPA and state societies will remain the home of and the advocates for CPAs. That commitment is rock solid and will not diminish.

ASFG RESPONSE

The state societies have been the state home and advocates of CPAs. The commitment of the various state societies is not in question, so why cloud the debate with that issue? Could it possibly be because the AICPA has been veering away from advocacy for its membership with many of its recent initiatives (CPA2Biz, relocation of the library, etc.)?

Also, since virtually all of the AICPA's revenue-generating resources have been moved to CPA2Biz, where will the money come from for the AICPA to remain the national home for CPAs? The only answer appears to be significant dues increases.

If the membership approves XYZ, why would XYZs decide to continue their AICPA membership? Professionals will seriously consider whether or not they receive value from their AICPA membership. If XYZ becomes so successful, why would CPAs want to continue to maintain their AICPA membership? If, on the other hand AICPA membership will be required of CPAs to become an XYZ and join the Global Institute, substantial numbers of CPAs are likely to abandon the AICPA, not join the Global Institute, but stay with their state societies. If many AICPA members decide not to renew their AICPA memberships, where will the support come from?

Members can question now whether the AICPA's commitment is rock solid. We believe that it has not adequately supported the CPA brand or its existing accredited specialties. Why should we believe they would begin to do so in the future?

AICPA REBUTTAL

From the previous commentary: "Also, since virtually all of the AICPA's revenue-generating resources have been moved to CPA2Biz, where will the money come from for the AICPA to remain the national home for CPAs? The only answer appears to be significant dues increases."

The 2001-02 dues billing sent in July 2001 did not include any dues increase.

Also, in a recent letter submitted to Accounting Today, AICPA Chairman Kathy Eddy wrote:

"There has been no diversion of AICPA revenue to CPA2Biz. CPA2Biz has been contracted to be the marketing and distribution arm of the AICPA. AICPA is made whole just as if we sold our products without CPA2Biz. In fact, due to a royalty agreement, the AICPA has more economic upside with less downside risk exposure than before the transaction."

AICPA TALKING POINT

The decision to develop XYZ is very much in alignment with the grassroots CPA Vision and there have been independent effort in the profession to develop the kind of strategic knowledge accreditation intended by the XYZ concept.

ASFG RESPONSE

Grassroots implies that a large number of typical CPAs are supportive of the XYZ concept. At the AICPA PEP Technical Conference in January, there was a presentation on XYZ to the approximately 1,000 CPAs in attendance. Representative post-session comments included: "Who came up with this crazy idea?" And, "I hope they're not spending any of my money on this!"

We personally attend many conferences and interact with many CPAs. We have spoken with only an extremely small minority that has been supportive of this concept (probably less than 10 percent). The five of us, in speaking with the many CPA we know from around the country, have garnered this evidence, and even if anecdotal, it should not be dismissed. Accordingly, we would ask where is this grassroots majority?

Finally, Professor Ronald M. Mano, Ph.D, CPA, CFE, and chair of Weber State University's School of Accounting said the following in a recent article in Accounting Today (August 6-19, 2001):

"... If the XYZ project fails, we will have wasted a significant amount of the effort and finances of the AICPA. If it succeeds, it will certainly dilute and possibly destroy the quality and stature of the CPA certificate. Thus, both CPA certificate holders and society (emphasis added) would lose in either case. Therefore, succeed or fail, the XYZ project could be suicide for the CPA certificate and/or the AICPA."

Professor Mano concludes by saying, "Remember that 19 o 21 failed civilizations did not die from conquest from outside but from failures from within. Let's not allow the demise of the CPA certificate to come from ourselves. Let us not be our own worst enemy."

AICPA REBUTTAL

Again, the AICPA is grateful to the editors of California CPA or providing the opportunity to address the misstatements 2nd most egregious innuendo included in the foregoing article. Just as the CPA/PFS authors conclude their article with quote, please take a minute to read what Jim Emerson, author of Emerson Opinions on Professional Services, wrote July 23, 2001:

"While there is significant work to be done to bring the XYZ credential to even early stage acceptance, I am hard-pressed to find any glaring, fundamental flaws in the concept or plan. In my opinion, the idea is right, the implementation plan is right, he timing is right and the leadership is right. And this opinion is from a person who takes great pride in being a professional skeptic. After all the education and debate around XYZ clears, I believe the only remaining question will be whether our profession has the courage and confidence to lead the professional services industry in the 21st century."

STRAW POLL
CaICPA Board of Directors, April 2001
GLOBAL CONFIDENTIAL
 7                   Supported the credential
35                   Opposed the credential
21                   Felt they need more information
 6                   Were undecided
Total respondents = 69 board
members
GLOBAL CREDENTIAL: TAX LAW CONFERENCE POLL
Among the 428 surveys that were
were returned, 289 were from men
and 139 were from women. Of these,
386 were from CPAs in public practice
and 291 came from firms with
five or fewer CPAs.
   Believe the credential is a good
                              idea.  41%
       Thought it should be limited
                           to CPAs.  29%
  Would support the credential even
it were offered to non-accountants.  20%
  Felt if non-accountants can part-
   icipate, it should be limited to
         those working in financial
 disciplines or in affiliation with
                        accountants  37%
  Said the credential should become
         a special designation that
      supplements the CPA (like PFS,
                      ABV or CITP).  42%
   Reported they didn't have enough
          information to answer the
                         questions.  43%
Note: Table made from bar graph
GLOBAL CREDENTIAL: MONTEREY FOCUS GROUP
Among the 39 respondents, 14 were
women and 25 were men. Of these, 29
were in public practice and 23 came
from small firms.
        Believe the credential is a good
                                   idea.  56%
         Thought it should be limited to
                                   CPAs.  49%
    Would support the credential even it
        were offered to non-accountants.  28%
             Felt if non-accountants can
       participate, it should be limited
           to those working in financial
      disciplines or in affiliation with
                             accountants  62%
     Said the credential should become a
    special designation that supplements
        the CPA (like PFS, ABV or CITP).  69%
Note: Table made from bar graph
GLOBAL CREDENTIAL: SAN DIEGO FOCUS GROUP
Among th 50 respondents, 13 were women
and 37 were men. Of these, 38 were in
public practice and 27 came from
firms with five or fewer CPAs.
     Believe the credential is a good
                              idea.  78%
    Thought it should be limited to
                              CPAs.  56%
  Would support the credential even
it were offered to non-accountants.  42%
        Felt if non-accountants can
  participate, it should be limited
      to those working in financial
      disciplines or in affiliation
                   with accountants  60%
  Said the credential should become
         a special designation that
     supplements the CPA (like PFS,
                      ABV or CITP).  72%
Note: Table made from bar graph

The Global Business Credential - Just the Facts

What is the global business credential?

An AICPA-proposed business credential for CPAs and other business professionals.

Who is working to create this credential?

The Global Credential Steering Committee consists of the AICPA and participating accounting organizations from Canada, Australia, New Zealand and Italy.

Judith Trepeck is a CPA from Michigan and COO of the Global Credential Steering Committee. Trepeck is a member of the AICPA's Strategic Planning Committee and a former member of the AICPA Council as well as the MAP and CPE executive committees.

Who will administer the global credential?

This has not been determined. According to the AICPA 2001 spring council minutes, "Council believes that the AICPA should be the holder of the rights in the United States to administer and award the new global credential."

In late October, the AICPA is expected to distribute ballots for a general membership vote (although this is subject to change). The vote will focus on whether or not the AICPA should amend its bylaws to allow for the creation of a separate organization to administer the global credential. To move forward, the AICPA needs to obtain a two-thirds majority from voting members.

Who will regulate the global credential?

The administering organization (see previous question) will be a self-regulating body that is not subject to government intervention, licensing or regulation.

Who is eligible for the global credential?

Anyone who meets the requirements is eligible. This is not a CPA-only credential. The business plan for the global credential projects that there will be more than 600,000 credential holders in the next 10 years.

What are the requirements?

The proposed requirements have been identified as "consistent global standards for competency, experience and integrity." During an interim period, CPAs and other selected professionals 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 (not the Professional Code of Conduct to which CPAs are held to be licensed);

* Ability to integrate knowledge from multiple business disciplines;

* Ability to apply this knowledge to provide strategic business insight; and

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

Who is funding the global credential?

The AICPA and the Global Credential Steering Committee have funded the initial efforts for developing and promoting the global credential. According to the AICPA, as of late-September, it had spent just under $5 million on the global credential. This includes all costs incurred since 1998, and represents .75 percent of the AICPA's budget during this time period.

Who will fund the global credential long-term?

The largest source of initial funding is projected to be $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 proposed national credential granting organizations.

Ongoing funding will come from dues from credential holders and from fees for services in which credential members choose to participate, such as exam assessment fees and publications.

Will all global credential holders be required to abide by international accounting standards?

No, the global credential is not an accounting designation, so it has no connection to GAAP, GAAS or IAS.

How global is the credential?

Currently the AICPA and accounting organizations from four other countries are participating in the global credential's development.

What will this global credential be called?

A final name selection was to be unveiled to AICPA Council members in September and was unavailable as California CPA went to press.

What are the implications to me as a CPA if a global credential is created?

This is an area of enormous debate and very difficult to sort out fact from opinion and supposition. The point-counterpoint debate starting on Page 34 covers many of the salient issues surrounding the global credential and is provided to help you determine how the global credential might impact you.

How do I get more information?

There are several information sources available on the proposed global credential and they include:

* The AICPA's global business credential member information center at http://globalcredential.aicpa.org/index.htm; (202) 4349263 or [e-mail].

* CaICPA Online has a global credential resource page that you can access at www.caIcpa.org/californiacpa/XYZ/index.html. This page provides links to CaICPA, AICPA and member-driven resources, as well as a forum for member feedback.

* Member-driven resources are available at www.xyztalk.com. You also may subscribe to the XYZTalk listserve by sending an e-mail message to [e-mail].

This sidebar contains information reprinted with permission from the July/August 2001 issue of The CPA Letter.

In Search of Balance - An Update on Global Credential Activities in California

Susan B. Waters, CAE

What's in a credential?

CPAs in California and nationwide are debating the AICPA's proposal to create a multidisciplinary, global business credential. This issue of California CPA includes articles arguing both for and against the new credential. I will not repeat those arguments here. Instead, I will try to summarize CaICPA's actions in this area.

CaICPA Member Survey

Last January, CaICPA surveyed a random sample of members. Among the survey's goals, we attempted to get a sense of how our members perceive the value of their CPA credential. We asked several questions:

* Whether members are able to practice as they wish with the CPA credential;

* Whether the CPA credential is too limiting;

* Whether the value of the CPA has increased in the past five years; and

* Whether the perception of CPAs hinders the ability to expand the practice.

Our members were consistent in their responses to the first two questions: 77 percent agreed that they were able to practice as they wished with their CPA credential and only 13 percent found the credential to be too limiting.

Nine percent reported that the perception of CPAs hinders the expansion of their practices. However, only just over one-third, or 34 percent, reported that they believe the value of the CPA brand has increased over the past five years. A plurality, between 41 percent and 48 percent, were neutral on this statement, probably indicating that the brand has neither increased nor decreased.

The data also showed that our industry members expressed more ambivalence about the CPA credential's value than members in public practice.

Straw Poll

In April, staff took a straw poll on the credential at the CaICPA Board of Directors (now Council) meeting. Those results (see Page 35) found that seven directors supported the credential; 35 opposed it; 21 felt that they needed more information; and six were undecided.

At the AICPA Council's spring meeting, following a resounding defeat of a New York and Illinois-led resolution to end the global credential, Council passed a resolution, proposed by the California delegation and supported by Texas. This resolution authorized the AICPA to continue developing the global credential, educate its membership and prepare a ballot to be mailed to AICPA members following the October 2001 AICPA Council meeting-if Council still supports the vote.

The resolution also called for the AICPA to conduct a statistically valid survey of members to determine their attitudes toward the credential, including an inquiry as to whether the credential should be made available only to accountants or to a wide range of professionals. CaICPA Past President Hal Schultz has served on an advisory panel about this survey, which the Roper Research firm was to conduct in September.

California Focus Groups

Following the AICPA Council meeting, CaICPA's Executive Committee (now Board of Directors) asked staff to hold focus groups about the proposed global credential. The Education Foundation's CE Weeks provided a forum for those focus groups, with John Plymyer (who recently served as CaICPA's interim executive director) facilitating the discussions. At each focus group, a videotape and descriptive information from the AICPA was distributed prior to discussion.

At the San Diego CE Week in July, 50 people participated in the focus groups. The findings (see Page 42) break down as follows:

* 78 percent believe that the idea of a global business credential is a good one;

* 56 percent thought it should be limited to CPAs;

* 42 percent would support the credential even if it were offered to non-accountants;

* 60 percent felt that non-accountants who participate should be working in financial disciplines or in affiliation with accountants; and

* 72 percent reported that they believe that the credential should become a special designation that supplements the CPA (like PFS, ABV or CITP).

At the Monterey CE Week in August, 39 people participated in the focus groups. The findings (see Page 42) included:

* 56 percent believed that the idea of a global credential is a good one;

* 49 percent thought it should be limited to CPAs; and

* 28 percent would support the credential even if it were offered to non-accountants.

Tax Conferences Surveys

In August, the Education Foundation held conferences on the new tax law in Anaheim, San Francisco and Universal City. Here, staff distributed the same questionnaire that was used with the focus groups, but there was no organized discussion of the credential. In all, 428 surveys were returned. The findings (see Page 40) included:

* 41 percent believe that the idea of a global business credential is a good one;

* 29 percent thought it should be limited to CPAs;

* 20 percent would support the credential even if it were offered to non-accountants; and

* 42 percent believe that the credential should become a special designation that supplements the CPA.

Striving for Balance

Throughout this year, CaICPA has attempted to compile information and report to our members in a fair, balanced and unbiased way about this credential. Articles have appeared in California CPA and BUZZ; materials from CaICPA, the AICPA and independent members have been posted to CaICPA Online; several chapters and state committees have discussed the credential; and so on. It has been our goal to provide information that will enable our members to be informed if and when an AICPA ballot arrives.