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AICPA's incoming chairman looks ahead to a new decade: Charles Kaiser, Jr.; no matter how good, there's always better.


Charles Kaiser, Jr.: No matter how good, there's always better.

Hold hands and stick together" was the theme of the inauguration address by Charles Kaiser, Jr., when he was installed as chairman of the board of directors at the American Institute of CPAs annual meeting in San Antonio, Texas. By all appearances, it will become the primary message of his tenure as chairman as well.

In a recent Journal interview, it quickly became apparent that Kaiser is a firm believer in cooperative effort for all AICPA projects. He has traveled over 3 million miles as a result of his professional interest in world tourism and reflects that "I've traveled a lot and seen a great deal. If nothing else, this peripatetic life-style has taught me that AICPA members have much more to bind them together than they have to keep them apart. Time and again, I'm reminded that we are stronger as one than we are as many."

Kaiser's management style places heavy emphasis on cooperative or participative leadership. He believes that "when people fail, it is usually because the leadership has failed to provide the proper guidance." Setting the right tone, or corporate culture, is one of management's most important functions, according to Kaiser. People then must be indoctrinated with those values. "If you can do that," he says, "you'll have a successful organization."

He sums up his management philosophy by saying that "good managers delegate within a structure that's controlled but not rigid. They help their people develop work programs that encourage initiative. They let subordinates pursue objective in their own way while remaining a partner in the ultimate outcome--sharing in the eventual success or, more important, failure. I know of no better way for managers to build a winning relationship than to give their people full credit when they succeed and to share or accept the blame if they fail."


Kaiser first learned the value of cooperative effort playing stickball and stoopball on the streets of New York City, where he was born and brought up. His mother still lives there, and he jokingly notes that she absolutely refuses to move more than five blocks from Bloomingdale's. He got his first taste of life in a rural atmosphere when he attended Franklin and Marshall College, a liberal arts college located in Lancaster, Pennsylvania, graduating in 1955 with a bachelor of science degree in economics.

Kaiser never made a conscious decision to become a practicing CPA. Rather, he almost drifted into the profession. Shortly after graduation, a favorite uncle urged him to "become a professional, no matter what else you decide to do with your life." Since he had already joined Pannell Kerr Forster, an association he maintains to this day, he decided to become a CPA. He completed the educational requirements for a CPA certificate while earning an MBA at New York University Graduate School. After receiving his CPA certificate in 1959, he joined the management advisory services staff in New York and was transferred to Los Angeles in 1964 to develop MAS activities in that office. He was admitted to partnership in 1967 and became the firm's managing partner in 1973.


Since 1968, when he first conducted a tourism study for Travelodge Australia, Kaiser has specialized in tourism and hotel development, with particular emphasis on the Pacific Rim. He has studied areas such as Tahiti, Fiji, Samoa, New Zealand and Australia as well as Hawaii. In addition, he has been a consultant to the Disney organization in developing Disney World in Orlando, Florida, and has represented the Agua Caliente band of Mission Indians before the U.S. Department of the Interior in developing their tribal lands in Southern California. He also used the skills acquired in writing these numerous tourism development plans to measure the damages to the tourism industry from the Santa Barbara channel oil spill in 1971.

He points out that, unlike extractive industries, tourism does not deplete a country's resources. As he puts it, "When the tourists go home, the beach, the sunshine, the hotel, the golf course remain to be used again." He also notes that "tourism is a very positive ecological industry," because "if you despoil the environment, you ruin the attraction itself."


Kaiser has little patience with programs aimed at maintaining the status quo. He is fond of saying that "no matter how good, there's always better." For that reason, he looks forward to helping the AICPA meet a number of challenges it will face during his chairmanship.

* The SECPS vote. The AICPA's most immediate challenge is the referendum on mandatory membership in the Institute's division for firms SEC practice section (SECPS) for firms with public company clients. Kaiser enthusiastically supports a "yes" vote, pointing out that the real issue is not mandatory membership per se but, rather, the ability of the profession to regulate itself. "We must demonstrate to the public," he says, "that we can regulate ourselves--we can and must be our brother's keeper--even though it may not be pleasant or comfortable to do so."

* Federal financial reform. In terms of overriding public interest, this may be the most significant challenge for the AICPA as it heads into the new decade. "The Institute has made a new commitment to speak out on public issues about which it has special knowledge," says Kaiser. "I believe accountants should be engaged in an attempt to restore some form of sanity to federal financial management, including the appointment of a chief financial officer for the U.S. government, uniform accounting and reporting standards and published, audited financial statements."

Kaiser points out that "right now, four people are working to maintain one person on Social Security. But after the year 2,000, there will be only two people working for every one on Social Security. This means we will need to cut benefits, reduce spending on other programs, raise taxes or increase debt to pay for the increased Social Security burden. Only an effective federal financial management program can tell us the correct mix of options to choose." As part of its new stance, the AICPA will sponsor a colloquium on federal financial reform in Washington, D.C., next month.

* The Uniform CPA Examination. In his first act as chairman, Kaiser appointed a special committee to find ways to test communications skills in a cost-effective manner in, before or after the CPA examination. This would resolve a long-standing dispute between those who would eliminate essay questions and those who want to grade essay questions in the manner of college student themes.

Kaiser personally believes that failing to examine and grade communications skills will produce technicians rather than professionals. "If it were only my decision," he says, "I would test for verbal proficiency as a prerequisite to taking the CPA exam. Then the CPA exam could be all objective." He also points out that GMATs and SATs test communications skills very successfully without using essay questions. "However," he adds, "that's why I appointed a committee--to come up with its own independent conclusion." The committee is chaired by Robert L. Israeloff, chairman of the private companies practice section executive committee, and staffed by Rick Elam, AICPA vice-president-education. It will include members from the SECPS executive committee, the industry committee and the board of examiners as well as two prominent educators and a practitioner familiar with testing procedures. The National Association of State Boards of Accountancy has been asked to send a representative.

* Forms of practice. Kaiser intends to give this issue the highest priority. Specifically, he says "there is no reason for us to wait to control our unlimited liability until the government, for its own reasons, makes us move." He points out that the AICPA governing council has already indicated its willingness to accept a limited-liability practice format. Kaiser therefore intends to ask the Institute board of directors to join with the professional ethics division and the tort reform committee in developing a limited-liability model for consideration.

* Pension safety. Kaiser believes this is potentially the most explosive issue facing the profession today. "The magnitude of the risk is mind-boggling," he says. "There are $1.7 trillion in private pension funds in the United States today. Even a 1% erosion would amount to a loss of $17 billion." The principal problem, according to Kaiser, is a provision in the Employee Retirement Income Security Act that permits plan administrators to limit the scope of the audit. In Kaiser's view, these limited-scope audits "just don't pass the smell test" and should be eliminated.

He also believes that issues such as pension safety and the savings and loan crisis are drawing us "inexorably" down the road to reporting on internal controls and compliance with laws and regulations. He says, "If we can set appropriate standards, if we can define the terms of the engagement, I believe we should welcome it. After all, it's a beneficial service. So if we don't do it, someone else will."


Kaiser believes accounting will someday be taught largely at the graduate school level, although "the profession may not get there for another 25 years." Coming from a liberal arts background himself, he strongly advocates training in the arts and humanities for accountants.

He foresees much wider use of paraprofessionals in accounting as the profession copes with a shrinking supply of entry-level accountants and a more complex work environment. He points out that asking a recent college graduate "with 150 credit hours behind him to examine vouchers is not the highest and best use of that person."

By the turn of the century he believes the manner in which audits are conducted today will be "an anachronism," replaced in large part by expert computer systems. For that reason, he believes the audit process should be reevaluated over the next decade.

He says change is inevitable but the AICPA must be prepared to manage change--not allow change to manage it. "We need to anticipate, not react, to the challenges of exploding technology, increasing complexity, expanding competition and a shrinking demographic base, as discussed in the Institute's strategic plan."
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Author:Barrett, Gene R.
Publication:Journal of Accountancy
Date:Nov 1, 1989
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