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New AICPA chairman sees a bright future for the profession.

Jake Netterville will stress the positive view of the profession's future during his term as chairman.

When Jake Netterville, new chairman of the American Institute of CPAs board of directors, was asked about the state of the profession during a recent Journal interview, he sounded optimistic. He said, "I fully realize the profession is facing some problems, such as the recession and the liability crisis, but there are some very positive things as well. Unfortunately, negative matters sometimes get more press than positive ones. I'd like to see the profession's positive side become more visible while I serve as chairman."

Netterville cited media treatment of the impact of the economic downturn on the profession as a prime example of negative reporting. He said, "The fact that the recession has damaged CPAs all across the country, with many areas still feeling its effect, has been widely reported. But, on a more positive note, some parts of the country, including my own state of Louisiana, are now beginning to turn the corner and come out of the recession. However, there has been almost no news coverage on that encouraging development."

In a similar vein, Netterville pointed to the explosion in liability suits against CPA firms. He said, "The liability crisis is far and away the most important problem facing the profession at this time. Nothing else is even close. But, even here, there are some positives. Most important, we have mounted a concerted attack on the problem from several different angles."


Netterville pointed out that the profession is not alone in its attempt to halt the rash of abusive lawsuits. The AICPA has joined the Coalition to Eliminate Abusive Security Suits (CEASS), an important Washington coalition of business and professional organizations lobbying for laws that would replace joint and several liability (all parties to a lawsuit are potentially liable for 100% of the damages) with proportional liability (the damages assessed are based on the defendant's degree of fault). CEASS also is lobbying for federal legislation that would require plaintiffs to pay a defendant's legal fees if a court determines a lawsuit is without merit.

In addition, the six largest accounting firms have issued a joint statement of position (see J of A, Nov.92, page 18) supporting a coordinated federal and state effort to achieve liability reform and have pledged to work together to achieve that goal. Netterville said the combined effort was an indication of the importance they attach to litigation reform.

He stressed, however, that the need for litigation reform is an issue that concerns the entire profession, not just the largest CPA firms. "I come from a midsized firm, and I know we do not have the 'deep pockets' needed to cope with the settlements handed down in recent years." Netterville said a recent AICPA survey showed claims against CPA firms other than the six largest rose by 66% between 1987 and 1991. Moreover, 40% of these firms can no longer afford malpractice liability insurance and are "going bare."

To improve the chances for favorable action on litigation reform, the AICPA is upgrading the effectiveness of its key person program, in which AICPA members maintain personal contact with members of Congress. Netterville said, "As I travel around the country, I plead with CPAs to let the Institute know if they are closely connected with congressional representatives. Our key person program is very effective as it now stands, but I'm convinced we could use more CPAs calling on members of Congress. So far, we have had some new people step forward, and I'm sure they will help."

Netterville doesn't believe members will have to wait very long for action on litigation reform. He expects a bill to be introduced in early 1993. He cautions, however, that "it's going to be a very difficult fight. We expect stiff resistance from a number of special interest groups that are also heavy contributors to congressional races. Nevertheless, I believe we will be able to achieve some victories here."


When Netterville talks of managing a CPA firm in a business downturn, he speaks from hard experience. His geographic area was, in his words, "on the cutting edge of the economic decline." Netterville explained, "Our economy was the first to suffer, primarily because of a sudden drop in oil prices." At that time, Netterville was heavily involved in the work of the AICPA management of an accounting practice committee and the private companies practice section of the AICPA division for firms. As he spoke at conferences and committee meetings around the country, he recalled, "Very few believed me when I said a CPA firm can actually lose gross income from one year to the next. Until then, CPA firms had always gone forward--never backward."

Netterville strongly believes his work on AICPA committees has contributed to a more efficient firm. "Much of our success is the direct result of picking up ideas from other firms. By putting ideas from other AICPA members to work, our firm was in a much better position to get through the difficult times in our area. I hope other small and midsized firms can use the ideas and experiences I shared at these conferences and committee meetings to get through the downturn in their areas."

Among its many lessons, the recession showed Netterville how a CPA firm reflects the general business economy in its area. "Economists in Baton Rouge concluded the bottoming out of the Louisiana economy occurred in August 1989. Well, our firm hired its first new person after the recession in August 1989, long before the economists reached their conclusion. Thankfully, we're back on the right track now and have been for the three years since then."


Netterville looks forward to making proress on women and family issues. "As you know, the AICPA council had quite a discussion on creating a new executive committee for women and family issues. The committee will hold its first meeting sometime this month. I hope that by the end of my term many of the goals the AICPA council set for the committee will have been reached."

These goals are ambitious, Netterville said. They include establishing formal liaison programs with state CPA societies to share information on women's and family issues and to conduct roundtable discussions with state society staff members responsible for these issues. In addition, the committee will enhance a program to identify appropriate women for AICPA committee, board and council appointments and to monitor the number of women serving in such positions within the AICPA. The committee also will develop an information clearinghouse to serve as a resource for women in the profession and publish a newsletter with articles relevant to women and family issues.


Netterville also wants to ensure the AICPA gives its members "just value for its dues income." He intends to reach this goal by intensifying efforts in two areas. First, he said, "I would like to see various state societies and the Institute come closer together and try to eliminate duplication of programs in order to reduce costs and lessen upward pressure on dues." He pointed out that an AICPA task force is now working with state society executive directors to accomplish this objective. He said, "Each group will have to give a little bit, but we should move well along the path in the next year."

Second, Netterville believes the Institute should preserve the operational efficiencies made last year. "The Institute made tremendous strides toward being more effective and efficient when it tightened its belt and cut costs last year. With the help of the cost-cutting program and a dues increase, we started this fiscal year in the black. We do not want to continue the activities curtailment we had to endure in fiscal 1992 and intend to restore many of the programs that had to be cut back or reduced. However, we need to remember the lessons we learned from the belt-tightening, particularly the ones on improved productivity and efficiency. We must keep trying to deliver AICPA services at the lowest possible cost to our members."


Netterville is acutely aware of what AICPA services can mean to members. He said, "My first real assignment at the Institute was in 1977 as a member of the MAP committee. That assignment opened my eyes to what the Institute was doing for its members. It was a thrill for me to meet other members who came from small and medium-sized firms with problems similar to my own. They were able to share their experiences, and often solutions, with me."

Netterville spent three years as a MAP committee member and another three years as its chairman. He also served on the PCPS executive committee. During that time, he was president of the Society of Louisiana CPAs and a member of the State Board of CPAs of Louisiana.

Soon after, he was elected as an AICPA vice-president. Netterville said, "Frankly, I was shocked when I learned I was to be nominated as vice-chairman of the AICPA board of directors, the post that eventually leads to a nomination as chairman. At that time, I had attended only two board meetings, so I was very new, and the nomination was quite a challenge. As honored as I was, I did not accept the nomination at once. I told the caller I would first have to speak with my wife, to make sure she would commit herself to several years of travel, and then to my business partners, to see if they would take up the slack when I was away from the office on institute business. My wife and partners both were very enthusiastic and encouraged me to accept the challenge. Since that time, they have supported me throughout."

Netterville has a message for practitioners from small firms who may be considering involvement in Institute work. "Do it. It's a wonderful experience. It's not nearly the burden on your practice that it may seem to be. You can continue to be in practice and also devote time to the Institute." He stresses that the demands on his time have not been unreasonable thus far, and he has continued to record the same number of billable hours as he had in the past few years.


When asked how he chose to become a CPA, Netterville had an unusual answer. He took a preference test as a high school sophomore, and his guidance counselor told him his scores indicated he should be a CPA. "At that time, I didn't know what a CPA was," he said, "and I didn't really know one." However, taking his guidance counselor's advice, he majored in accounting in college, even though he never considered a career in public accounting. After graduation, he joined a bank and switched to public accounting when he realized 10 weeks later that accounting is an overhead item in most businesses. Only in public accounting firms is it a revenue producer.


Now, some 32 years later, Netterville is an unabashed booster for the profession. He said bluntly, "I'm very bullish on the accounting profession. I love it. Sure, things have changed since I first came into it. It's more competitive and complex now, but in many ways the changes have been for the good. Brighter, better-trained students are now joining public accounting, and it has become the profession of choice for women who want to mix family and a career. The big negative is the liability crisis. When we put that behind us, it will remove a big cloud over the profession. I certainly think we will make progress on that issue this year. We may not get a bill through Congress, but we will fight a good fight. What's more, we intend to keep fighting till we win."

Gene R. Barrett is a news editor on the Journal.

Mr. Barrett is an employee of the American Institute of CPAs and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.
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Title Annotation:Jake Netterville
Author:Barrett, Gene R.
Publication:Journal of Accountancy
Date:Dec 1, 1992
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