Special feature: the year in review.
Addressing Private Company/Small Firm Issues
* Private companies represent over 99% of the nation's incorporated businesses. Early last year, in response to concerns expressed by interested parties about the relevance, benefits and related cost of certain financial reporting requirements for privately held, for-profit entities, the AICPA Private Company Financial Reporting Task Force began a comprehensive research effort. In May 2005, the AICPA governing Council approved the task force's recommendation for the profession to work with the Financial Accounting Standards Board to evaluate potential changes to generally accepted accounting principles for this business sector (www.aicpa.org/members/div/acctstd/pvtco_fincl_reprt/dow nload/Report_Draft_Final.pdf).
* More than 45,000 accounting firms which are members of the AICPA have clients that are privately held companies. Often they are smaller businesses that have special needs, and the CPAs serving them need targeted information. The Private Companies Practice Section works as a community for these firms, recently launching the PCPS Firm Practice Center (www.aicpa.org/pcps) to provide valuable up-to-the-minute news and information and practical resources for firms.
* Firms find value in comparing their practices and management objectives with other, similar firms. To help these firms compare themselves in the marketplace, the PCPS teams with the Texas Society of CPAs in a survey that gleans details on best practices among small firms. Topics covered include insights into the economic climate, the largest sources of income for the average firm, top specialty areas, most popular marketing practices, average earnings and rates, the prevalence of retirement plans, human resources policies and outsourcing approaches, among other data (www.aicpa.org/pcps).
* Demonstrating the AICPA's response to small firm needs, the Institute's Web site (www.aicpa.org) features a new Small Firm Corner, which provides regular updates from Vice-President--Small Firm Interests Jim Metzler on initiatives, advocacy efforts and new resources.
Serving the Public Interest
* In the fierce debate on Social Security, the AICPA and the profession emerged as a voice of independent analysis. The Institute updated its study, Understanding Social Security Reform: The Issues and Alternatives, to foster informed discussion by providing unbiased facts and examination (www.aicpa.org/members/socsec.htm).
* The AICPA strives to provide policymakers and the public with a clear understanding of the issues and alternatives involved in federal tax reform. Most recently, the Institute updated its 1995 study, Flat Taxes and Consumption Taxes: A Guide to the Debate. The preliminary report, which offers criteria for analyzing reform proposals and discusses the differences between income and consumption taxation, was submitted to the President's Advisory Panel on Federal Tax Reform (www.aicpa.org/taxreform). The final report also will evaluate the Panel's recommendations--due to President Bush by July 31.
* As a leader in exploring rationality in tax policy, the AICPA recommended to the IRS Oversight Board that the agency's top three administrative goals should be improving taxpayer service, enhancing enforcement of the tax law and modernizing the IRS through its people, processes and technology. The comment letter can be found by going to www.cpa2biz.com/tax and clicking on "Legislative, Administrative, Judicial."
* No effort in recent memory has galvanized the profession like the 360 Degrees of Financial Literacy campaign that launched last year. Through our extensive public awareness efforts, 145 million people have learned about the campaign in the past year alone. The CPA Web site (www.aicpa.org/ financialliteracy) ranks third in popularity under financial literacy on Google and Yahoo. The consumer site (www.360financialliteracy.org) has had over 2 million hits and ranks number 3 on MSN Search.
* Research by the Social Security Administration shows that elderly women live in poverty at nearly double the rate of men. But women have been gaining ground in the workforce: Almost half of all privately held small businesses are at least 50% owned by women. Recognizing the unique financial education needs of women, the AICPA launched the 360 Degrees of Financial Literacy for Women Web site (www.360financialliteracy.org/women).
* On the heels of a major decision among banks to substitute electronic checks for paper ones, the AICPA quickly delivered comprehensive information to members on the "Check Clearing for the 21st Century Act." Go to www.aicpa.org/financialliteracy/hot_topics.asp for details.
* For many years, the marketplace has wanted more reliable, time-sensitive, future-oriented financial information. The AICPA has continued to take a lead in working to meet this demand, most recently through the creation of the AICPA Special Committee on Enhanced Business Reporting. This special committee completed its two-year term in the first half of 2005, successfully realizing its mission of establishing the Enhanced Business Reporting Consortium. As a market-driven, independent not-for-profit organization, the Consortium will bring together representatives from all key stakeholder groups to collaborate on the development of a voluntary disclosure framework designed to be the "gold standard" in business reporting.
* Outsourcing was a hot topic in both the media and political talk last year. For the CPA profession, the issue centered around confidentiality of client information and quality of work performed. In response, the Professional Ethics Executive Committee adopted ethics rulings to help members understand their responsibilities when outsourcing services to third parties (www.aicpa.org/dowuload/ethics/2004_1028 outsourcing.pdf).
* Compliance with auditing standards always is a priority for the AICPA and its members. To help auditors of private companies and their clients understand and follow auditing standards, the AICPA expanded access to authoritative standards by making them available free of charge at www.aicpa.org/members /div/auditstd/Auth_Lit_for_NonIssuers.htm.
* Many members are involved in the not-for-profit area and often look to the AICPA for guidance. The new Not-for-Profit Audit Committee Toolkit (www.aicpa.org/audcommctr/toolkitsnpo) was developed as a resource similar to the existing toolkit aimed at for-profit entities (www.aicpa.org/audcommctr/ toolkits/homepage.htm). A government version of the toolkit is expected to be released this summer.
* After intensive evaluation, the peer review standards were revised (effective Jan. 1) to enhance the AICPA peer review program. Enhancements include increasing the usefulness of peer review reports so users better understand what a peer review is and the review's findings: strengthening oversight of peer reviews and the 41 entities administering the peer review program to assure both peer reviewers and administering entities are fulfilling their responsibilities; and raising the level of qualifications of certain peer review team members as well as administeringentity technical reviewers and committee members.
Providing Professional Tools and Guidance
* Auditing is the CPA profession's franchise. As such, the highest quality performance is essential. Enhanced versions of the Web sites of two of the Institute's earlier audit quality centers were rolled out: the Center for Public Company Audit Firms (www.aicpa.org/CPCAF) and the Employee Benefit Plan Audit Quality Center (www.aicpa.org/EBPAQC). The sites' offerings are now more consistent with those of the Governmental Audit Quality Center (www.aicpa.org/GAQC), which was launched more recently.
* Special interest niches and non-traditional services continue to grow among CPAs and require targeted resources for members practicing in those areas. Four new online centers serving these CPAs' needs have been launched in recent months. They include the Business Valuation and Forensic & Litigation Services Center (www.aicpa.org/bvfls); the Accounting Education Center (www.aicpa.org/aec); the Information Technology Center (www.aicpa.org/infotech); and the Personal Financial Planning Center (www.aicpa.org/pfp). The Financial Management Center (www.aicpa.org/fmcenter) is scheduled to launch this month. Each one provides news and resources to members in these areas.
* Auditor independence was under the spotlight when the Securities and Exchange Commission revised its rules several years ago. Concerns revolved around auditors of public companies performing non-audit services for the audit client. Since then, members received clarification from the AICPA on what can and cannot be done. Most recently, Ethics Interpretation 101-3, Performance of Nonattest Services, was issued and then revised based on member feedback. To obtain information on Interpetation 101-3, visit (www.aicpa.org/members/div/ ethics/intr_101-3.htm).
* Responding to issues raised in the U.S. non-issuer community, the Auditing Standards Board issued Audit Documentation,an exposure draft designed to improve audit practice by helping members decide what records to maintain after a private company audit is completed. The ED, which if approved would replace Statement on Auditing Standards No. 96, can be found at www.aicpa.org/members/div.auditstd/drafts.htm.
Creating Resources for Members
* CPA2Biz, the Institute's marketing and technology provider, launched a variety of new features that make its Web site (www.cpa2biz.com) even more user-friendly. Among them, an easier-to-browse homepage, more robust CPE and conferences sections, and the ability to download documents on demand. An Apr. 2005 customer survey showed that 92% of CPA2Biz online customers polled would recommend www.cpa2biz.com to a colleague, up from 86% in Jan. 2005. Further, more than 13,000 CPA firms in 49 states have benefited from the AICPA Business Solutions Program. Members can access value-added payroll, 401(k) and small-business banking services designed to serve the needs of practitioners at small and mid-sized firms. Visit www.cpa2biz.com/BusinessSolutions.
* Members looked to the AICPA for important guidance on pronouncements from the Public Company Accounting Oversight Board. As a result, the AICPA developed several publications. PCAOB Standards and Related Rules (including Select SEC-Approved PCAOB Releases and Staff Guidance) gives public company auditors a workable, current and comprehensive source of PCAOB guidance. PCAOB Auditing Standard No. 2: A Guide for Financial Managers and The Auditor & Guide to Understanding PCAOB Auditing Standard No. 2 offer critical guidance on understanding and complying with PCAOB Auditing Standard No. 2.
* To help members get a handle on their technology, the AICPA is offering a special 10% discount for anti-spare service from Postini Inc., which prevents e-mail intrusion, filters spare and viruses, enforces e-mail policy compliance and enhances e-mail management capabilities (go to www.postini.com/aicpa).
* A brochure, How to Afford a Long, Happy Retirement--and a related speech--were recently added to the CPA Marketing Tool Kit, as were items on business consulting services. The award-winning tool kit. which is available free to all members at www.aicpa.org/cpamarketing, provides practitioners with a comprehensive marketing resource, including tools to help promote a firm's practice and services to both businesses and individuals and increase its visibility.
* To collaborate on developing the highest quality of products and services for their members, the AICPA and the United Kingdom's Chartered Institute of Management Accountants have entered into an agreement that will allow the AICPA to offer additional professional resources to members in business and industry. This unique partnership will help CPAs achieve their career goals and continue to develop the skills to succeed by providing them with content that is relevant to the needs of a successful business.
Recruiting the Next Generation
* Accounting graduates are on the upswing and hiring by public accounting firms continues to climb as well, as noted in the most recent "Supply of Accounting Graduates and the Demand for Public Accounting Recruits." The report provides valuable insights into recruiting issues, including detailed information on the number of degrees awarded in 2003, as well as on the hiring of recent college graduates by public accounting firms (www.aicpa.org/members/div/careerledu/sagdpar.htm).
* Traction from the profession's student recruitment campaign over the past three years has resulted in an abundance of potential future CPAs. As of Apr. 2005, the "Start Here. Go Places." campaign had attracted over 929,000 responders, 267,430 registrants and more than 175,000 leads, 86% of whom are incremental leads (that is, students who would not normally have been attracted to the accounting profession if not for this campaign). Catch Me If You Can, the forensic accounting contest and promotion that is part of the recruiting campaign (www.startheregoplaces.com), won the coveted Marketing Agencies Association Worldwide "GLOBES" Award in the "Best Use of Direct Marketing" category and won second-place gold in the "Best Use of Interactive Media" category. "Start Here. Go Places." also won the first place PROMO Award for Best Use of Direct Marketing. The PROMO Award honors outstanding promotion marketing campaigns.
* Last year, the Uniform CPA Examination became a computer-based test to better assess the skills and knowledge needed by today's entry-level CPAs. It has proven successful. Fully 97% of candidates who took the computerized exam reported a satisfactory exam experience. The exam's launch and completion rate of over 99.8% is better than most computer-based test programs.
* The AICPA is committed to attracting recruits who reflect American diversity and who are the best and brightest of their generations. To that end. the Minority Initiatives Committee awarded scholarships to 157 students at 107 different universities in the most recent fiscal year (the students' average accounting and overall GPAs were 3.80). The institute also has developed advertising campaigns specifically for minority high school and college audiences and works with strategic partners to attract minority students to careers in accounting.
Promoting Members' Expertise
* Research shows that Institute efforts to positively influence public opinion about the profession have been a success. In a new survey, the profession received high marks from business decision makers, executives and investors, earning favorability ratings of 97%, 95% and 89%, respectively. Business decision makers and executives ranked CPAs above physicians by several percentage points, and CPAs came out well ahead of other financial professions.
* Even when some pointed fingers at the "profession" for business failures caused by accounting scandals, individual CPAs had maintained their credibility with their clients. Our research uncovered this dynamic and the Institute reengineered its image campaign accordingly. A new tagline for the profession--"America Counts on CPAs"--emphasizes the grassroots image and strength of individual CPAs. Members can attain the new logo and tagline through the CPA Marketing Tool Kit at www.aicpa.org/cpamarketing/CPALogo.htm.
* Capitalizing on the idea that putting a face and name to the CPA profession reinforces its reputation with the public, the CPA Ambassador Program mobilizes CPAs as highly trained and influential spokespeople in their communities (www.cpaambassador.org). More than 500 CPA Ambassadors nationwide are now ready to speak about issues of concern to all Americans.
Advocating Legislative/Regulatory Positions
* The AICPA has been closely following the work of the Public Company Accounting Oversight Board. Recently, the AICPA provided input on a proposed rule on auditor independence issues relating to tax services that can be offered to public company clients (www.pcaobus.org/rules of the board/documents/docket_017/release2004-015.pdf).
* Smooth relationships with agencies that oversee or regulate/he profession are important in helping the AICPA explain its positions and advocate for its members and the public. AICPA Board Chair Bob Bunting, Vice-Chair Leslie Murphy and Institute President and CEO Barry Melancon meet regularly with the Internal Revenue Service, the Public Company Accounting Oversight Board, the Securities and Exchange Commission and the Government Accountability Office.
* Concerned about a lack of implementation lead time as expressed by AICPA members, the Institute urged the IRS to delay, by at least a year, implementation of mandatory electronic filing procedures for large corporations and exempt organizations. The AICPA noted, however, that it supports the agency's long-range goals for electronic tax administration.
* The AICPA and its members agree that taxpayers should be allowed to employ strategies that legally minimize tax burdens but that abusive tax shelters should be eradicated. Working with Congress and the Treasury Department, the Institute actively proposes and evaluates legislative and regulatory measures designed to identify and prevent taxpayers from undertaking, and tax advisers from rendering advice on, transactions having no purpose other than the reduction of federal income taxes in an abusive manner.
* The IRS has observed an increase in the use of tax-exempt organizations to improperly shield income or assets from taxation. Working with the Senate Finance Committee, the AICPA joined in efforts to crack down on tax abuses by charitable organizations and their donors.
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|Title Annotation:||Private companies's guidance|
|Date:||Jul 1, 2005|
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