As always, the future of the CPA profession was a major topic of discussion at the VSCPA’s Top Firms Roundtable, held at the Williams Mullen offices in downtown Richmond on Sept. 16. This annual event brings together leaders from Virginia CPA firms to discuss trends impacting the profession and their own businesses.
This year, discussion centered on the beginning and end of the CPA career cycle — sort of, that is. The career end discussed at Top Firms wasn’t the usual issue of succession planning, but rather the end of the line for one specific CPA — Virginia Sen. Walter Stosch, CPA (R-Henrico), whose decorated career in public service ends at the end of the year.
“We're not going to replace Walter,” VSCPA Chief Operating Officer Maureen Dingus, CAE, said. “But we do want to encourage our members, and have you encourage our staff, to think about public service, even on the local level. You have to start somewhere. We hear so much about how the CPA can give such great advice, and we have to find a way to get some people engaged.”
Williams Mullen’s Bill Asxelle gave a legislative update that came from a place of experience, as he spent 16 years in the Virginia House of Delegates before joining the firm. He saluted Stosch and fellow retiring Senators Chuck Colgan (D-Manassas) and John Watkins (R-Midlothian) for their efforts to put commonwealth above party.
“These are people who literally did look at what was best, not what was best for their party,” Axselle said. “They'll be replaced by people who are a little further right or a little further left, people with a party orientation.”
And whether or not the Virginia General Assembly boasts any CPAs — and in the short term, the answer is almost certainly “not” — the profession can play a vital role in advising legislators, both at the state and federal levels.
“In the absence of not being able to do comprehensive tax reform, there's so much that can be done on the margins to be able to fix our tax code,” said Maureen Downes, CPA, tax policy advisor for Sen. Mark Warner (D-Va.) “This is where CPAs play such a vital role.”
To CPA or Not to CPA?
Replacing productive workers is a concern for all CPA firms, of course, which was the other major theme of the day’s discussion. With accounting graduates at an all-time high and CPA Exam takers on the decline, how to get young professionals to sit for the Exam was a major point.
“If they want to continue to grow within our firm, they have to pass the CPA Exam,” said Heather Sunderlin, director of employee services at Wall, Einhorn & Chernitzer in Norfolk. “We do hire graduates who have not gotten the 150 [credit hours] yet, but with the expectation that they finish that. We expect them to finish it within 18 months. We don't let them go, but there is a ceiling in place. If you get promoted to senior and do not pass the Exam, you will not get promoted to supervisor.”
One issue that’s been identified is the increase in young accountants going into corporate finance instead of public accounting. Without firm influence or requirement, young professionals don’t seem to see the CPA title as the necessity it once was.
Eighty-nine percent of CPA-bound Exam sitters have worked for a public accounting firm, compared to just 27 percent of CPA-bound non-sitters. College recruiting and the specialized accounting major are by far the top drivers for students pursuing the CPA credential, far more than family influence and personal attitude.
In a recent study, Exam sitters and non-sitters alike agreed with the statement “Having a CPA opens doors to many professions” at a 71 percent rate, and the groups were just 3 percent apart on the statement “The CPA credential is also relevant to broader finance and business fields.”
Of course, it’s not just attitudes that influence Exam outcomes. The way sitters prepare is a major factor as well, up to and including the length of time prospective CPAs allot for the Exam.
“When I look at the people who might not have passed all four parts, but passed two or three, versus the people who traveled and did other things, it's a pretty stark difference in terms of success rate,” said Susan Moser, CPA, of Cherry Bekaert in Washington. “Getting people to focus at the start makes a huge difference overall.”
The Quest for Quality
Everyone who’s been paying attention knows about the U.S. Department of Labor’s (DOL) damning report on deficiencies in employee benefit plan (EBP) audits. But that’s just one quality issue that has industry experts concerned.
The single audit is one glaring example. In a 2007 study, more than half of all single audits analyzed in a federal study were deemed unacceptable or of limited reliability. The new single audit regulation contains a requirement for a federal study of audit quality once every six years, beginning in 2018.
“We have to get this right, because another questionable report out there from government regulators will not bode well,” said Sue Coffey, CPA, senior vice president of public practice and global alliances at the American Institute of CPAs (AICPA). “We spent a lot of political capital in Washington this year on the DOL report. If another one comes down the road in three years, it will be incredibly difficult to deal with.”
Coffey and the AICPA hope to head off those issues with the “Enhancing Audit Quality” initiative, which has been in the works since 2012. The plan places special focus on industries and practice areas with a greater risk of audit deficiencies and pushes the importance of proper qualifications.
“If we can prevent firms from taking on work for which they don't have the qualifications, we, as a profession, will be much better off,” Coffey said.
The six points from the initiative’s name are:
Enforcement (investigation of all referrals of deficiencies, enhanced coordination with state boards, reinforced rules on due care)
Pre-licensure (improved CPA Exam, AP coursework, changes to accounting education, additional doctoral-level audit professors with practical experience)
Standards and ethics (quality control standards, evaluation of standards implementation, auditor’s report revisions”
CPA learning and support (competency models for audits, assessment tools, certificate programs, resources)
Peer review (focus on high-risk industries and areas, more significant remediation, termination from peer review after repeat quality issues)
Practice monitoring of the future (near real-time, ongoing monitoring of firm quality)
The main goal of the AICPA’s proactive steps is, of course, more reliable audits. But another big reason for improvement is the privilege to maintain the profession’s ability to regulate itself.
“It's a risk to self-regulation,” Coffey said. “We set standards for private company auditors. We could lose that if we don't get it right. We administer peer review. We could lose that if we don't get it right.”
How Can I Get Involved?
The VSCPA holds several events throughout the year for small firm leaders, notably the Management of an Accounting Practice breakfasts held across the state. Check the CPE Catalog for more information on these events.