State of the Profession

Transcription

1 State of the Profession Georgia Society of CPAs Annual Convention Bill Balhoff, CPA, CGMA Chairman, AICPA Board of Directors July 1, 2014 High satisfaction with CPA performance 91% 87% 97% of BDMs very/somewhat satisfied with internal CPAs of BDMs very/somewhat satisfied with external CPAs of investors very/somewhat satisfied with CPAs CPAs first among financial professionals in positive perception BDM Business Decision Maker Source: Applied Research & Consulting, LLC CPA: Confidence-inspiring & rigorous 75% of BDMs agree 72% of investors agree 71% of BDMs agree (significant increase from 64% in 2011) I would be more confident in a job done by a CPA than if it were done by an accountant who is not a CPA I would be more confident in a job done by a CPA than if it were done by an accountant who is not a CPA Becoming certified as a CPA requires more rigorous training and testing than any other financial credential Source: Applied Research & Consulting, LLC 1

2 CPA credential in high demand Robert Half 2014 Salary Guide Employers: Most desired credential Solid salary growth Entry-level demand also strong Broader responsibilities Accountants & Auditors: Among Top 5 in demand professions for 2014 Accounting: One of the largest single blocks of above-average paying jobs in the country Source: TIME Business & Money1/7/14 Accounting: Tops for hiring interns 31% Percentage of internships that turn into full-time, paid hires 25% 22% 14% Accounting Management Consulting Information Technology Financial Services Source: LinkedIn survey Facing CPAs this year Accounting standards Effects of EU audit reforms Private company reporting Focus on auditors Legislation & Regulation 2

3 Legislation & Tax Copyright 2014 American Institute of CPAs Cash to accrual basis of accounting Discussion drafts in House & Senate Impact on partners Grassroots effort Tax issues Tax reform Extenders Tax return preparer registration IRS services Due dates Mobile workforce 3

4 Financial Reporting Copyright 2014 American Institute of CPAs PCAOB focus on auditors Auditor s report Engagement partner signing Cascade risk EU audit reforms Effective year auditor rotation 20 year rotation if company tenders at 10 years 24 year mandatory rotation for companies conducting joint audits 70% cap on non-audit fees Limits tax and advisory non-audit services 4

5 Increased focus on consulting We need roundtables and task force attention on the implication of the regeneration of non-audit consulting. -James Doty, PCAOB Chairman I continue to observe the accounting firms are actively growing g their consultancy practices. Such expansion runs the risk of damaging the accountant's reputation. -Paul Beswick, Outgoing SEC Chief Accountant As the accounting profession becomes more committed to consulting, their audit activities have got to be questioned. -Arthur Levitt, Former SEC Chairman Changes in assurance Compilation proposals Definition of attest Firm mobility 5

6 FRF for SMEs New toolkit resources late June Working with state societies F/S user education campaign Regulators view as OCBOA [FRF for SMEs] could be a competitive tool for banks it s an option bank lenders should be aware of so as not to be at a disadvantage in prospecting for business in the SME space. Private Company Council progress Private Company Framework Definition of Public Business Entity FASB issued three standards Interest rate swaps Goodwill VIE exception GAAP/IFRS convergence Convergence and IFRS 2014 FUTURE Revenue recognition standard [RELEASED] Financial instruments standards Leases standard IFRS? Principlebased Affects virtually all businesses SEC strategic plan 6

7 Revenue recognition resources AICPA resources Business brief Learning and implementation plan Audit committee primer Non-authoritative guidance Blog posts JofA articles aicpa.org/revenuerecognition Supporting CPAs Copyright 2014 American Institute of CPAs CGMA CGMA Competency Framework Driving CIMA syllabus and lifelong learning CGMA exam 2015 Proposed Global Management Accounting Principles World Congress 7

8 Restructured ethics code released Intuitively arranged User-friendly online code: aicpa.org/newcode Enforceable rules and principles not changed Minimum substantive changes to interpretations Non-authoritative guidance referenced Effective December 15, 2014 Additional year for Conceptual Frameworks Firm Issues Copyright 2014 American Institute of CPAs Profession s commitment to quality 8

9 Commitment to public interest Audit Quality Centers Standards setting Guidance, tools, learning, resources Quality monitoring/peer review Ethics enforcement CPA Exam Thought leadership Emerging issues in profession Complexity in business and underlying standards Pace of change Continued audit relevance e Peer review and inspection results Regulators scrutiny Expanding services 2-Phased approach to enhance quality Near-term: Changes to professional standards and related implementation guidance Long-term: Practice Monitoring of the Future New tools, development and resources (including Future of Learning, AQC activities, and CPEA) Amendments to the existing peer review program Regulator Engagement 9

10 Practice Monitoring of the Future More real-time and continuous Technology and people Data from firms systems Dashboard: Useful to firms and monitors Transparent and useful Checks and balances Center for Plain English Accounting AICPA PCPS national A&A resource center for firms aicpa.org/cpea Services: Written responses to written technical inquiries Monthly how-to A&A reports Webcasts Alerts Content for firm newsletters Future growth in public accounting Core accounting services remain the central focus 2% 16% A&A Revenue 46% $94B 35% Tax Advisory Other and advisory services offer growth opportunities Advisory service Growth Risk 65% 6.5% Business valuation 3.5% Forensic 6.8% accounting Financial planning 3.1% IT/S&P consulting 6.0% Source: IBISWorld 10

11 Top issues PCPS survey Solos 2-5 Professionals 6-10 Professionals Professionals 21+ Professionals 1. Keeping up with changes and complexity of tax laws 2. Bringing g in new clients 3. Seasonality/workload compression 4. Retaining current clients 5. Effect of regulations Top issues PCPS survey Solos 2-5 Professionals 6-10 Professionals Professionals 21+ Professionals 1. Keeping up with changes and complexity of tax laws 2. Succession planning 3. Finding qualified staff (all levels) 4. Bringing in new clients 5. Seasonality/workload compression Top issues PCPS survey Solos 2-5 Professionals 6-10 Professionals Professionals 21+ Professionals 1. Succession planning 2. Finding qualified staff (all levels) 3. Bringing in new clients 4. Retaining qualified staff (all levels) 5. Owner/partner accountability & unity 11

12 Top issues PCPS survey Solos 2-5 Professionals 6-10 Professionals Professionals 21+ Professionals 1. Bringing in new clients 2. Finding qualified staff (all levels) 3. Succession planning 4. Retaining qualified staff (all levels) 5. Retaining current clients Top issues PCPS survey Solos 2-5 Professionals 6-10 Professionals Professionals 21+ Professionals 1. Owner/partner accountability & unity 2. Bringing in new clients 3. Retaining qualified staff (all levels) 4. Succession planning 5. Finding qualified staff (all levels) M&A increasing key drivers Looking to acquire Geographic expansion New niche service/industry Looking to be acquired: Succession Too much tied-up equity Compete for PE work Positioning for international referrals 12

13 Succession 46% of firms have aformal succession plan up from 35% in % of firms say M&A talks are on table 50% of practitioners expect 1x revenues for their practice, but in reality often less Source: 2012 PCPS Succession Survey Third party verifications Issues identified Scope of services Laws and standards CFPB Qualified Mortgage rule AICPA guidance and resources Top cybercrimes Tax-refund fraud Corporate account takeover Identity theft Theft of sensitive data Theft of intellectual property 87% of security breaches could have been avoided d if reasonable security controls had been in place. Source: AICPA Whitepaper The Top 5 Cybercrimes Source: Verizon 13

14 Developing CPAs Copyright 2014 American Institute of CPAs Future of learning Lifelong learning for new generation Competencies measured in CPE Technology s effects MOOCs, hybrids FOL task force recommendations Innovate and experiment Ignite a passion for learning Make learning personal Measure what matters 14

15 Student initiatives This Way to CPA Start Here, Go Places Accounting graduates 100 thousand AP Course 80 National Academy Foundation Diversity Accounting Inclusion Maturity Model AICPA Recruiting and Retention toolkit Investment in pipeline CPA Exam 10 years of CBT Next generation exam CPA candidate pipeline 15

16 Professional issues & initiatives Advocacy Fed/State Legislation & Regulation Government Fiscal Responsibility Tax Uniformity & Mobility Public Policy Issues People CPA Exam Young CPAs Student Recruitment Diversity & Inclusion Learning & Education International IFRS ISAs CGMA International CPA Exam Financial Literacy Prof. Excellence & Public Interest Tax Preparer Registration FRF for SMEs Integrated Reporting Sustainability SOC Reports Private Companies Practice Section Center for Plain English Accounting Audit Quality Peer Review & Ethics Specialized Communities & Credentials Business, Industry & Government CPA Reputation Competition & Risk Operational Excellence State of the Profession Bill Balhoff, CPA, CGMA Chairman, AICPA Board of Directors or Telephone: GSCPA Annual Convention July 1,