STATE SOCIETIES:What's the Real Deal?

State societies are reacting with energy and innovation to a bevy of weighty challenges.

Here are some early results from a canvass we are currently conducting of the State-of-the-State of State CPA Societies...

Trends affecting societies:
1. Membership declines.
2. CPA firm mergers (bigger firms buy less CPE).
3. CPA brand competition.
4. Increasing costs and prices of live CPE.
6. Increasing demand for online learning.
7. Membership demographic shifting female

Issues/trends affecting members:
1. Finding staff.
2. Technology (Keeping up with it, competing with it, and/or competing against it.)
3. Work-life balance for new generation.
4. Lack of succession planning.
5. Increased regulatory activity.
6. The rise of new non-CPA competitors, from H&R Block to local banks.



VERBATIM RESPONSES

While the study remains a work in progress, we are holding the names of the respondents in confidence. Thus, you'll notice some editing in the verbatim responses. But otherwise, they are published here in their entireties.



RESPONSE #1

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
There is an ongoing effort to liberalize the existing accounting statute, to allow the provision of services and use of accounting titles, by individuals who do not hold the required credential elements - in particular education and examination. The issue has been raised in the legislative arena, without success. At present the issue is now before District US Court.

QUESTION 2: What are you doing about it? What programs, remedies, activities, strategies, solutions, etc. are you undertaking in the face of these challenges or opportunities? Or what should the profession as a whole be doing about it?
We continue to actively represent the accounting profession, in the legislative arena.


RESPONSE #2

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
The younger generation of members are not as interested (or available) for actively serving in Society positions nor attending Society business functions. I think they feel either disconnected from the organization (which may be at their own choosing, or problems with our communication methods), or they simply think "someone" else can handle the matters of the Society. I think the firms place a much higher value on what their employees do to elevate the firm, than what their employees do to nurture and secure the reputation of the accounting profession.


QUESTION 2: What are you doing about it?
We are working on changes in our governing structure from a very complicated one put in place in 2000 to a simpler structure. Also, lessening the number of standing committees. Retaining some standing committees, but moving toward Task Forces which are given specific measurable tasks each year. Also, Committee Chairs are to be invited to serve as chair each year by the incoming Chairman of the organization. Also, efforts are being made to bring together the two primary constituencies of members [in key cities]. Having two metropolitan areas 500 miles apart and quite dissimilar in characteristics complicates efforts toward a truly united statewide organization. Our new governing structure, (Board of Directors), will automatically include a member or members from the boards of those Chapters.

THE MORE PUBLIC SERVICE ANNOUNCEMENTS THAT THE AICPA CAN FUND ON RADIO STATIONS WHICH EMPHASIZE THE QUALITY OF CPAS, AND STATES "THIS MESSAGE IS BROUGHT TO YOU BY THE AICPA AND YOUR STATE CPA SOCIETY"..........THE BETTER. THE MESSAGE CONVEYS NOT JUST THE INFORMATION YOU WANT TO REACH THE PUBLIC, BUT ALSO INDICATES A CERTAIN PRESTIGE FOR A CPA TO BE A MEMBER OF HIS STATE CPA ORGANIZATION.


QUESTION #3: How's it working?
Ask me in a year.


RESPONSE #3

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
Our most recent Board planning session took the pulse of every major segment of our membership (Publicly-traded & privately-held corporate, government and non-profit, large firm to sole practitioner) and came up with a list of almost one hundred major issues. Yet when we looked for the root causes or fundamental drivers, there were only four -
1) Work-Life Balance (which includes staffing shortages, succession planning, student recruitment, etc);
2) Increased Regulations and greater risk (post SARBOX impacts);
3) Training & Development; and
4) Impact of Technology.

Each one of these had major impacts into each and every segment of our membership - from sole practitioners struggling with the changing regulations and standards to public company CFOs & large firms struggling to implement Section 404, they all agreed that the Profession was still navigating the whitewaters of change.



QUESTION 2: What are you doing about it? What programs, remedies, activities, strategies, solutions, etc. are you undertaking in the face of these challenges or opportunities? Or what should the profession as a whole be doing about it?
Mobilizing our members! The power of associations is very simply stated as, strength in numbers. Time after time in our one hundred year history we have examples of how small groups of CPAs have made huge contributions to the CPA Profession and the public at large. Now is the time when we must leverage the collective talents of the CPA Profession to solve some of these BIG problems. We are working on several key initiatives and many educational/informational initiatives - each targeted to help specific segments of our membership.

Our biggest priorities directly address the first three fundamental issues (Work-life; Regulatory; Training & Development) facing our members:

1) Work-Life Balance - several of our largest initiatives directly impact our members' struggle to deal with this issue. The regulatory changes as a result of SARBOX combined with the profession wide staffing shortage have made work-life balance almost impossible. Fortunately, we have been working on this for awhile, planting seeds that are now beginning to bear fruit.

Our student recruitment programs are building the future supply of CPAs to lessen the staffing shortage which impacts all segments of our membership. Our New/Young Professionals Network has worked to create a multi-year Leadership Academy to jumpstart CPAs into their careers and prepare them for leadership in firms and companies.

2) Increased Regulations & Risk - This is an area that proves the power of mobilizing our members. From the moment Enron collapsed, our Accounting Reform Task Force was formed and put out a whitepaper entitled, "The Road to Reform: Protecting the Public Interest, Strengthening the CPA Profession".

This effort has resulted in a comprehensive legislative and regulatory strategy that is based on a philosophy that our best defense against draconian SARBOX reforms in the private company sector is a strong proactive offense. The work of this group of our members has led to defeating a major SOX bill in 2003; participation in a major public hearing by our State Board of Public Accountancy and now three "proactive" bills in our legislature (Mandatory Peer Review, Substantial Equivalency, and Separate Funding for our State Board) that have the support of our regulators.

These bills also include the substantial equivalency provision from the Uniform Accountancy Act that is designed to help our members practice more easily across state borders.

Other important initiatives that help our members in this critical area include our Section 404 Task Force; new education programs in the areas of fraud detection, ethics, internal controls; a partnership with [a major liability insurer] to bring more risk management resources to our firms; and several sessions with the PCAOB to discuss new rules & regulations.

This spring we are planning small firm roundtables to help our small firms understand some of the major changes recently implemented and on the horizon (Ethics Rules 101-2; 101-3; Differential Standards; Tax changes; Succession planning; workload compression, etc.). All of these programs deal with this critical and changing area of the Profession.

The amazing thing I have found is that the diversity of our membership as State CPA Societies gives us a powerful advantage over vertical homogeneous organizations. Gathering CPAs from all segments - practice - government - industry brings a wealth of knowledge and perspective that enables us to solve some of these important problems in a holistic way that benefits all CPAs.

3) Training & Development - We see this as an area where we are making a major impact. Professional Development is a core competency that all State CPA Societies have since the Profession adopted mandatory CPE in the mid-1970s.

CPAs in all areas are struggling to keep up with the In Maryland, we sharpened this competency and expanded it in several key areas - leadership development; leading-edge technical training (fraud, internal controls, ethics, SOX, Section 404); and customized in-house training - where we bring timely, relevant training right into our CPA firms and Corporations.

Our Business Learning Institute has created major programs in leadership and management training to help CPAs acquire the critical hard skills required today. We also provide strategic planning services and competency plans to help firms and companies create custom professional development programs designed to help them accomplish their strategic initiatives.

4) Impact of Technology - We are in the process of several initiatives designed to enable us to provide more focused information to our members. We are involved in the national Shared Services project with the AICPA and a majority of the State CPA Societies. This is a long-term collaborative project to provide us with the technology infrastructure to better support and serve the diverse needs of our members. Without the help of technology, we risk becoming irrelevant as we focus on the fundamental issues of all CPAs without the additional capabilities of delivering information to each member in personalized or customized way. We are working toward the day when all of our members can get the most important and relevant information in the easiest way possible.



QUESTION 3: How's it working?
As they say the proof is in the pudding - results are critical in this day of tight resources and the extreme constraints on our members' most important asset - their time. We measure success by results and impact of our volunteers in addition to traditional ROI measures.

In the past few years we have seen enrollment [in state] accounting programs increase by five times the national average - a direct result of our more than 150 volunteers who annually visit over 4,000 high school and college students to talks about an exciting career as a CPA. This program has expanded to include financial literacy initiatives which also increase the image of the CPA. The ROI is huge when you factor the future staffing increase for our firms and corporations as these new accounting majors become productive CPAs.

Leadership Academy - from concept to launch in nine months with input from managing partners from firms all across the state and several CFOs of [state] companies.

Driven by our new/young professionals group, this initiative promises to help provide tangible benefits to CPAs and their employers. Using competency models from the AICPA Business & Industry Committee, the AICPA Assurance Services Committee, and Harvard Business School Publishing, we developed a six-year leadership program designed to create well-rounded professionals from entry in the Profession (Industry, Government, or Practice) to the point in their career that they become a leader. Our program is unique in that it features experiential volunteer activities that are designed to network the CPA in the business community, impact the community in areas like financial literacy or student recruitment, and learn how to influence the Profession of the future (regulatory and legislative involvement).

By integrating these activities into a competency-based curriculum, we believe we can provide more productive professionals that will help solve some of the major issues we face under the work life crisis (succession planning, staffing shortage). This should also build a solid foundation for regulatory and legislative advocacy to address the increasing regulatory risk facing our Profession.

Business Learning Institute and our "in-house" training efforts - Over 150 satisfied clients including Maryland's largest corporations, national CPA firms, local CPA firms, and privately-held companies held over 200 programs training over 4,000 CPAs in leadership, ethics, internal control, fraud detection, management and technical training. This is in addition to our traditional professional development programs available to all of our members. The measurable results are in our growth (this has doubled every year since its inception four years ago), customer satisfaction, and customer retention. Many of these programs and instructors have been included in our leadership academy.

Increased Regulations & Risk - Stopped the [State] Corporate Accountability Act in 2003 which would have imposed many Sarbanes-Oxley provisions on privately-held companies. Expect to pass reasonable reform in the form of mandatory peer review and get an added benefit of easier practice privileges by passing "Substantial Equivalency". Held a private session between our Section 404 Task Force and Chairman Bill McDonough of the PCAOB and created a referral bureau for CPA firms wanting to do 404 work.

These initiatives were driven by over one hundred volunteers over the past three years - from our Accounting Reform Task Force to our CPA Day attendees - these CPAs have demonstrated that a focused effort can produce big results - we have stopped the cascade of SARBOX from hurting [state’s] small businesses and their CPAs. We have also been successful in restoring the public trust in the CPA in Maryland through these same efforts.


Question 4 - what should you be asking?
I think the fundamental question is What can we do to revitalize the involvement of CPAs in their Profession?

Most CPAs in their 40s and 50s were told to join and be active in their Professional Associations (AICPA & State CPA Societies), yet that does not happen in this highly competitive and rapidly changing environment. Active membership from larger firms and companies has been on a decline for years. Young CPAs don't have the time or encouragement from their employers. More and more I hear the CPA as a credential and not a Profession.

I worry that we could go the way of the medical profession as it lost its voice in the marketplace. Doctors began specializing and lost their identity with the fundamental designation of Doctor. They spent more time in their specialty and stopped worrying about the profession of being Doctors. The result was special interest groups like trial lawyers and HMOs began to weigh in on their issues and they lacked the critical mass to fight them.

The CPA Profession is at that same tipping point today. The BAR association is weighing in on tax services and special interest groups are working congress and state legislatures with ideas on how to reform our Profession. As CPAs we all have a stake in our Profession and we are all impacted by the major forces of the marketplace. Only by sticking together as CPAs will we be able to maintain our role as trusted professionals. This is our biggest focus for the upcoming year...


RESPONSE #4

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
The shrinking talent pool for firms; this is the number one issue. Hiring and retention of CPAs in public practice firms is becoming more difficult. There are so many obstacles to entering the practice now: the cost in time and money of the 150 hour requirement; the difficulties with the new CPA exam; the ability of CPAs to be certified without any public practice experience; the flood of work consuming the firms trying to comply with so many new rules and regulations, making firms less anxious to give candidates the time to study and take the exam on four (or many more) different occasions; the rising costs of the Becker course and the rising costs of the exam; the poor pass rate of the exam makes it less attractive to invest the time and money in the entire exercise; etc.

Of course, the shrinking pool will also begin to be reflected in the Society's long-term membership strength. An aging population, coupled with the above challenges will take their toll. Historically, industry members have not been as loyal to the profession -- partly because employers do not necessarily pay for association dues, and partly because members in industry are less likely to need the CPA certification to progress in their careers.

QUESTION 2: What are you doing about it?

We are changing the focus of our strategic plan to incorporate this problem, and will assign our Firm Development Committee to the Executive Committee to begin tackling these issues.


QUESTION 3: How's it working?
Retreat was held this month, we are still in the planning stages.


RESPONSE #5

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
Issues/trends affecting [our state]:
1. Membership decline due to fewer people taking the exam and more Boomers retiring.
2. Increase in mergers and acquisitions of CPA firms could impact our revenue because bigger firms buy less CPE.
3. Expanding list of certifications in marketplace is making the CPA brand fuzzy.
4. A decreasing supply of new instructors and consolidation of CPE vendors may raise fees and limit offerings in CPE.
5. The trend for people to hold 7-12 jobs in their lifetime is creating increased need for career-related services.
6. Increasing demand for online learning.
7. Unknown effect of 150 hour rule taking effect 7-1-06.
8. Greater emphasis on specialization is weakening the CPA brand as the "gold standard" in accounting.
9. Our membership is gradually becoming more and more female. Understanding what this will mean... deserves attention.

Issues/trends affecting... members:
1. Finding staff is the most
urgent issue. It hits smaller firms and businesses hardest.
2. Providing services to clients online -- technology is a challenge for smaller firms.
3. Insistence on work-life balance by new employees -- once again, our members in smaller firms and businesses have the greatest challenge.
4. Lack of good succession planning.
5. Increased "aggressiveness" in the regulatory arena, both at the state and federal levels.
6. The rise of new competitors, such as H&R Block's move into providing comprehensive business services for small businesses. We think banks may start hiring CPAs soon to provide services to businesses.



QUESTION 2: What are you doing about it?
We're making major efforts in our college accounting programs -- visiting the students at least once a year all over the state to promote the CPA exam and the CPA profession. We're hoping to increase the pool of graduates for new hires and increase the number taking the CPA exam.

We're strengthening our relationship with our state Board of Accountancy.

We're adding capability in online education and expanding our offerings. We're offering opportunities to new instructors in a special series of summer CPE programs.

We're evaluating adding an expanded career support center.

We're participating in the Ambassador Program and hope that will facilitate getting the word out to the public and business community about the value of using/hiring CPAs.

The profession as a whole will need to beef up the efforts to help the public and business community understand the value of a CPA versus other certifications. We need to figure out an effective way to reach those hiring in business and industry so that they support their new hires in getting their CPA.