The CPA Profession: Opportunities, Responsibilities, and Services

By Stephen R. Moehrle, Gary John Previts, and Jennifer A. Reynolds-Moehrle

Published by the American Institute of Certified Public Accountants, 2006, $52 (AICPA members), $65 (nonmembers); ISBN: 0-87051-624-8

Reviewed by Robert H. Colson

E-mail Story Print Story

Its special strength is the grounding it provides for the CPA profession’s fundamental service to society in ensuring citizens’ exercise of their information rights in financial matters through assurance services. Veteran CPAs, new professionals, and those interested in what it means to be a CPA in the 21st century all have something to gain from The CPA Profession: Opportunities, Responsibilities, and Services.

The first paragraph—“What is a Profession?”—sets the tone for much of what is to follow:

A profession is a discipline practiced by an individual. However, it is also a vital, continuing social organization that lives on after any particular individual leaves the profession. Professions are typically marked by at least the following: (1) professional education (usually at the graduate level), (2) a system of self-regulation based in a code of professional ethics (conduct), and (3) governmental review and/or licensure.

The remainder of the book delves in detail into the ways these three characteristics of a profession are practiced in the CPA profession, with special emphasis on the effects of the CPA “revival of fundamentals” after the Sarbanes-Oxley Act of 2002 (SOX).

Highlights

After introducing the CPA profession as the “defender of the information right,” the authors present chapters dealing with fundamentals such as commitment to serve the public; competence, integrity, and objectivity; CPA careers; scope of CPA services in public and corporate practice; personal, professional, and public accountability and oversight; the effects of SOX; and trends that portend the future for the CPA profession. The exposition is careful and thought-provoking, leading readers to question themselves and to articulate in some fashion their own views on the subject matter.

Seven appendices cover the AICPA’s code of professional conduct, state CPA practice requirements, state boards of accountancy, state CPA societies, a historical perspective, websites of interest, and discussion questions for each chapter. All of the appendices cover useful information, but the appendix of discussion questions is particularly valuable. Considering the questions while reading a chapter also illuminates key concepts.

The authors’ writing style is easy to read, so the book flows well if a reader simply wants to go through it from cover to cover. The many headings and subheadings also make it interesting for those who prefer to browse by topic. The chapter questions in Appendix G also alert the reader to information that the authors consider most important. The topics are well organized and thoughtfully discussed. Footnotes and references are few, and those provided are generally helpful.

Improvements

Many would probably be happy with the book as it is, but four modifications would really transform this book from a very competent discussion of current affairs to something more enduring. First, the authors bring statistical evidence into the book from various public sources in an attempt to help explain business elements of the CPA profession—for example, a table about accounting firm fees adapted from Public Accounting Report. Such data can become dated quickly or can reflect reporting systems that may not be accurate; data integrity issues can be especially difficult when trying to explain what has happened in the CPA profession since 2002. Because a book cannot self-update or self-correct with respect to data, the authors should consider carefully the statistical tabulations essential for their narrative.

Second, more space could be devoted to understanding and explaining the most fundamental fact for CPA firms since the passage of SOX and the registration of “public” company audit firms with the Public Company Accounting Oversight Board (PCAOB). Increasingly, those firms that are organized primarily to serve SEC registrant audit clients have a very different set of concerns related to scope of practice and self-regulation than those firms that primarily serve non-SEC registrants. These differences, mostly arising from the disparities between federal securities acts and state incorporation laws, affect many aspects of how the CPA profession will function.

Third, more balance between the self-regulatory efforts of the AICPA, which were mostly oriented toward federal initiatives, and the regulatory functions of the professional licensor, the states, which affect CPA firms pervasively, would help position this book more solidly in this century. State statutory and regulatory provisions are premised on common-law concepts of a profession, which leave considerable discretion for agencies and courts to permit judgments in line with current professional standards. The federal government, on the other hand, is based on statutes, agencies, and rules, without the same explicit provision for professional judgment. The states’ regulatory authority determines who can practice public accountancy—CPAs’ only exclusive, professional franchise—just as it determines who can practice medicine or law. Several federal agencies, including the SEC, the GAO, and the IRS, accept state licensure but regulate to sets of regulations and rules that vary in their explicitness.

Finally, people trying to understand the CPA profession also need to appreciate clearly the three dimensions of a professional service business. Just so we’re on the same page, consider “professional service business” in the context of a doctor. The profession is practicing medicine. Service is performing on a timely basis in an efficient and effective manner at an appropriate location. Business concerns such factors as price, billing practices, insurance accepted, and administrative functions of an office. The authors correctly criticize the pre–SOX efforts for CPAs to offer all kinds of different services, but they should also offer a well-articulated alternative to the scope-of-practice issues that arose in the 1990s.

Final Thoughts

Notwithstanding this reviewer’s four “improvements,” The CPA Profession is the best attempt of its type that this reviewer has seen. Perhaps it is a testimony to the book’s engaging qualities that it would prompt me to consider such improvements at all. And, of course, the book’s organization provides opportunities to consider such points when discussing the chapter questions. Anyone participating in a discussion group with this book as the catalyst will walk away a more informed and more enthusiastic supporter of CPA professionalism.