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Public Expectations Remain High for CPAs By Ron Klein Although some damage has been done to the image of CPAs, the American public holds high levels of trust and expectations for professionalism among accountants, according to a 2003 survey commissioned by Camico, the New York State Society of CPAs–endorsed professional liability insurance carrier. The bad news for CPAs is that survey respondents don’t believe accounting firms are monitoring their clients’ ethical standards. When asked, “Do you think that a professional accounting firm would look the other way if a client violated the law in order to maintain its relationship with the client?,” 62 percent answered, “Yes.” When asked if accountants have become less ethical, more ethical, or stayed the same in the past five years, 38 percent said less ethical, 13 percent said more, and the remaining 49 said there’d been no change. On the other hand, the public does not hold accountants as responsible for the corporate scandals of recent years as others involved with corporate institutions. A whopping 94 percent of survey respondents believe there are legal or ethical problems, or both, facing corporate America today, but when asked to place responsibility for those problems, CEOs headed the list (70 percent), followed closely by senior executives (68 percent), CFOs (62 percent), inside lawyers (58 percent) and boards of directors (55 percent). Inside accountants were then named (53 percent), followed by external accountants (42 percent), external lawyers (40 percent) and external consultants (34 percent). Meanwhile, expectations for accountants remain high. Three out of four respondents believe accountants should police the financial reporting that a publicly held company makes to investors. In addition, 71 percent of respondents expect an accountant to uncover fraud if the accountant is hired by a company to review financial statements but is not retained to perform an audit. On a positive note for accountants, a resounding 85 percent agreed with the statement, “While some accountants have done bad things, the entire accounting profession should not be condemned.” Only 21 percent agreed with the statement, “I do not trust accountants,” and only 17 percent had ever had a negative experience with an accountant. Members of the public generally view CPAs as professionals they can trust. As a consequence, the public has high expectations for accountants to catch unethical corporate financial behavior. Other survey results indicate that trust of corporate behavior in general is low. More than half of respondents felt the U.S. is more endangered by white-collar than blue-collar crime, and 78 percent answered “yes” to the question: “Do you tend to believe the things you hear in the news about corporate wrongdoing?” Given the negative impact of corporate scandals on the profession, it has become all the more important for firms to effectively serve their clients and other stakeholders. Camico recommends a number of techniques and approaches for CPAs to better serve clients and manage risks, including client acceptance procedures, an engagement letter for each and every engagement, and the careful documentation of key events such as CPA inquiries, follow-ups, concerns, warnings, recommendations, client decisions, and changes to the original engagement. Camico commissioned the survey to investigate potential jurors’ attitudes toward accountants and whether those attitudes have been negatively affected by the recent corporate scandals. Dispute Dynamics, Inc., a trial consulting firm, conducted the survey, which consisted of random respondents from the general public in Atlanta, Los Angeles, Miami, New Orleans, New York and Seattle. Selected portions of the entire survey are highlighted in this article. Ron Klein, J.D., CFE, is vice president of claims with Camico. Recipient of the 2002 Award for Outstanding Conference Speaker from the Education Foundation of the California Society of CPAs, Klein co-authored the CPA’s Guide to Loss Prevention Practices and CPA’s Guide to Effective Engagement Letters. |
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