Transparency: Now Is the Time

Transparency: Now Is the Time

By John J. Kearney

Continued from the Home Page

Just about everyone has had to walk the talk on issues of transparency by making some changes in the way they report. And, likewise, the Society has been a leader in working for transparency for CPAs.

Society members have been particularly aware of the need to demonstrate that we deserve the public trust.

We were the first CPA society to pass a membership bylaw that permits the organization to make closed ethics cases available to the state regulators. Our goal was to show that transparency applies to us, too, even when it pertains to that small number of CPAs who have failed in their ethical responsibilities.

Being in the lead on ethics transparency has increased our stature immensely, and we are highly regarded for our openness and willingness to lead in this important area.

We’re about to open up another area of leadership, on transparency pertaining to peer review. As most already know, the Society has supported mandatory peer review in its legislative efforts over the past few years. The truth is, though, that almost all firms that would be subject to mandatory state peer review when a new law passes already participate in the peer review system.

The Society serves as the administrator for the AICPA peer review program in New York state, and has approximately 2,800 firms participating in the system. Many firms that audit only private entities have undergone peer review since the inception of the program in 1978, and a good number of those firms voluntarily participate in the public file program at the AICPA and even more routinely make their peer review reports available to clients, banks and members of the public that express an interest.

Most CPAs are engaged in important work in their business communities, ethically and responsibly, and want others to know about it. One way to accomplish this type of transparency is by making their peer review reports widely available.

The AICPA is also in the midst of proposing changes to their peer review system that would dramatically increase the transparency of the system by making peer review reports part of a public file. The AICPA is contemplating changes to facilitate the transparency of peer review and increase the perception that CPAs are responsibly fulfilling their public duties.

The spirit of the AICPA proposals is very much in line with our bylaw change to make ethics more transparent and with the peer review legislation the Society has supported for several years. Backing the AICPA’s proposals would definitely show the public that we’re serious about walking the talk.

Now is the time for us to take the lead on transparency. We should step up and volunteer to make this part of transparency meaningful. Most firms fare very well in the peer review process. It’s important that people know about this high quality in order for public confidence to grow. And for those firms with quality problems, greater transparency would provide a significant incentive to make the necessary changes. The time has come for CPAs to make the most of our opportunities for transparency.
Let me know what you think.