Accounting Swims in Alphabet Soup: Spelling Out the Profession in Layman’s Terms

By Nancy Newman-Limata, CPA

Until recently, the work of the accounting profession has been somewhat of a mystery to the general public.

We have used GAAS, GAAP, EITF, IASB, SEC, POB, ISB and a volume of other industry-specific terms to identify the work we perform. But does anyone outside the accounting profession understand what these terms mean? Do we care if they don’t register with the public at large? Have we ever cared? Have we, like attorneys and doctors, used acronyms to demonstrate that public accounting is a profession rather than merely a service?

We are now learning the price you pay for failing to adequately disclose. Over the last several months I have invested a considerable amount of time educating members of the state legislature as to what it is we do. Though, as a layman, I cannot perform a medical procedure or cross-examine a witness in court, I do have a sense of what is involved and can understand when it is explained to me. I’m not sure that we can say the public has as good a grasp of the work we perform as they may with other professions, despite our efforts to educate publicly elected officials.

But if the public is to trust us again, they must develop a better understanding of our duties and responsibilities.

The financial media in the past few months has done a good job distilling the financial information related to Enron and other troubled companies and repackaging it to the public in plain English. Though the Securities and Exchange Commission has promoted “plain English” for filings, both attorneys and accountants have failed to make these documents more comprehensible. Notes to financial statements generally are as plodding as they are lengthy. Last week I submitted the first of four columns on understanding financial statements to the New York Post. It was a rude awakening for me to see how the paper’s editors boiled my words down to their most basic elements. As any paper worth its salt knows, it’s these key elements that the public is most interested in. We should follow the media’s example.

We each must make an effort to educate the public on what we do—we owe it to them. Part of our role in protecting the investing public is to help them understand what they are investing in. As such, we should each write a column for our local paper or speak to civic groups and schools to try and give the public some insight and perspective on financial statements.

If students were able to understand the full story told by the financial statements—all of its nuances and shades of gray—the profession might actually seem more attractive to them. One of the few positive developments to grow out of the Enron debacle is that students no longer regard accountants as a profession of “bean counters.” We must take advantage of this situation and allow the whole truth and nothing but the truth to be told. This can begin to be accomplished simply through visiting local high schools and telling the students in plain English (or as close as we can get) about our jobs and how we help our clients. We should tell them how an audit or inventory count is performed, how we represent a client during a tax audit, and how we handle some of the dicey issues that confront our profession.

The New York State Society of CPAs is made up of 30,000 members. If we each reach out to a group of 25 individuals, we’ve educated three quarters of a million people. It’s time to make the math count and stop the doublespeak and overblown use of acronyms. We can make meaningful inroads into getting people to understand what we do.

Parting Thoughts

As my term as NYSSCPA president draws to a close, I would like to thank you for giving me the opportunity to represent you during what has been a most interesting and enlightening year, Enron notwithstanding. Some of you may recall from my July 2001 column that I am a Star Trek fan. With that in mind, I think it’s only fitting to say this past year has been, to paraphrase the Starship Enterprise mission, a bold adventure into vast unknown frontiers. However, I did not actually have to seek out these new frontiers, they came to me, one after the other in a virtual cosmic barrage of events.

As president, I do not regret the paths that I have taken, for the lessons I have learned have been bountiful. My term as president has helped hone my knowledge of New York state geography as well as expand my familiarity with politics, strategy, management and even myself. Over the last year, I have formed deep and lasting friendships, and I have managed to develop a leadership style that I can call my own. I have had the privilege of working with countless brilliant and extremely capable members from all over the state, whether they serve on the board, a chapter committee or are just active participants.

As I leave office, I encourage you to consider taking a bold adventure into an unknown frontier if you haven’t recently. If not in the Society, become involved in some organization that takes you outside of your comfort zone. Give of yourself, and I promise you that you will get more back in return. As Star Trek’s Captain Picard would say, “engage” with destiny.

president@nysscpa.org