Leadership Conference Addresses CPA Politics and Image

By Joanne S. Barry,Director, Communications Division

The statewide leadership of the New York State Society of CPAs learned about the power of political strength and ways to reclaim the profession’s image at the third annual Leadership Conference, held in Saratoga Springs last month.

Society leaders—nearly 200 strong and from every level of the organization—convened on July 13 to help find ways to restore the image of the profession for regulators, legislators, clients, the public and other important audiences.

Held at the Gideon Putnam Hotel and Conference Center, this year’s conference featured speakers with ideas for jump-starting both advocacy and image enhancement— two of the goals defined in the Society’s strategic plan and the focus of Jeffrey R. Hoops’ presidency.

Michael Dunn, a political consultant who has worked with the accounting profession, focused on the premise that the profession has lost its institutional credibility nationally and now is perceived as a political interest group. He stressed that CPAs need to start the building process on a grassroots level and regain confidence with legislators and others on a personal, individual basis.

“It will take decades to get your institutional credibility back,” Dunn said. “This is not a time to divide yourselves politically. CPAs need to work together to influence the outcome of important issues. You must be players in the process, not victims.”

Sharper Image

Meanwhile, Lynn E. Turner, former chief accountant of the Securities and Exchange Commission and current director of the Center for Quality Financial Reporting at Colorado State University, kicked off a panel discussion on image restoration.
“The CPA reputation is subject to question,” Turner said. “This is the result of a long-term evolutionary change that started in the 1960s.’’

He offered his advice on changes needed to reconstruct the profession’s image. Included among these is changing strategy to keep the public franchise as a first priority. Second is a change in product quality so that financial statements can stand the test of time. He also discussed a change in leadership on the national level.

“With the XYZ (a failed American Institute of CPAs’ professional credential proposal) and other initiatives the CPA reputation has been dragged through the mud,” Turner said. “The profession has been resoundingly opposed to change. Once you are perceived as fighting with the public, you can’t change that image.”

He also discussed specifics such as putting pension liabilities on the balance sheet; the fact that standards don’t require CPAs to do what they need to to get the numbers right; responsibility for detecting fraud; changing how CPAs report because current “paragraphs” don’t get the job done; firm improvement of risk management; mandatory firm rotation with exceptions for good audits and mandatory retention; more timely enforcement actions; professional liability caps of 15 times the audit fee, and changes in academia to accommodate the amount of data to be taught.

Charles Weinstein, a managing partner of Eisner LLP’s executive committee, discussed the impact of the corporate scandals and the Sarbanes-Oxley Act of 2002 on the way his firm practices, as well as on liability, client relationships, the appropriateness of CPA skill sets and the possibility of any negative effects on a firm.

Eisner formed a Sarbanes-Oxley response team to monitor regulatory developments, review client base risk assessment and review quality controls, among other issues. They have frequent internal communications and a firm philosophy that technical partners cannot be overridden, Weinstein said. He also discussed a compensation structure built around both technical expertise and client service.

Past Society President Marilyn Pendergast, managing director of the Albany office of Urbach Kahn & Werlin LLP, labeled the current environment a “crisis in regulatory and media confidence in the profession.”
She recounted previous crises in accounting since the 1930s and charged the leadership group to look carefully at what might happen in the future.

“The next crisis might be related to tax planning for corporate clients, or to government accounting when the public finally becomes aware that off-balance-sheet transactions, phony assets and other accounting techniques, all perfectly in accordance with the Governmental Accounting Standards Board, make our government financial statements a far cry from a fair and true view,” Pendergast said. “We need to think about where the smoking guns may be and try to disarm them before the next explosion.”