September 2001

Member Q & A

Q: How long have you been a CPA?
A: Twenty-three years. My uncle was a CPA. After undergraduate school he invited me to work with him. I then went to graduate school for accounting and worked for him (a rather busy schedule). I received offers to work with other firms after graduate school, but decided to stay with my uncle. That was 25 years ago.

Q: What category do most of your clients fall into: small-, medium-, large-size business?
A: Small business.

Q: How many people work for you? How many CPAs are in your firm?
A: We have nine employees, two CPAs, two candidates.

Q: What are your primary functions and responsibilities? What do your clients most frequently rely on you to do?
A: Typical small-firm tasks.

Q: What are the biggest differences between your work-related concerns and the work-related concerns of CPAs who belong in industry or in other practices? What are the similarities?
A: The need for independence; we work with many clients. We all provide ethical service…I believe what brings all CPAs together is their ethics, their adherence to our professional code of conduct. Serving one client (your employer) or many clients presents many of the same challenges to our code of conduct. Today, many say that only 15 percent of all CPAs use their franchise, therefore, we are much more homogeneous than in the past.

Q: Do you believe the public has an accurate understanding of what the CPA brand represents?
A: We do a very poor job with the CPA brand. We need a better understanding with the public as to what a CPA does and can do.

Q: Do you think it’s necessary to better market the CPA image to the general public? If so, what can state societies do to accomplish this task?
A: Yes, we need to do a better job. I believe that our society should begin a campaign in our state (not just New York City) to identify the CPA and the services that can be provided. We should stress our ethics and our quality. We need to establish a base from which some CPAs may want to expand (e.g., XYZ), but the majority will want to grow within their own profession.

Q: Where do you stand on the American Institute of CPAs’ proposed global credential?
A: I see no reason to limit the growth potential of any CPA, and I support the initiative. However, we need to do a better job of supporting the majority of our members with their daily work as a CPA—that is better branding. As for myself, the XYZ offers nothing I can use in my own practice.

Q: What are other significant developments to take place over the last five years in the kind of work you perform for your clients?
A: I am doing much more planning, perhaps due to the growth of small business and the awareness of the need to plan. I am providing many services that larger businesses do in-house (types of services that do not impair independence). We are also beginning to offer controllership services (types of services that would impair independence).

Q: To what extent have advancements in technology contributed to those developments?
A: Advances in technology certainly increase the cost of doing business. Also, technology allows more work to be done by fewer individuals. As such, we are able to offer more services to our clients, thus allowing the developments mentioned above.

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Q: Can you elaborate on how technology increases the cost of business?
A: Simply, the need to keep up-to-date hardware, software, training, procedures and personnel [is expensive]. We are spending a great deal of money to hire and train individuals who are able to support our system and those of our clients. The system is costly and must be updated quickly.

Q: Have Securities Exchange Commission rulings on auditor independence in the last year changed the way you serve your clients? If so, how?
A: Yes. Even though my practice does not bring me into direct contact with the SEC, the modernization of the independence rules has begun to filter down to firms my size. Look at the new exposure draft from the AICPA regarding independence (or my article in the February 2001 issue of the Journal of Accountancy). These changes will have a profound effect on the small firm. [Caswell's article discusses the SEC's revisions to rule 2-01, which he describes as a shift to a "team level approach" to engagements. The new revisions limit the scope of independence rules to those actively engaged in audits and those who could influence an audit improperly, as opposed to the older regulation that applied independence rules to partners and others even if they were not directly involved in an audit. In his article, Caswell states that this will help smaller firms who have more diversified relationships with their clients, such as when clients hire spouses and often compensate them with stock options.]

Q: Does auditor independence remain a controversial issue between the accounting profession and the SEC?
A: I do not believe the issue has been controversial. I do believe that the current staff of the SEC may actually be less restrictive than the AICPA rules. There will always be disagreements and some issues will come to the forefront.

Q: What is your initial opinion of Harvey Pitt as chairman of the SEC? What issues would you hope to see Pitt address in the coming year?
A: I am glad to see the appointment of a more moderate chair. [Former chairman Arthur] Levitt may have been a bit too much of an activist. Issues will include the dissolution of the ISB [Independence Standards Board].

Q: Do you believe that Pitt’s past affiliation with organizations like the AICPA could present future conflicts of interest?
A: Absolutely not.

Q: Do you think trends in accounting and auditing affect CPAs in industry the same way they affect you?
A: Yes. Whether you are governed by the independence rules or not (the only real substantive difference), the A&A issues are the same. You may be inside or outside; however, the issues, the problems and the solutions concern all CPAs.

Q: What are some of your core objectives for the coming year? What do you believe will be your biggest challenges?
A: The cost of technology and the ability to compete in a business world where the CPA license is of less importance [will be some of the biggest challenges].

Q: If the CPA license is less important, what kind of services have you had to provide to clients to keep them and to grow your practice?
A: My clients are more concerned about the quality of the service we provide than the letters after our name. I believe that the CPA license gets me in the door; however, our service keeps us in the office.

Q: Do you believe the New York State Society of CPAs adequately represents your interests? If not, what could be done to make sure you receive fair representation?
A: If I were in industry, my answer may be different. As a practitioner, I believe the Society, over the past several years, has done a fair job in representing my interests. Certainly in the areas of education and accounting standards, the job has been excellent. We need more emphasis on CPA branding. I would like to see more success in Albany.