October 2000

Business or Profession?

The founder of McDonald’s, Ray Kroc, claimed that the secret to succeed at McDonald’s is the ability to see the beauty in a hamburger bun. Although many professionals would laugh upon hearing this statement, upon reflection, most would realize that Kroc was correct. In fact, one cannot be a world leader in a business as basic as hamburgers without truly caring, passionately, about what he or she does.

For a professional, one must believe passionately in what one does and never knowingly compromise one’s standards and values. This is the mark of true professionalism. At issue, however, is the question of whether the modern CPA firm should be deemed a profession or a business.

To understand the implication of this simple question, one must first understand how labeling the industry anything but a profession would affect the CPA’s reputation as the “trusted professional.”

This reputation was created as a result of how the public perceives the CPA and the professional service provided. It is therefore advocated that a professional service cannot be sold like a business. The primary purpose of a business is to maximize returns. In the case of a professional, the bottom line may not be all that counts. To further analyze this issue, one needs to take a moment to look at the services that the CPA sells and how these services could be altered by the corporate acquisition of CPA firms.

Th CPA profession offers a diverse array of professional services. Among these services are an exclusive license to issue financial reports and admission to practice before most governmental taxing authorities——accompanied by the expectation that the services performed will be held to a higher standard. In today’s market, some of these services have been generating a lower profit margin. Many professionals will even argue that the attestation function is becoming more of a commodity than a service. It is argued that as the needs of the marketplace change, so must this profession.

There is a lot more at stake, however, than simply finding new ways to supplement monies lost. If the Uniform Accountancy Act passes in Albany, CPA firms could offer other financial products (i.e., investments and insurance). Although this would provide new sources of revenue, it is imperative that the professional service remain the focus of the CPA firm.

Self-regulation within the CPA profession may be required to ensure this. This is a step that a professional would take, and more importantly, this would uphold the credibility of the profession.

The credibility of the profession is ultimately derived from the practitioner-clientele relationship. With the acquisition of CPA practices by nonprofessional companies, there is a concern that this credibility would be affected. In addition, the consolidation of firms under a limited number of corporate umbrellas might dilute the individual identity of the professional.

To further explore these concerns, some issues that are presently dominating the medical profession provide interesting similarities. In the medical industry, the judgment of many physicians has clearly been compromised by the second-guessing of insurance companies that make the financial bottom line an issue. Insurance companies make modern-day health care decisions like a business, a practice that often conflicts with the professional judgment of the attending physicians.

Likewise, there is the question of whether the professional judgment of the CPA practitioner and firm is diminished and compromised by the influence of the corporate acquirer’s desire to maximize shareholder wealth. These issues raise serious concerns about the future of the CPA professional.

Over time, clients may begin to no longer think of the CPA as a professional who provides a valued professional service, but as a sophisticated “salesperson” of the acquirer’s product. If they believe that the services are not being performed solely and passionately in favor of their best interests, clients might assign a lower value to the profession and the professional. With this, the reputation of the CPA as the “trusted professional” could cease to exist.

These questions are posed during good and prosperous economic times; nevertheless, it is certainly true that how this profession handles these situations is a stern test of the vision and judgment of the practicing professionals. They could either enhance or destroy the reputation in which so many CPAs take so much pride.

Perhaps it is time to reflect on the lessons of Ray Kroc and passionately advocate what the CPA sells, the professional service. It is important to maintain true professionalism as we sell this service and consider this business as it should be, a profession.