November 2000

Business or Profession?

Certified public accounting is a relatively young profession: The medical and legal professions have existed for centuries, the CPA profession for little over 100 years. During this period, however, its practitioners have earned an unrivaled reputation for protecting the public interest.

This reputation is founded on the cornerstones of expertise, integrity, objectivity, and independence. The first three cornerstones are common to many professions; the last is virtually unique to the CPA.

The requirement for independence in performing attest functions may have contributed the most to the profession’s reputation. If so, the profession must continue to maintain independence as a cornerstone.

Likewise, the profession could not have survived if its practitioners were not business men and women. Absent its ability to prosper, the profession would likely have disappeared and been replaced by another profession or business.

CPA firms of all sizes have prospered, and some have become exceptionally prosperous in recent years. Nevertheless, their profits most likely came from services other than attest services. The services that can be performed only by a CPA may, in fact, provide the lowest margins to a firm or be loss leaders for the firm as a whole.

As business needs have expanded, so has the ability of the CPA firm to meet them. Perceiving a need for a certain service, CPAs either developed the necessary expertise or employed (or admitted to the firm) non-CPAs that already had the expertise needed. As needs of business expanded, so did the ability of the CPA firm to meet the needs because of the business expertise of the firm’s owners to provide talent to the engagement. Certain business needs could have been met by other organizations, but CPA firms were retained.

The CPA profession is both a profession and a business: If CPAs were not excellent businesspersons they could not have expanded the profession’s horizons.

As the profession’s horizons are expanded, independence is the cornerstone of the profession most likely to be impaired. Great care must be taken to maintain independence, or the profession could risk losing its professional designation. If this were to occur, would the CPA firm still be perceived as a provider of outstanding service? Clearly, denigration of the CPA designation would be neither a sound move nor an expected move from an astute businessperson. Preservation of independence is critical to the CPA profession, as both a profession and a profitable business.

The preservation of independence is critical to the profession. Loyalty to a firm is expected in business. For a CPA firm, however, maintaining the position that loyalty to professional conduct transcends loyalty to the firm is critical to the continued success of the CPA profession as a profession and as a profitable business.