Post on 18-Apr-2018
6/12/2014
1
State of the Profession
Georgia Society of CPAs
Annual Convention
July 1, 2014
Bill Balhoff, CPA, CGMA
Chairman, AICPA Board of Directors
High satisfaction with CPA performance
91% 97%87%of BDMs of investorsof BDMs of BDMs
very/somewhat satisfied with
external CPAs
of investors very/somewhat
satisfied with CPAs
of BDMs very/somewhat satisfied with internal CPAs
BDM – Business Decision Maker
CPAs first among financial professionals in positive perception
Source: Applied Research & Consulting, LLC
CPA: Confidence-inspiring & rigorous
I would be more confident in a job done by a CPA than if it were done by an accountant who is not a CPA
I would be more confident in a job done by a CPA than if it were done by an accountant who is not a CPA
75% of BDMs agree
72% of investors agree
Becoming certified as a CPA requires more rigorous training and testing than any other financial credential
71% of BDMs agree(significant increase from 64% in 2011)
Source: Applied Research & Consulting, LLC
6/12/2014
2
CPA credential in high demand
Employers: Most desired credential
Solid salary growth
Robert Half 2014 Salary Guide Accountants & Auditors:Among Top 5 “in demand” professions
for 2014
Entry-level demand also strong
Broader responsibilities
Source: TIME Business & Money1/7/14
Accounting:“One of the largest single blocks of above-average paying jobs in the
country”
Accounting: Tops for hiring interns
Percentage of internships that turn into full-time, paid hires
31%
25%22%
Source: LinkedIn survey
Accounting Financial Services
Information Technology
Management Consulting
14%
Facing CPAs this year
Effects of EU audit reforms
Accounting standards
Private company reporting
Legislation &
RegulationFocus on auditors
6/12/2014
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Legislation & Tax
Copyright © 2014 American Inst itute of CPAs
Cash to accrual basis of accounting
Discussion drafts in House & Senate
Impact on partners
Grassroots effort
Tax issues
• Tax reform
• Extenders
• Tax return preparer registration
• IRS services
• Due dates
• Mobile workforce
6/12/2014
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Financial Reporting
Copyright © 2014 American Inst itute of CPAs
PCAOB focus on auditors
Auditor’s report Engagement partner signing Cascade risk
Effective 2016
10 year auditor rotation20 year rotation if company tenders at 10 years
EU audit reforms
24 year mandatory rotation for companies conducting joint audits
70% cap on non-audit fees
Limits tax and advisory non-audit services
6/12/2014
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Increased focus on consulting
“We need roundtables and task force attention on the implication of the
regeneration of non-audit consulting.”
-James Doty, PCAOB Chairman
“I continue to observe the accounting firms are actively growing their g y g g
consultancy practices. Such expansion runs the risk of damaging the
accountant's reputation.”
-Paul Beswick, Outgoing SEC Chief Accountant
“As the accounting profession becomes more committed to consulting,
their audit activities have got to be questioned.”
-Arthur Levitt, Former SEC Chairman
Changes in assurance
Compilation proposals
Definition of attest
Firm mobility
6/12/2014
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New toolkit resources late June
Working with state societies
FRF for SMEs
societies
F/S user education campaign
Regulators view as OCBOA
“[FRF for SMEs] could be a competitive tool for banks… it’s
an option bank lenders should be aware of so as not to
be at a disadvantage in prospecting for business in the
SME space.”
Private Company Council progress
Private Company Framework
Definition of Public Business Entity
FASB issued three standards
Interest rate swaps
Goodwill
VIE exception
FUTURE2014
IFRS?
Convergence and IFRS
GAAP/IFRS convergence
Revenue recognition
standard[RELEASED]
Financial instrumentsstandards
IFRS?
Leasesstandard
Principle-based
SEC strategic plan
Affects virtuallyall businesses
6/12/2014
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Revenue recognition resources
AICPA resources
• Business brief
• Learning and implementation plan
• Audit committee primer
aicpa.org/RevenueRecognition
• Audit committee primer
• Non-authoritative guidance
• Blog posts
• JofA articles
Supporting CPAs
Copyright © 2014 American Inst itute of CPAs
• CGMA Competency Framework –Driving CIMA syllabus and lifelong learning
• CGMA exam – 2015
• Proposed Global Management Accounting Principles
• World Congress
CGMA
6/12/2014
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Restructured ethics code released
Intuitively arranged
User-friendly online code: aicpa.org/newcode
Enforceable rules and principles not changed
Minimum substantive changes to interpretations
Non-authoritative guidance referenced
Effective December 15, 2014
Additional year for Conceptual Frameworks
Firm Issues
Copyright © 2014 American Inst itute of CPAs
Profession’s commitment to quality
6/12/2014
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Commitment to public interest
Ethics enforcement
Guidance, tools, learning, resourcesAudit Quality Centers
Quality monitoring/peer reviewStandards setting
Ethics enforcement
CPA Exam
Thought leadership
Complexity in business and underlying standards
Pace of change
Continued audit relevance
Emerging issues in profession
Co t ued aud t e e a ce
Peer review and inspection results
Regulators’ scrutiny
Expanding services
2-Phased approach to enhance quality
Near-term:
Changes to professional standards and related implementation guidance
N t l d l t d
Long-term:
Practice Monitoring of the Future
New tools, development and resources (including Future of Learning, AQC activities, and CPEA)
Amendments to the existing peer review program
Regulator EngagementRegulator Engagement
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More real-time and continuous
Technology and people
Practice Monitoring of the Future
Data from firms’ systems
Dashboard: Useful to firms and monitors
Transparent and useful
Checks and balances
Center for Plain English Accounting
AICPA PCPS national A&A resource center for firms
aicpa.org/CPEA
Services:
Written responses to written technical inquiries
Monthly “how-to” A&A reportsy p
Webcasts
Alerts
Content for firm newsletters
Future growth in public accounting
2%A&A
Core accounting services remain the central focus…
…and advisory services offer growth opportunities
Advisory service Growth
Ri k 6 5%
46%
35%
16% A&A
Tax
Advisory
Other
Revenue$94B
Risk 6.5%
Business valuation 3.5%
Forensic accounting
6.8%
Financial planning 3.1%
IT/S&P consulting 6.0%Source: IBISWorld
6/12/2014
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Solos
2-5 Professionals
Top issues – PCPS survey
1. Keeping up with changes and complexity of tax laws
2. Bringing in new clients6-10 Professionals
11-20 Professionals
21+ Professionals
g g
3. Seasonality/workload compression
4. Retaining current clients
5. Effect of regulations
Solos
2-5 Professionals
Top issues – PCPS survey
1. Keeping up with changes and complexity of tax laws
2. Succession planning
6-10 Professionals
11-20 Professionals
21+ Professionals
3. Finding qualified staff (all levels)
4. Bringing in new clients
5. Seasonality/workload compression
Solos
2-5 Professionals
Top issues – PCPS survey
1. Succession planning
2. Finding qualified staff (all levels)
6-10 Professionals
11-20 Professionals
21+ Professionals
3. Bringing in new clients
4. Retaining qualified staff (all levels)
5. Owner/partner accountability & unity
6/12/2014
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Solos
2-5 Professionals
Top issues – PCPS survey
1. Bringing in new clients
2. Finding qualified staff (all levels)
6-10 Professionals
11-20 Professionals
21+ Professionals
3. Succession planning
4. Retaining qualified staff (all levels)
5. Retaining current clients
Solos
2-5 Professionals
Top issues – PCPS survey
1. Owner/partner accountability & unity
2. Bringing in new clients
6-10 Professionals
11-20 Professionals
21+ Professionals
3. Retaining qualified staff (all levels)
4. Succession planning
5. Finding qualified staff (all levels)
Looking to acquire
Geographic expansion
New niche service/industry
Compete for PE work
M&A increasing – key drivers
Looking to be acquired:
Succession
Too much tied-up equity
Positioning for international
referrals
6/12/2014
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Succession
46%of firms have
a formal
50%of practitioners
expect 1x
44%of firms say
M&A talks area formal succession plan – up
from 35% in 2008
expect 1x revenues for their
practice, but in reality often less
M&A talks are on table
Source: 2012 PCPS Succession Survey
Third party verifications
Issues identified
Scope of services
Laws and standards
CFPB “Qualified Mortgage” rule
AICPA guidance and resources
Top cybercrimes
Tax-refund fraud
Corporate account takeover
Identity theft
Th ft f iti d t87% of security breaches
ld h b id d ifTheft of sensitive data
Theft of intellectual property
could have been avoided if reasonable security controls
had been in place.
Source: VerizonSource: AICPA Whitepaper – “The Top 5 Cybercrimes”
6/12/2014
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Developing CPAs
Copyright © 2014 American Inst itute of CPAs
• Lifelong learning for new generation
• Competencies
Future of learning
Competencies measured in CPE
• Technology’s effects – MOOCs, hybrids
FOL task force recommendations
Innovate and experiment
Ignite a passion for learning
Make learning personalMake learning personal
Measure what matters
6/12/2014
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Student initiatives
This Way to CPAAccounting graduates
100 thousand
80
Start Here, Go Places
AP Course 80
60
40
20
‘70 ‘90‘80 ‘00 ‘10
AP Course
National Academy Foundation
Di ersitDiversity
Accounting Inclusion Maturity Model
AICPA Recruiting and Retention toolkit
Investment in pipeline
CPA Exam
10 years of CBT
Next generation exam
CPA candidate pipeline
6/12/2014
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Professional issues & initiativesAdvocacy
• Fed/State Legislation & Regulation
• Government Fiscal Responsibility
• Tax
• Uniformity & Mobility
• Public Policy Issues
People
International CPA Exam
Financial Literacy
Prof. Excellence & Public Interest
• Tax Preparer Registration
• FRF for SMEs
• Integrated Reporting
• Sustainability
• CPA Exam
• Young CPAs
• Student Recruitment
• Diversity & Inclusion
• Learning & Education
International
• IFRS
• ISAs
• CGMA
• SOC Reports
• Private Companies Practice Section
• Center for Plain English Accounting
• Audit Quality
• Peer Review & Ethics
• Specialized Communities & Credentials
• Business, Industry & Government
CPA Reputation
Competition & Risk
Operational Excellence
State of the Profession
July 1, 2014
GSCPA Annual Convention
Bill Balhoff, CPA, CGMA
Chairman, AICPA Board of Directors
Email: bbalhoff@pncpa.com or Bill@cpa.com
Telephone: 225-922-4615