The Years with

ROBERT L. GRAY

An Interview By James L. Craig, Jr.

From editor to editor-in-chief: a 28-year journey

No Plans to Retire

On May 31, 1998, Robert L. Gray, CPA, stepped down as editor-in-chief and publisher of The CPA Journal after 28 years of involvement. It started in 1970 when he became executive director of the New York State Society of CPAs. At that time, the magazine was The New York Certified Public Accountant and Max Block was the editor. Shortly thereafter the name was changed to The Certified Public Accountant in recognition of the broad editorial coverage of issues of interest to CPAs beyond the borders of the Empire State. And shortly after that, the name was changed to what it is today.

Over those 28 years, Gray served in many different editorial capacities, depending on the needs at the time--from editor to senior editor and managing editor to editor-in-chief. And working with The CPA Journal Business Activity Committee over the years, he guided the business aspects of the magazine leading to his appointment as publisher in the 1980s.

Managing editor James L. Craig, Jr., spoke with Robert L. Gray to discuss some of the highlights from his years with the Journal as publisher and editor-in-chief and to obtain his views on some of the important issues facing the accounting profession.

CPA Journal: What were your first dealings with the magazine?

Robert L. Gray: My first dealings were as a practitioner in upstate New York and then as a college professor. I used the magazine in my practice and in the classroom as a teaching tool for my more senior and postgraduate students. Both my teaching and practice were on a full-time basis. The latter was primarily consulting, working a great deal with troubled companies.

CPAJ: You gave that all up to become the executive director of the New York State Society of CPAs in 1970. It was shortly thereafter that the then New York State Certified Public Accountant expanded its size and became The Certified Public Accountant.

Gray: About a year before I came on board, the publication committee had proposed to the society's board of directors that the magazine's distribution and coverage be expanded to appeal to CPAs beyond New York. The proposal was on the table, but had not been implemented. The society's leadership left it up to me to decide how and when, and even if, the recommendation would be implemented. Max Block was the editor--an outstanding editor, well known for his attention to detail and his hard-nosed exacting demands on contributors. Stuart Kessler, now chairman of the AICPA, often recalls his dealings with Max and how hard he worked on an article to satisfy Max. But Max was not interested in taking on the chore of moving the publication into this expanded, national arena. In fact, he had indicated his intent to resign as editor as soon as I had a chance to take charge and find a replacement. Surprisingly to some--he was a tough taskmaster--Max and I got along marvelously well, immediately, and became friends professionally and personally. In fact, he agreed to stay on in a pure editorial capacity as long as I agreed to provide the leadership to implement the expansion. We became co-editors.

CPAJ. Were there changes to be made?

Gray: The magazine had always been a technical and professional issues oriented journal. The one clear tie to the society was the president's message that appeared in every issue. So in changing the name to enable us to expand our horizons, we simple moved the president's letter to a society newsletter. The magazine was not a house organ. It didn't present a New York focus on issues or policy. It was a technical journal concentrating on issues of interest and importance to CPAs--these issues knew no jurisdictional boundaries. The New York tag was not reflective of the content and was misleading. This finally led to the name it is known by today.

CPAJ: The name change and removal of society news and activities has enabled the Journal to publish material that perhaps a house organ could not.

Gray: The editorial policy has been totally independent of what the society's point of view or policy might have been. The Journal has been free to publish objectively what is best for our readers--both sides of issues.

CPAJ: Have constituents of any group or point of view ever expressed concern about what the Journal has published because of this independent approach?

Gray: We often hear from those who differ with the views presented by our contributors. But just once in 28 years has a spokesperson for an interest group attempted to influence our editorial policy of being an independent, objective voice.

CPAJ: The success of the Journal under your leadership as publisher has enabled it to produce a sizable magazine every month with plenty of room to give complete coverage to the important issues.

Gray: That is correct. Contributors know we will devote the space to cover a topic in depth and that we will publish material that is critical of the established institutions. And we don't have to agree with something in order to publish it. What we look for is a well developed, logical, clearly articulated point of view. We want our readers to decide, based upon the quality of the thinking.

Also, we have been able to attract advertisers to help underwrite the cost of producing the magazine every month.

CPAJ: There is the feeling among some that the leaders of the major firms in the profession are not contributing to the dialog on the professional issues--via published articles--as they did in the past. Names like J.S. Seidman, Philip DeFliese, Robert Montgomery, Robert May, and others. How do we get them back?

Gray: The profession has grown in so many ways and has become so complex that the person who can both run a firm and speak on technical issues is indeed a rare person. DeFliese may have been the last of them, although we have heard Shaun O'Malley of Price Waterhouse, Michael Cook of Deloitte & Touche, and Ray Groves of Ernst & Young speak out on professional issues. But today the thinkers are not the managers of the firms. We have the two Bobs--Mednick and Elliott who have contributed enormously. Ed Jenkins, David Landsittel, Dennis Beresford, Jim Leisenring, and many others also come to mind. So I would disagree with your observation. We are still getting contributions from the very best minds.

CPAJ: Is The CPA Journal a low-budget version of The Journal of Accountancy? Is there a need for both journals? I have heard some, especially strong supporters of the AICPA, express that view.

Gray: This is a broad, complex profession. In a way, it is amazing that there are not more journals in the marketplace providing the kind of coverage we do. There are a few other state CPA societies that have magazines, but they tend to include society activities, course offerings, membership news, and the like which reduce the amount of space they can devote to professional issues.

Also, our mission is very different. We are a practice-oriented journal. All we are concerned about is helping the CPA understand the body of knowledge and to be able to apply it better to his or her circumstances. The Journal of Accountancy, on the other hand, has to cover a lot of activities of the very broad and diverse AICPA organization. It covers the activities of its staff, elected officials, and its various committees. It also has to promote the views of the governing body (council) and its board of directors. If you go through this whole scenario, it has a vastly different role to play. The CPA Journal has the luxury of not having to be all these things. All it has to be concerned about is what the CPA needs to carry out his or her professional responsibilities. The two publications are quite different, and I would argue that the serious CPA needs both magazines. They are complementary, not competing, in my mind.

CPAJ: CPA Journal symposia over the years have dealt with some very important professional issues, again serving as an independent forum. The leaders in the profession have participated in them. Should they be continued?

Gray: My feedback is that they have been major contributors to the understanding of the issues. We have brought the various interest groups together--auditors, preparers, users, regulators, standard setters, and the like--for informed dialogue. This is another extension of The CPA Journal as an independent, presenter of the issues. The quality of the people that have gathered has been outstanding. And the contributions have been thoughtful, balanced, and, overall, positive.

CPAJ: Is there unfinished business with The CPA Journal as far as you are concerned?

Gray: Like any activity there is always more to be done. In the Journal's case, more topflight articles to contribute to the practical knowledge and professional success of our readers and promote an understanding of the various sides of complex professional issues. I would have liked to have produced more symposia. But the challenge ahead is how to properly service the information needs of an expanding, ever more diverse profession.

CPAJ: Is print journalism here to stay?

Gray: I think it is here to stay for a while. Electronic distribution of information still does not have the critical mass to replace it. It is not ready to replace the delivery to the CPA's doorstep every month of hard copy that the reader can take any place, is not dependent on a modem or electrical power, and can be randomly accessed and perused at whatever pace suits the reader's mood. I think if we had electronic publishing first and then print journalism, users would say "Wow! What a revolution... I don't have to download anything or use a search engine. It's at my fingertips."

We must, of course, use electronic means to complement and supplement the printed word. But bear in mind, I know of no one as yet who is making money from electronic publishing.

Eventually, what will happen is that cost savings from eliminating the printing-onto-paper process can be reallocated to providing a broader range of editorial content that will be more tailored to specific user groups. There will be more editors obtaining and preparing material in specialized and more focused areas. If a subscriber needs to know something in a specialized area, it will be available to him or her on an as-needed basis. As paper and mailing costs are eliminated, the revenue will be redirected to provide more editorial content. I think it would be a marvelous investment to prepare such capability for when the critical mass of users is there and the economics of electronic publishing is solved. Under this scheme, electronic publishing would also be the means of delivering continuing professional education. The two would be inseparable. There are exciting days ahead--this is the unfinished work for the Journal.

Robert Gray as a Leader in the Profession

CPAJ: Over these 28 years, your primary role has not been that of editor and publisher of the Journal, but as executive director of the largest state society of CPAs in the U.S. Common to both of those roles has been your strong interest and participation in the professional issues facing the CPA profession.

What is your opinion as to the overall health of the accounting profession? Is the future bleak?

Gray: As we sit here today, the profession is quite healthy. I think there are two basic measures of health: the first is the status and recognition of the core values of the profession--independence, objectivity, integrity, and competence. We are quite healthy here. My experience with the other professions in New York confirms this. The second measure is the economic health of those in the profession. And on that basis we are fine also.

But if we look at the future, I think there are wonderful opportunities. Yes, the demand for traditional audit work is waning. But what about the need for online, real time auditing? And the potential demand for assurances on the reliability of systems? I think there will be work here, but it will require new competencies. There will be a greater demand for assurance services, not less.

In other words, the future is bright if the profession responds by learning new skills and new competencies. Technology is a huge part of this, although not an end in itself. The CPA of the future will need to be part of the dynamics of the organizational world but firmly grounded in the core values.

CPAJ: Stuart Kessler, a good friend of yours, now chairman of the AICPA, says the future is based on a new vision for the CPA not as a certified public accountant but as a certified professional advisor. The notion of some sort of responsibility to the public is gone. What is your reaction to the new CPA in this sense?

Gray: I think Stu has done a great job in getting us to focus on the CPA imprimatur and its value today. I think Stu's desire to get away from the word accountant is based upon too narrow a definition. When you think of the accountant as the gatherer, organizer, and interpreter of information, there is no need to rush to abandon the word. Somehow, we have let the view of some--that accountants only count the beans--limit what the CPA credential has already built into it. It's an information discipline. And for sure, we cannot abandon the public aspect. Audits and assurance services without responsibility to the public benefit are of considerably less value.

CPAJ: But Stu would respond, "What about all the CPAs no longer in public practice?" What are we going to call them?

Gray: What do we call the doctor of philosophy who starts a career in the academic world and ends up president of a major stock exchange, or the medical doctor who ends up the administrator of a major hospital. The titles and labels were earned, awarded, and have meaning based upon the attainment of a certain level of education and a set of skills and competencies. Does the "dr." credential have meaning outside the operating room? Of course, it does. But is it reflective of what the hospital administrator does? Does it mean we should change the definition of doctor of medicine to doctor of management? Whether CPAs who are no longer in public practice should be able to call themselves CPAs as part of some other vocation is a matter of public policy. If it creates a risk that the public will be mislead or harmed, then regulators of the profession may seek to prohibit it. Whether they would be successful on constitutional grounds is another issue. But I think of the president of a mortgage company that is identified in ads as a CPA. Is there potential for the public to be misled here or damaged? I think so. Should he be subject to discipline by state regulators since he his holding out as a CPA? I think so.

CPAJ: But regulated for what? There are no professional standards for being a president of a mortgage company.

Gray: But he can be held accountable for the core values of the profession. This is consistent with the new Uniform Accountancy Act under its CPA=CPA provisions. That part of the act says that if you call yourself a CPA, you must maintain an active license, meeting all the CPE and other requirements. If you do not, when you use the CPA label you must add the word "inactive."

CPAJ: Let's turn to the Uniform Accountancy Act. The AICPA and NASBA have just revised the UAA, calling for major changes to the profession's structure. Among the changes are the following:

*Simple majority ownership by licensed practitioners of CPA firms

*CPAs holding out as such while employed by commercial organizations

*Those who choose to use the CPA designation must maintain an active license

*Relaxed experience requirements.

It is remarkable how quickly this new document, with these revolutionary changes, has moved through the process. Now the big push is on to get states to adopt the provisions of the UAA. How will this play out in your mind?

Gray: Its general acceptance by the profession and a notable number of regulators is astounding. The sleeper is the CPA=CPA requirements. What does it mean for someone to hold out as a CPA while doing non-CPA type services? The president of the mortgage company? This ties into a project we have been working on in New York--the regulation partnership, which would lead in my view to that person having to to take courses in ethics in order to maintain his license.

I also think that to protect the public, non-CPA owners of CPA firms must be subject to the profession's code of conduct. This would be a self-regulatory or regulatory requirement. They would have to be educated in and tested as to their understanding of the code of conduct.

CPAJ: Many practitioners are concerned about American Express Tax and Business Services with its CPAs performing accounting and tax services. Do they realize under the new UAA that that is permitted?

Gray: They probably do not. But I feel comfortable with the UAA provisions. As long as the public can be assured there is adherence to the appropriate ethical and performance standards, the vehicle for delivery of the service is not as critical. I'm speaking strictly of nonattest services.

CPAJ: In the TBS case, the entity would not be regulated--it is not a CPA firm--but the individuals performing the service would be.

Gray: I believe in that example, if there are non-CPAs directing engagements or otherwise involved, they should also be subject to the code of conduct.

CPAJ: But how? That is not called for in the UAA.

Gray: The AICPA ethics committee is studying how and where the code of conduct needs to be revised in light of the new UAA. It may be in this way that some of these issues can be dealt with.

CPAJ: The new UAA experience requirement would allow candidates to qualify for the license while working for organizations other than CPA firms. Why are CPAs balking at this?

Gray: I am an advocate of a strong experience requirement. But we must recognize that the kinds of things CPAs are doing are much broader than they have ever been. So the validity of experience in all those activities is open to reexamination. But there should be no compromise when it comes to an experience requirement for those doing audit engagements.

CPAJ: The thinking behind the UAA would have all candidates well grounded in the core values but free to gain their experience in the kind of work they will end up doing. It doesn't have to be a CPA firm. Except when it comes to auditing.

Gray: Yes, and that's OK by me. And a lot of jurisdictions already have just a one-year requirement.

CPAJ: Some CPAs want to be able to earn commissions. They think this is the cure for all their ills. What do you think? Will this detract from the core values of the profession--objectivity, independence, etc.?

Gray: The prohibition against CPAs accepting contingent fees and commissions was built into the code of conduct to protect the public. The Federal Trade Commission said the prohibition was a restraint on trade. So for years now we have been trying to bring the best of these two types of compensation in at the state level. It is clear to me that acceptance of contingent fees under the appropriate guidelines is very valid. When it comes to commissions, we are running right up against the perception of the public that acceptance of them is contrary to our core values. The way the public views our profession is essential to its survival. Allowing commissions is not helpful to a healthy perception by the public. The playing field is already tilted in our favor. By introducing commissions, we give up our advantage and make the field level for others to compete with us. I think the profession, over the long run, will lose once there is widespread acceptance of commissions.

CPAJ: In some ways, you were known as a maverick among the leaders of the profession. How did this come about?

Gray: I have always felt an obligation to myself and the 33,000 members of my society to express my views on topics and issues of concern to the best of my capability, and, hopefully, based upon a solid analysis of the issues. I interacted with some leaders of the profession, however, who did not think this way. They, for whatever reason, chose to go with the flow of events without necessarily expressing their own personal views. This has been damaging to the profession in some cases because the wrong action was taken. And we might have had a stronger consensus on some very important issues if we had more extensive open debate.

Often when I speak out on issues I get the "high" or other sign of approval. But those giving the sign often do not want to speak out and appear to impede "progress."

CPAJ: The New York State Society, under your leadership, could never be accused of being a trade organization. It is clear from everything it does that the society is a professional organization from head to toe. Can we say that of some of the other professional organizations?

Gray: I believe that at times the AICPA has slid somewhat into a trade association mindset. Its publications' revenue, driven by the publication of professional standards and software, has become such a large part of its budget. Now it must make those hard-nosed business decisions to maintain the status quo. I am very pleased with what I see, however, coming from the profession's vision project now in its final stages. That project is very profession oriented.

The AICPA, under the leadership of Barry Melancon, is attempting to be multi-dimensional--to maximize business opportunities in the marketplace, to promote the CPA profession's self-interests (quite legitimately), and to strengthen and enhance the value of the profession to the public. In my mind, the massive effort on the vision project is serving to bring balance to the overall direction of the AICPA.

CPAJ: You have let it be known over the years your desire to enhance the quality of practice through state society membership requirements.

Gray: At one point, it was my thought to make the membership requirements of the New York Society more stringent than the state licensing requirements. For example, Max Block, Emanuel Sachs, Eli Mason, and I set up the profession's first peer review program, strictly on a voluntary basis. The end in mind was society membership requirements of continuing professional education and peer review. Then the society would have been able to promote this to the public and distinguish its members from other CPAs. That was not to be.

In the meantime, the society's board voted to push for a CPE requirement for licensure. I had my own personal reservations, in that I knew as soon as mandatory education was introduced, the quality in the classroom would suffer. I could foresee commercial CPE givers skimming the cream of the courses and leaving the society to provide courses at the less popular end of the catalog.

It was my original position to require CPE as a condition of membership in the society rather than for licensing. But that proposal failed. I then had to provide the leadership to implement the society's position for legislation for mandatory CPE. Then and now I advocate self-regulatory programs in place of increased legislation to regulate the profession.

CPAJ: You just delivered a paper at a recent gathering of academics having to do with the various forces and players involved in the regulation of the profession. You pointed out the various uncoordinated forces at work--state regulation, the self-regulatory programs of state societies and the AICPA, the SEC and other governmental agencies, the judicial system, and, of course,
the marketplace. It is truly a hodgepodge. Is there a need for some group or body to identify the issues and seek a comprehensive, cohesive solution?

Gray: The logical parties to study the issues and seek a comprehensive solution are the AICPA, the National Association of State Boards of Public Accountancy (NASBA), and the state societies. Those are the ones who should be fostering the discussion.

Perhaps it will require a study group made up of all the interested constituencies--CPA firms both large and small, state and Federal regulators, academics, public interest types, investment advisors, and business executives. The question would be what is needed in terms of guidance to the profession; what is the public policy that should govern the use of the term CPA and those that use it.

CPAJ: You also recently presented a paper to a group of state regulators about the need for a holistic approach to regulating the professions. In some respects, state regulators have not taken advantage of the full range of self-regulatory institutions, such as peer review and ethics enforcement. You have been pushing this in New York in what you call a regulation partnership.

Gray: Regulators have not lived up to their public mandate because they have not taken a holistic approach to regulation. They have not been creative, innovative, or willing to step out there and commit the resources needed. They have not accepted the responsibility to set standards and then enforce them. Again, my proposal for a regulation partnership between the profession and state
regulators would provide the resources that are needed.

CPAJ: A drawback of the self-
regulatory process of ethics and discipline is that the only threat to the member is loss of membership. How can that work as a credible means of regulation in the eyes of the public?

Gray: That's the whole idea of the regulation partnership. The only way the state regulators can be effective is to take advantage of the strength and commitment of state societies and couple them with the clout and authority of the licensing role. The final say would have to be with the state regulators. We need the best elements of both; where the risk of doing shoddy work is loss of the CPA license, not just loss of membership. But the punishment should be the final step in a process built on lifelong learning, practice monitoring by peers, and ethics enforcement. It can only be done together.

CPAJ: Any advice for the young professional to help him or her be successful?

Gray: To be successful as a CPA, the young professional must focus on the core values. He or she must be an honest subscriber to independence, objectivity, integrity, and competency. How can someone with this as his or her foundation not be successful? This is perhaps the most important question raised here today, but the easiest to answer. The young professional's advice in such a perspective will have value in the marketplace. I could add other adjectives to describe the work of the young professional such as relevancy, intellectual depth, and understanding, but that is tied to the competency issue.

CPAJ: What are the other challenges of note facing the profession?

Gray: CPAs must look forward; ever questioning how to bring value to the marketplace, taking advantage of those core values. The CPA is not being creative enough in looking at the real needs the public has to legitimately serve and learn to serve. There may be new skills to learn and technology to take advantage of, but the needs are there.

CPAJ: On a personal note, what are your plans for the next five years?

Gray: There are a number of business opportunities that I am exploring, principally in the consulting area. I plan to remain active in the profession as a member of the AICPA, NYSSCPA, NASBA, and the American Accounting Association. I also look forward to participation in future CPA Journal symposia on the major professional issues.

CPAJ: Thank you, Robert L. Gray, for 28 years of devotion, dedication, ideas, and passion for the CPA profession and The CPA Journal.*