October 1998 Issue

CPAs in business and industry--a new look

AICPA Competency Model for the


By Mary Jane Scott

In Brief

The New CPA for the New Finance

Responding to changes in technology, the acceleration of the pace of change, and economic pressures, the Professional Development Subcommittee of the AICPA's Business and Industry Executive Committee developed a model to identify attributes and competencies today's CPAs in industry need to remain relevant.

The model is organized around four major competency categories:

* Personal Attributes

* Leadership Qualities

* Broad Business Perspectives

* Functional Expertise

Each of these competencies is further subdivided into three proficiency levels--basic, intermediate, and advanced.

The model can be used to identify competency gaps and in career development. The model has been tested by the AICPA and is consistent with results by industry employers. Plans call for a rollout of the model and self-assessment tool in the fourth quarter of 1998.

n recognition of the demands on its members in industry to redefine and expand their roles, the Professional Development Subcommittee of the AICPA's Business and Industry Executive Committee created the "AICPA Competency Model for the New Finance Professional." The model identifies attributes and competencies that today's CPAs in industry need to remain relevant in an increasingly complex business environment. It is designed to be a career and educational development tool that can be used by the individual, employers, state CPA societies, the AICPA, and educators. Using this career planning tool, CPAs will be able to assess themselves against an array of desired competencies, select those areas where enhancement is needed, explore relevant learning activities, and embark upon a systematic learning plan for their career advancement.

Reasons for Change

Where once the primary function of CPAs in industry was that of gatherer and recorder of historical financial information--the old back office bean counter--several changes have occurred in the workplace to cause CPAs to refocus their efforts.

Technology has largely automated the transaction processing and financial reporting that used to consume most of the CPA's time and effort. Automation has saved time and allowed ready access to volumes of information.

The pace of change has gathered momentum and accelerated. This has contributed to the sheer complexity of conducting business and placed additional burdens on decision-makers. Decision-makers look to CPAs who control information and demand that they assume the role of business leader and partner who can determine the needs of various users throughout the organization and provide a high level of strategic financial analysis and decision support.

Economic pressures have forced companies to cut costs and streamline processes. Because of the background of CPAs, organizations look to them to assume different, expanded roles within their organizations to help solve problems.

In other words, the profession is in the midst of an "upskilling"; it is necessary for CPAs to move from a transaction processing focus to visible leadership roles in all areas of their organizations.

The AICPA uses the term, the new finance, to describe this movement. Here is how the New Finance Subcommittee of the AICPA's BIEC defines it:

The new finance, a term coined by the AICPA, consists of the emerging, multidisciplinary body of knowledge essential for today's accounting and financial professional to meet the challenges of a rapidly changing business environment. This broad, cross-functional body of knowledge encompasses the management of process, technology, and resources. The new finance will require an emphasis on technical competencies, innovation, teamwork, and broader business issues. Finance's traditional roles of reporter and asset custodian will expand. As an advisor to core business process owners and a provider of technical expertise for strategic and tactical decisions, the new finance professional will be a business partner to his or her organization.

The Competency Model

To help CPAs in industry identify the training necessary to rise to the exciting challenges and opportunities open to them today, the subcommittee designed the competency model for the new finance professional. Competencies are the knowledge, skills, and performance abilities required to perform a job effectively. A competency model is the collection of competencies needed for a particular position.

The model is organized around four main competency categories: personal attributes, leadership qualities, broad business perspective, and functional expertise.

Personal attributes are characteristics that enable the finance professional to attract others to well-reasoned and logical points of view, to communicate effectively, and to relate to others. They are difficult to assess or teach, but they are critical to effective job performance.

Leadership qualities allow the CPA to assume a position of influence by assembling and leveraging a variety of resources that address problems and identify opportunities throughout the organization. In The Leader of the Future, a compendium of essays on leadership published by the Drucker Foundation, Stephen Covey identifies the three roles of a leader as pathfinding (conceiving a compelling vision and mission and tying them to customers and stakeholders through a strategic plan), aligning (ensuring that organizational structure, systems, and processes achieve the vision and mission), and empowering (granting authority to employees to fulfill the mission and serve customer needs).

Broad business perspective is the body of knowledge that encompasses an understanding of the organization, its industry, and management accounting practices and their applicability to the organization. Although adopting a cross-functional perspective is stressed throughout the model, it is particularly prominent here.

Functional expertise is the broad term used to describe the traditional technical skills that CPAs possess and that form the basis for their ability to understand an organization from a unique perspective. Although listed last, this competency is in no way least important. Technical skills are the core of the CPA's training and the foundation that enables CPAs to assume larger roles.

Exhibit 1 provides an overview of the four competency categories and lists the related competencies. The competencies presented in the personal attributes and leadership qualities categories are considered to be common to CPAs throughout the profession. Also, many of the competencies under broad business perspective are found in the various segments of the profession with slight adjustments in the specific focus. The competencies listed under functional expertise are distinctively directed toward a specific area of employment. For example, the technical competencies required by a CPA in industry are different than those required of a CPA practicing in the assurance services area.

Skills and Proficiency Levels

The complete model presents the competencies as a series of skills in a progression of three proficiency levels: basic, intermediate, and advanced:

* Basic is the level at which someone new to a skill or attribute should be performing.

* Intermediate is the level at which someone with detailed knowledge in an area should be performing.

* Advanced is the level at which someone with mastery of a skill should be performing.

As seen in Exhibit 2, the skills build on each other. A CPA who identifies a skill in the basic column would be expected to master that skill prior to working on intermediate or advanced skills. In addition, a CPA at the advanced level for the specific skill should be able to demonstrate the basic and intermediate steps the skill presumes.

Validation of the Model

Results of work by industry employers on the identification and development of competencies support the model. For example, at the AICPA's Spring 1998 National Industry Conference, Gary Kelly, CFO of Southwest Airlines, kicked off the conference with a keynote speech about the transformation of his company's finance function. Mr. Kelly outlined the reorganization of finance to beef up value-added support and project management, to get financial data out faster and ensure its accuracy, to make financial tools easier to use, to ensure financial information is easier to understand, and to promote finance as a business partner, particularly in the areas of decision support and project management. To accomplish this, Southwest seeks finance professionals who are people-focused and who have good communication and project management skills.

Having received a copy of the model during its exposure period, Jane Montvilas, manager of financial processes and systems at Sears contacted the AICPA to discuss the development of Sears' "World Class Finance Organization" competency model under her direction. Sears identified a set of leadership skills they seek in all employees. They include change leadership; integrity; customer service orientation; valuing diversity; developing associates and valuing their ideas; business knowledge and literacy; initiative and a sense of urgency; and empowerment, interpersonal, team, communication, and problem solving skills.

In addition, Sears identified a set of finance technical and functional competencies that are specific to their finance function. They include many of the broad business perspective and functional expertise skills listed in the AICPA model. Montvilas noted that Sears wants to integrate their finance professionals into the entire retail environment.

In another example, the May 1998 issue of CFO Magazine featured an article titled "Sometimes a Great Notion" about financial reeducation efforts.
The article highlighted large and recognizable corporate names such as
General Electric and Procter & Gamble. References to cross-functional teamwork, finance as a business partner, using finance as a competitive advantage rather than as a tool for control, and change management serve to further legitimize the content of the AICPA's Model.

Pilot Study

Perhaps the most compelling evidence of the model's validity comes from within the AICPA. The AICPA's CPE Standards Subcommittee tested the model (along with a version for those in assurance services) in conjunction with a research project about the feasibility of competency-based learning and measurement. The AICPA commissioned Hewitt Associates, a Chicago-based consulting firm, to conduct the research project. The project necessitated the identification of the competencies CPAs should possess. Since the BIEC Professional Development Subcommittee had already developed its industry model, the project team used it in its pilot study.

The first part of the study examined the completeness of the content of the model through a series of focus groups. Once verification of the model was complete, Hewitt Associates developed a computer-based self-assessment tool that leads users through a process of comparing current proficiency levels to the desired levels for the user's current or prospective position. Exhibit 3 shows the self-assessment page for the insight and judgment competency under the personal attributes competency category. After completion of the self-assessment, the computer generates a report that identifies competency gaps and lists available traditional and nontraditional learning activities that can be completed to help close them.

Next, the AICPA solicited the help of state societies by having them identify individuals who would agree to participate in the pilot study. To shorten the time commitment, participants were asked to undergo the competency assessment, select one or two competencies for development, choose and complete appropriate learning activities, and then report on the success of increasing their proficiency. Results of the pilot study indicate that participants are enthusiastic about the availability of the model, its competency assessment tool, and the prospects for using both in their career development.

Model Rollout

Plans call for a rollout of the model and self-assessment tool in the fourth quarter of 1998. The AICPA anticipates that both the model and self-assessment will be web-based to facilitate its use by AICPA and state society members and their employers.

The AICPA formed a cross-functional team of employees to coordinate the rollout. They are developing a plan to ensure that the model receives the broadest exposure to members, their employers, state societies, and other committees and teams within the AICPA. The AICPA website (www.aicpa.org) will report updates.

Users of the Model

One of the attractive features of the model is its versatility. It can be personalized for individual or corporate use by selecting the competencies that align with the individual's values, goals, and interests and/or the organization's core values. The personalized model would then be used--


* To take charge of their careers by focusing on competencies needed to remain relevant, competitive, and forward-thinking.

* To design a personalized career development plan that ensures they reach their highest professional standing and economic potential.

* As a guide for developing continuing educational programs.

By Employers

* To assist in identifying qualities and competencies that are relevant to their organizations.

* To identify gaps between competencies and needs, in conjunction with the competency assessment tool.

* As a guide for selecting educational programs to close performance gaps.

By Professional Organizations and Educational Providers

* As a guide for development of a comprehensive continuing education program.

* As a tool for the design of academic education programs that educate future CPAs as finance professionals.

Future of the Model

The model will continually evolve. As industry needs change and new concepts and practices emerge, the model will be updated to reflect the constantly changing world in which we live and work.

The model is already reshaping the development of industry continuing professional education within the AICPA. Courses and conferences are being identified, developed, and presented in response to the four categories in the model.

In separate but related activities, the CPE Standards Subcommittee is studying how alternative learning activities as diverse as self-directed reading, mentoring, on-the-job training, or volunteering for leadership roles improve competencies. They are pursuing various means to measure or otherwise document incremental learning. The results of their work may help us all rethink the definition, accomplishment, and reporting of continuous professional development so that our efforts are focused on making continuing professional education output-based (that is, based on increasing relevant knowledge and not just meeting a compliance requirement).

In addition, the model developed for CPAs in industry has become the prototype for other areas of the profession. The AICPA assurance services team prepared a competency model that was also used in the Hewitt pilot study. Various committees representing other segments of the profession have begun the process of utilizing the model as a basic framework and identifying specific competencies to customize it for their members.

Finally, the subcommittee views the model as one piece in a whole program of career development that stresses the importance of professionals taking charge of their own careers. Variations on the program could be used to aid recruitment at the high school level and for career planning for experienced CPAs, college students, and employers.


The model has helped to create a vision of the future where every CPA recognizes the potential in the powerful credential he or she possesses. All CPAs have unlimited opportunity to shape their careers to enjoy challenging and rewarding work.

And, the message is the same for public accounting because CPAs in public practice are facing the same demands as CPAs in industry. The growth in public accounting services has not been in the traditional areas of tax and audit. Clients expect value-added services tailored to their individual needs.

The following quote first appeared in the November 1995 issue of Fortune magazine about "super" CFOs. The article details the role the featured CFOs play in formulating strategy and building shareholder value. The quote is also reproduced in the introduction to the model because it summarizes eloquently what the subcommittee tried to convey. It should be the mantra of the new CPA:

Once glorified bookkeepers, the best chief financial officers are now [well] rounded players who orchestrate megadeals, fix troubled companies, and hatch creative ideas ... What most distinguishes the super-CFO from the mere scorekeeper is extraordinary versatility. In the past, CFOs were as narrow as the columns in a ledger. They counted the beans and raised the bread, issuing annual reports and crunching numbers on investments proposed by someone else. Today, the great ones are superb managers who, on top of strong financial and deal-making skills, often boast a grasp of operations or a keen sense of strategy. Instead of simply measuring value, today's CFOs create it.

Now is a great time to be a CPA. We don't have to fashion a niche for ourselves in a fickle business environment that relegates yesterday's hot profession to tomorrow's scrap heap. Industry today is actively seeking our leadership, providing us a prominent role, and ensuring our futures. All we have to do is heed the call, step forward, and rise to the challenge! *

Mary Jane Scott, CPA, is the president of Plaza Centers, Inc., Louisville, Ky., and a member of the AICPA's business and industry professional development subcommittee. For more information on the industry competency model or the self-assessment tool, contact Karyn Waller at the AICPA, (212) 596-6054, or kwaller@aicpa.org

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