February 1999 Issue

Some would say it's long overdue.

Two Firsts for the AICPA

An Interview with AICPA Chair Olivia F. Kirtley

By James L. Craig, Jr.

In Brief

First from Industry, First Woman

Olivia F. Kirtley is chair of the AICPA for its 1998-99 program year. Her election reflects two major shifts under way in the makeup of the AICPA's membership: Forty-three percent are now from business and industry, the single largest group, and women are approaching 28% of the membership. CPAs outside of public practice do not always find it easy to stay involved in their state societies and the AICPA, but Kirtley does. CPA Journal Editor-in-Chief James L. Craig, Jr., spoke with her about how she became the AICPA chair and what she hopes to accomplish during her term. The chair's number one priority is the CPA Vision Process. Last year the AICPA concentrated a great deal of its resources in a grassroots effort to develop a vision to guide the profession into the new millennium. It is now time to turn the process into something concrete. Kirtley is ready to make it happen.

Other items on her agenda--

* establishment of a political leadership cabinet

* increased involvement and visibility in the international arena

* greater use of knowledge and information management

* greater diversity among those entering and leading the profession.

The CPA Journal: What path did you take that led you to become the chair of the AICPA?

Olivia F. Kirtley: I spent the first decade of my career with what is now one of the Big Five accounting firms, first in its Louisville office and then in Atlanta. While in Atlanta I earned a master's degree in taxation. I returned to Louisville at about the time major changes to the tax laws were occurring, and I became a frequent speaker on those changes for the Kentucky CPA society. Then I became active in a number of the society's tax committees. From there, I moved into various leadership positions including president.

CPAJ: Were you the first woman to become president of the Kentucky society?

Kirtley: No, I wasn't. Kentucky is a very progressive state. In fact, a woman preceded me by more than 10 years.

CPAJ: But how did you gain recognition at the AICPA level? That is, how did you make the leap from the Kentucky society to the AICPA?

Kirtley: In the late 1980s, there was a growing awareness of the importance of CPAs in industry, and I became involved in AICPA committees directed at benefiting them. And as a president-elect of my state society, I became a member of the AICPA Council. For many years, I was also active with CPE at the state level and was asked to serve on the AICPA's very first CPE board of management. That board was very visible. Finally, I served on the board of directors for a three-year term, during which time I was also chair of the AICPA's finance committee for two years. So it was a cumulative thing over a number of years.

CPAJ: Does the Kentucky society have chapters, and are CPAs in industry active in the chapters? The New York State Society of CPAs recently held a series of briefings for chapters on the new Uniform Accountancy Act, and CPAs from industry were hardly visible.

Kirtley: We have a great deal of involvement from CPAs in industry. Kentucky is a one-tier licensing state. Any CPA who wishes to use the designation must meet CPE and other licensing requirements whether providing services to the public or not. In Kentucky a CPA is a CPA, and so there is a sense of community that spills over into participation in the state society. It's been that way as long as I can remember.

CPAJ: I would like to turn to your stated objectives for the 1998/99 year. Your number one objective is to move the CPA Vision Process forward. Under immediate past chair Stuart Kessler, the process produced a vision statement and a core purpose. It is your goal to begin the implementation of the process in order to bring benefits to individual CPAs. What, exactly, will be done?

Kirtley: The next step is the development of strategies to implement the process. It is time to deliver the tools to CPAs to enable them to reap the benefits. A national CPA Vision Team, made up of delegates from the National Future Forum, executive directors from various state societies, and AICPA staff, has been established to ensure the continuation of the process. A vision strategy workshop for the team is scheduled for January 1999 to develop strategies and plan out the program in the near term. The AICPA is marshalling its full resources to turn the vision into reality.

CPAJ: How will it trickle down to the grass roots? The process started there, and now it must return if it is going to accomplish anything.

Kirtley: The involvement of the state societies is critical. We are partners with them in communicating and providing the tools for implementation. Our various roles and synergies for implementation will be explored during the January workshop.

CPAJ: In looking at the results of the process so far--the vision statement, the core purpose, and the core values--they seem somewhat soft and fuzzy, with no concrete action items. How will they be converted to tools to help individual CPAs?

Kirtley: I don't view the results of the process as soft at all. I consider them to be specific and solid. Lifelong learning, for example, as a core value is very real to me. We are currently coming to grips with one of the critical elements in lifelong learning by taking a hard look at the CPE model. Issues are being addressed on how CPE is measured. Should it be on the basis of hours in a classroom or the attainment of specific levels of competency? A pilot competency model has been built and tested for CPAs in business and industry. Several groups within the AICPA are already in the process of developing competency models for their constituencies. This is an example of the development of strategies and implementation programs to go hand and glove with the Vision Process.

The December issue of The Journal of Accountancy contains a special 48-page insert, CPA Vision 2011 and Beyond: Focus on the Horizon. This is both a detailed explanation of the process and a tool to help each and every CPA get started. It includes a self-assessment questionnaire for every CPA to begin to use to prepare for the future. This same issue also contains an article on the competency-based approach to lifelong learning.

CPAJ: Picking up on your discussion of lifelong learning, the number one core service that the Vision Process identified for 2011 and beyond was assurance and information integrity services. I suppose it will be the strategy of the Vision Team to continue to identify market needs and solutions to those needs in the assurance area. The WebTrustSM program would be an example, would it not?

Kirtley: If you take assurance in the very broad sense, as more than just giving an opinion on historic financial statements, there are numerous areas where CPA skills can benefit users and the public. Yes, it is a very high priority of the AICPA to continue to develop new assurance services. But there are many growth opportunities for assurance services that do not require new products.

CPAJ: The naming of assurance as the number one core service for the future flies in the face of the current conventional wisdom that says the demand for audit services is at best stagnant. Is this because it was CPAs themselves who reached this conclusion? What about the marketplace? To make this work, won't the AICPA and, to some extent, state societies, have to equip CPAs to provide an expanding array of assurance services and then promote the benefits of these services to the buying public?

Kirtley: While it is true CPAs decided that the number one core service is in the assurance area, I think they were mindful of the marketplace. They see the need for assurance services that go way beyond today's historic financial statement model, into real-time information, systems, reviews, and cyberspace. On the service delivery side, it will be much like providing a tool kit or bag of services for CPAs to offer. But the CPA will have to promote the service to clients. We will have to spend the time identifying specific needs and then offering the services to match. The CPA cannot sit back and wait for the client to ask for a particular type of service.

The CPA Vision is a very real, tangible document that should not be put on a shelf somewhere. It is a program that retains the core values of the CPA while stimulating progress to meet the changing needs of the business world. It will certainly take an ongoing time commitment in order to reap the benefits. It is the duty of the leadership to equip the profession with the ability to realize this vision through concrete programs and resources.

CPAJ: This has been a major, major effort. The payoff will come when its benefits are realized by the individual CPA.

Kirtley: That is why this is my number one priority. Also, you will note that some of the other parts of my agenda tie in very closely to the Vision Process.

CPAJ: A second initiative that you are pushing has to do with involvement in the political process. Would you please explain what you have in mind?

Kirtley: In the past we have placed a great deal of emphasis on our Federal key person program to move our political objectives forward; and we have reaped the benefits of a very able Washington office. My objective in establishing a political leadership cabinet, however, is to put together a group of high level, politically savvy members who will give advice to the board of directors, the Washington office, and our political action committee on political matters.

The other side of the cabinet's role is to inspire the volunteer leadership to be more involved in the political process and to be a voice on some of the policy matters that are going on in Washington, particularly where our knowledge or expertise can contribute to the debate and help move along issues in the public interest.

CPAJ: Are all those in the cabinet CPAs?

Kirtley: Yes, they are. The chair is a past chair of the AICPA, Jake Netterville. Nineteen other well-known and politically respected CPAs will join him. Every other year, our spring council meeting is in Washington, D.C. The political leadership cabinet will play a vital role in that meeting as our leaders meet with legislators to discuss issues and offer our services to them. Our cabinet will help to focus that activity a bit more.

CPAJ: Another of your initiatives deals with knowledge and information management. I sense that this area builds upon the recent work of the AICPA in developing the Center for Excellence in Financial Management as a website for CPAs in business and industry.

Kirtley: The center is perfectly positioned to take advantage of knowledge and information management. For example, the role of audit committees in corporate governance is receiving close attention by the SEC and others. We plan to use the center as an information resource for audit committee members on a broad range of subjects to help them discharge their responsibilities. The information comes from both inside the AICPA and other relevant sources. This particular focus was in response to a challenge by Kathy Wriston, a former member of the AICPA board of directors and a strong advocate for improving corporate governance.

CPAJ: It is also in response to the concerns SEC Chair Arthur Levitt expressed in his September 18, 1998, speech on earnings management.

Kirtley: Yes, it is. We are very supportive of Chair Levitt's approach in seeking self-regulatory and private sector solutions to the issues he raised. If we can help audit committees be more effective, we are making a contribution. And it demonstrates our desire to expand our resources to benefit the public interest, not just our members.

Our objective is to expand the center to include other subject areas of broad public interest and to make it a place of knowledge and information management where, through links (some within the AICPA and others to outside sources), a full understanding of a subject can be obtained.

CPAJ: Another of your initiatives addresses the issue of diversity in the profession. You call this a real challenge to make this profession look like the America and business world of the future. What are some of your plans here?

Kirtley: I believe that we have not been able to attract a diverse mix of entrants because many parts of society have had no meaningful contact with the profession, unlike the legal and medical professions. The minority initiatives committee and the AICPA Foundation have a new ad campaign under way that features well-known sports and entertainment celebrities and their CPA. The tag line is along the lines of "Be a star, be a CPA." I have also met with the women and family issues and minority initiatives committees with the objective of seeing what more can be done to bring greater diversity, including diversity in age and work experience, to AICPA committee work and leadership positions. These committees in particular will assist the 112 other AICPA committees to obtain members who reflect the makeup of the profession and the business community.

CPAJ: Some may call this an affirmative action program. Others might say you are trying to prepare the profession to better serve the workplace of the year 2011. Along these same lines, last year's chair Stuart Kessler was pushing for a national television show featuring the CPA, much the same way as the legal and medical professions have been represented. Has there been any progress there?

Kirtley: The public relations people continue to explore that. In the near term, they are focusing on positive placement efforts. Much like product placement in television and the movies, they seek to have CPAs written into scripts that cast them in a good light.

CPAJ: The New York State Society of CPAs has had a minority cooperative program with several universities for a number of years--minority high-school students are introduced to members of the profession and exposed to what they do. This is a very long-term project, and it is, as yet, difficult to evaluate whether it has brought more minorities into the profession.

Kirtley: Programs such as this are important and should be commended and continued.

CPAJ: What progress are we seeing with women in the profession? Statistics for the Vision Process indicate that 70% of the participants in the various forums were men.

Kirtley: We have many extremely talented women in key roles throughout the AICPA. If you look at the board of directors, key committees, or special task forces, both national and international, you will see a number of women leaders. For instance, Kathy Eddy heads up the UAA effort for the Institute. The National Accreditation Commission is very balanced in its membership. Judy O'Dell has just been appointed to be the AICPA's next representative on the Financial Accounting Foundation. Marilyn Pendergast represents the AICPA internationally by chairing the Ethics Committee of IFAC. And there are many more in key roles on the AICPA staff and volunteer positions.

As far as the makeup of the future forums, I believe they were representative of the profession as a whole. Women have been entering the profession in large numbers recently, but it is taking time to change the overall mix.

CPAJ: On the international scene, you feel the AICPA has a greater role to play.

Kirtley: We are stepping up our international activities. We have just established a new director position to concentrate on this. We are very mindful of what the International Accounting Standards Committee is doing. We need a common financial reporting language throughout the world, and we want to be a leader in the process of developing that common language. In fact we feel we have a duty to be involved.

There are also global business issues that our members must be equipped to deal with. We want to be a resource for CPAs, especially those in smaller firms and businesses, in helping clients and employers capitalize on international business opportunities. The PCPS executive committee is seeking alliances for our members in the international area.

CPAJ: We sense that many CPAs continue to avoid learning about or addressing global business complexities.

Kirtley: I don't know how they can continue to do so. There are some very basic and pervasive issues to be dealt with--customs fees and duty taxes, transfer pricing, and other foreign dealings that just can't be avoided.

CPAJ: The last of your initiatives deals with managing change. What was your thinking here?

Kirtley: This is a high priority issue. There is so much happening at this moment that we must have the lines of communication open with all our constituencies and stakeholders--our members, regulators such as the SEC and the state boards of accountancy, accounting educators, and other membership organizations like the Financial Executives Institute. One of my key goals is to meet regularly with the various constituencies and talk about their concerns. Face to face is the best way to avoid misunderstanding and get the issues out in the open.

CPAJ: CPAs most certainly feel they are in the midst of difficult times. They feel threatened by the alternative forms of practice we are now seeing. At a meeting of the National Conference of CPA Practitioners, during which AICPA President Barry Melancon spoke, it became clear that small firm practitioners think the AICPA and state societies should do more to promote the value of their services to the public. Image enhancement of the CPA has been an objective of the AICPA in recent years. What are the plans for your year?

Kirtley: Image enhancement will continue, aligned with the Vision Process. Just as important is the work of our political leadership cabinet. Image equates with the public perception of what the CPA has market permission to do. And so much of public perception is controlled by the political landscape. We will be attacking the issue from that direction as well.

Also, image enhancement is part and parcel of the Vision Process as we stake out new ground and new services for the CPA into the year 2011. By the way, we are seeing measurable benefits from the existing image enhancement program. The print ad campaign coming out of the minority initiatives committee should also help the image of the CPA in the eyes of the general public and especially younger consumers.

Our job is to capitalize on the changes that are taking place, to identify the opportunities, and to equip our members to take advantage of those opportunities. Change creates opportunity for the nimble and the risk takers. I think the changes are very exciting. We must manage the process and capitalize on the opportunities.

CPAJ: In New York, until recently, it was generally felt that CPAs could not be compensated for services performed for clients in the form of commissions paid by third parties. It now looks as if CPAs can accept commissions provided that no attest services are performed for the client for whom the commissions are paid. In Kentucky can CPAs accept commissions? Has the acceptance of commissions corrupted the profession in Kentucky?

Kirtley: The ability to accept commissions and contingent fees puts the CPA on even footing with other financial planners and business advisers. The question is whether being able to accept these other forms of compensation will erode the CPA's reputation as the trusted adviser. In Kentucky, I have not noticed any loss in standing in the business community, even though CPAs can accept commissions, and we have had no issues or problems raised with our state board of accountancy or the state society. We still have our code of conduct to adhere to.

CPAJ: The number one problem that CPAs seem to face today is not enough competent people. Do we have a long-term problem here that the AICPA needs to address?

Kirtley: Many of the issues we have already discussed will help in the long-term to provide a steady stream of competent people into the profession. Attracting the best and the brightest is certainly part of the Vision Process. This need exists not only in public practice, but also in industry. With a broader base of services and competencies, as envisioned by the Vision Process, the profession should become more attractive to talented people.

CPAJ: The economics of the profession have to change as well. The starting salaries in public accounting haven't changed much in the last 10 years.

Kirtley: Things like that run in cycles. I have seen some movement in the past few years on the industry side. The broader based professional, with the competencies that are transferable to new
services and to industry, is more attractive in the marketplace and commands a higher salary.

CPAJ: What kind of work do you do for your company?

Kirtley: I am the vice president of finance and the chief financial officer. I have a wonderful, talented staff, and I spend a great deal of my time on the management side of the business. We are a manufacturing company. We make power tool accessories, such as saw blades, drill bits, router bits; we provide the cutting edge, literally, of the power tool. We also have a lawn and garden business--hose end products.

CPAJ: Some CPAs in industry have expressed that their companies do not fully support their involvement in the profession or, for that matter, the maintenance of their CPA license. Specifically, their employers do not reimburse them for professional society membership dues and attendance at CPE courses or give them time off to attend CPE courses. What would you say to a company that took that position with its CPAs?

Kirtley: This surprises me. CPAs who are involved professionally bring so much more to the companies and their issues. We need to be more proactive in educating employers about the benefits their CPAs bring to them when they maintain their license and are involved in the profession. The networking and the ideas that can be brought back to benefit employers are significant. My employer would certainly say that it has benefited from my professional activities.

CPAJ: Do you have other CPAs working for your company? Does your company reimburse them?

Kirtley: Approximately 25. We pay for their AICPA and state society memberships, we pay for CPE course fees, and we reimburse them for the usual expenses of belonging to professional organizations.

CPAJ: How do we encourage active participation in the profession by CPAs in industry?

Kirtley: We have to find ways to engage them, to offer things that are worthwhile to them. Some states have been very successful in doing this, and have set an example to be followed. Let's learn from each other.

CPAJ: Olivia, it has been a pleasure and a privilege to meet with you, the first woman to chair the AICPA and its first chair from outside of public accounting.

Kirtley: In closing, I encourage all of your readers to study the vision document and begin to apply its principles in their professional lives. They will be missing a wonderful opportunity if they do not. *

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