XYZ: Two Credentials for One Profession? A Case of Double Vision

By Lowell S. Pethley and Richard I. Fremgen

‘It [the Vision Project] will serve as a roadmap for the future and a platform on which the profession’s activities will be integrated and launched.”

—AICPA Chair Stuart Kessler, Journal of Accountancy, November 1997

From Kessler’s above statement, it seems reasonable to presume that the results of the CPA profession’s Vision Project would be an integrated profession with an updated “platform” that acknowledges the evolution of the profession into the 21st century. All professions evolve and must, from time to time, respond to change.

Evolution of the XYZ

One result of the Vision Project has been the proposal for what is provisionally referred to as the global credential or XYZ. But the XYZ concept will bring misfortune on itself and the CPA profession because of the following drawbacks:

• Rather than acknowledging and giving form to the evolution of the CPA profession, XYZ would create a separate profession that would result in the diminution of the CPA profession.
• XYZ is based on a business-oriented premise, not a professional premise.
• Because XYZ is so broad in its definition, it is open to anyone who meets the presumed qualification. The result is to betray any uniqueness XYZ may have.
• The proposal appears to transfer to the new credential services into which CPAs have already expanded, leaving behind “commodity” services and a reduced capacity to properly provide those traditional services.

In addition, the Vision report does not seem to set a specific set of objectives for the profession to pursue, and this vagueness carries over to the XYZ proposal. The Vision Project’s catchphrases, such as “migrating up the value chain,” “knowledge-based products,” and “designing pathways that transform vision into reality,” raise more questions than they answer. <>P Nor is there a specific definition of XYZ. At a highly general level, the proposal addresses strategic business issue. The Vision addresses the following:

• Assurance and information integrity
• Technology services
• Management consulting and performance management
• Financial planning
• International services

These areas of service are not, however, specifically mentioned in the AICPA’s latest description of XYZ (the “Global Business Credential” supplement to the August 2001 Journal of Accountancy). The supplement describes XYZ professionals as the following:

Professionals who can integrate knowledge from multiple sources to address strategic business issues and help create new innovation-driven business models.

The credential is not a specialized one, but rather represents a new, global profession. According to the information available online at www.globalcredential.aicpa.org, a new organization, “The Global Institute of XYZ Credential Holders” (GIC), would develop ethics standards, admission standards, assessment processes, and an “online learning platform.”

This new GIC would be organized by the AICPA itself, thus giving CPAs the initial input into its structure and function and a supposed advantage over other credential holders. The credential would be available to anyone who met the admission requirements; CPAs would not have exclusive rights to membership.

In a paper titled “Adding Value to the Profession: The Proposed Global Credential,” by William L. Reeb (a member of the AICPA Strategic Planning Committee) and Michaelle Cameron, posted at www.globalcredential.aicpa. org, the authors provide a detailed explanation about why the credential is not exclusive to CPAs. They point out that “The market space represented by this credential is not barren. Many professionals from different disciplines are currently providing business consulting and strategic advice to their clients and employers. These include CPAs, lawyers, management consultants, IT professionals, human resource consultants, engineers and others, each of whom brings valuable skills and experience to the table.”

Some of the considerable resistance to the XYZ is probably due to the highly conceptual and sometimes ambiguous language used. In addition, many people are confused as to the nontraditional CPA services being incorporated in XYZ. The supplement states that “The CPA … will remain the leading brand for depth of knowledge in finance and business operations.” But “business operations” also seems to be an area of service contemplated by XYZ. Is there a transfer of services from CPAs to the XYZ? If not, the two professions overlap substantially. So, how does the CPA remain a “leading brand”?

Although one could argue that the XYZ should not be accepted because of the vagueness and confusion of the proposal, we believe it is better to try to build some understanding of the XYZ services.

It is unclear whether assurance, technology, and financial planning are to be included in XYZ services, but we believe they will be. It also seems reasonable to assume that business consulting, strategic advice, management consulting, performance management, and international services are to be included in the new credential. Is this the answer for the CPA profession?

How the CPA Profession Evolved

The history of accounting goes back well before the industrial revolution, starting as bookkeeping in the 15th and 16th centuries. During the industrial revolution and the rise of the corporation, accounting replaced bookkeeping.

In the 1940s and 1950s, another revolution began, one perhaps as significant as the industrial revolution and probably still in its infancy. This is the information revolution, driven by computer technology. It became possible to create and process data (and, later, to transmit it) at speeds never before thought possible. With these advances came the ability to analyze and synthesize data for management and workers, which has already led to major productivity increases. The CPA profession’s nontraditional services have been a major factor in the development and implementation of these new technologies.

The CPA profession has moved from bookkeeping to accounting to information. Information is broader than accounting, but it is consistent with the practice of accounting and accepted by the marketplace as a natural extension of the accountant’s scope. The XYZ fails to recognize this natural evolution of the CPA profession and instead claims at least some of the nontraditional services currently performed by CPAs. To properly consider the impact of the proposed adoption of XYZ as a separate profession, we need to consider the attributes of a profession.

What Is a Profession?

Because certain areas of knowledge are of special importance to the public, organizations have developed that assume the responsibility of setting and maintaining high levels of competency for individuals working in such areas of knowledge. The book The Accounting Profession: Where Is It Headed?, edited by John Carey, is a summary of views on the profession’s future developed by members of the AICPA’s Committee on Long-Range Objectives during 1956-62. The book lists seven essential characteristics of professionals:

• They possess a body of specialized knowledge.
• They undergo a recognized, formal education process.
• They conform to a standard of qualification that governs admission.
• They maintain certain standards of conduct.
• They have a recognized status.
• The work they perform is endowed with a public interest.
• They belong to an organization devoted to the advancement of the social obligations of the profession.

The Professional Body of Knowledge

The hallmark of a profession is its body of knowledge; the professional has an ethical obligation to be competent in that body of knowledge. In our view, a professional body of knowledge consists of the following:

• An area of continuity—activities, processes, and theory that deal with the same or similar subject matter
• An area where interpretation, assistance, and guidance fulfill an important public need
• An area broad enough to evolve without losing its overall configuration or shape but not so broad as to defy reasonable definition
• An area constrained enough that it can be mastered but broad enough to attract a variety of talented people
• An area that is easily described in nontechnical terms; one that is easily understood at a general level
• An area that is distinctive and not easily confused with other professions, while recognizing that professional boundaries are not always exclusive.

As a body of knowledge matures in depth and breadth, areas of specialization will develop. Professional specialists will have an in-depth understanding of the core body of knowledge of the profession as well as an in-depth knowledge of their specialty. This core body of knowledge becomes the common body of knowledge for the entire profession.

Also professionals must maintain independence in providing services. The public expects that professional judgment is objectively rendered based upon the body of knowledge and not external factors, such as monetary gain.

Considering XYZ

The XYZ proposal has several flaws:

• It removes nontraditional services from the CPA’s scope of practice, which would harm the effectiveness of the CPA profession.
• It will cause confusion about the services offered by CPAs.
• It is a business enterprise concept rather than a profession.

Removing the CPA’s nontraditional services. The use of terms like “commodity” and “franchise” in the Vision Project and related materials is demeaning and reflects a negative view of the CPA profession. Removing some or all nontraditional services from the scope of the CPA profession ignores the importance of many of these newer services to the quality of traditional services, especially financial attestation.

In our article “The Accountant’s Paradox” , we pointed out the importance of improving the organizational and technical knowledge of professionals performing the financial attest function. Having an array of other skills to augment that service is important. Furthermore, reducing the CPA’s professional scope will result in fewer talented people entering the profession.

Confusing the marketplace and the public. The XYZ proposal incorporates the nontraditional services of CPAs with other services. But not all CPAs will choose to obtain the XYZ. Will they continue nontraditional services under the CPA aegis? Or will they drop nontraditional services that are now part of another profession? There seems to be great potential here for confusing the marketplace, the public, and the CPA.

The idea that two professional designations are better than one is also questionable. If a professional designation is combined with a specialty designation, the professional designation is enhanced. If a person has two professional designations, which one is the person representing? Can a person really stay proficient in two professions? If two professions are complementary, why then aren’t they combined? Or does one of the professions really represent a specialization within the other?

XYZ: Business or profession? It seems that the scope described above—assurance and information integrity, technology services, business consulting, strategic advice, management consulting, performance management, and international services—is the best available description of the XYZ. The meaning of some of these terms can be elusive, and there is also the problem of considering their inclusion in a body of knowledge for professional use. A body of knowledge is a fundamental requirement for a profession; it should be of sufficient breadth to be of consequence to the public, but not so broad as to defy reasonable definition or the ability of a person to master it. Three of the above areas would be difficult to define within a professional body of knowledge:

Determining what aspects of “business consulting” should be considered would be difficult. Considering every significant business matter (functions, management, structure, financing, products, markets, location, personnel) may provide a reasonable definition, but one unlikely to be mastered.

“Strategic advice”—whether it involves assisting a client in thinking through the strategic process or providing specific strategic advice—presents similar difficulties. An organization has many matters that need strategic attention: structure, products, information, markets, personnel, location, customers, legal and legislative matters, and so on. Providing professional advice in each of these areas may be possible, but to develop a single profession that would cover all of them does not seem practical.

“International services” also creates a problem because it could involve an almost infinite number of services. Globalization is constantly changing the needs of business, which also vary depending upon the countries involved.

These three areas—business consulting, strategic advice, and international services—are, at the very least, marginal as a basis for a professional body of knowledge. But XYZ appears to include not just one but all three, along with other substantial service areas as well. This makes the proposed profession impractical.

A case in point was the study called Masboke (management advisory services body of knowledge and examination), done by the University of Texas at Austin and overseen by a panel of practitioners from CPA firms. The AICPA published the results in the 1976 report “Management Advisory Services by CPAs.” The study concluded that the CPA profession required three different bodies of knowledge: organizational functions and technical disciplines; industry and public sector; and general knowledge, including consulting. These areas are not dissimilar to the scope of XYZ, although the services provided by CPAs in the 1970s were probably less extensive. When considering the problem of designing a professional examination, the study concluded that the bodies of knowledge were so extensive that rarely will one individual master them. The results of the Masboke study were never implemented.

Even if these areas do not lend themselves well to establishing a profession, they may still be valid areas of service, albeit ones treated as a business. They are, in fact, dealt with in that way today by the many firms that provide outstanding services in these areas, including those entities that were once part of CPA firms but decided that their range of services was best rendered in a business environment rather than a professional one.

Refocusing the Vision

Stuart Kessler saw the Vision Project as a “platform on which the profession’s activities will be integrated and launched.” But XYZ literally ignores the CPA profession, offering only a new business that CPAs can undertake if they wish—and then in competition with many others.

The CPA Vision project had as a goal “identifying new ways of doing business, developing new capabilities, and addressing what it will mean to be a CPA in the future.” The XYZ answer to this challenge is that it will mean less to be a CPA in the future.

XYZ should be rejected as impractical and injurious. Much was accomplished in carrying out the Vision Project. Let us refocus what was learned on lifting the CPA profession to a new level.

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