Who Speaks For Certified Public Accountants?

By John P. Laschenski, CPA

“It’s harder to find a major bean-counter willing to condemn publicly the failures of Arthur Andersen & Co. than to find a top Muslim cleric willing to criticize Osama Bin Laden.”
—William Safire, New York Times, January 14, 2002

“There were 157 financial restatements by companies in 2000, compared with 207 in 1999 and 100 in 1998. The three-year total of 464 was higher than the previous 10 years combined, during which the average number of restatements was 46.”
—Wall Street Journal, January 29, 2002

The CPA’s role as the protector of investors is being demolished in the press and in Congress every day. But who is defining the role of CPAs in society? Where can you find a leader who has crafted a vision of what the accounting profession should be? And is anyone standing up and defending the profession against those that are now denigrating it?

Sadly, there seems to be no vision, and no leader. The AICPA is silent. In its Vision project and its website you’ll find nary a mention of accounting or auditing. Its chairman and elected leadership are tongue-tied. They’ve been busy trying to create irrelevant credentials and web businesses that compete with their members.
The state societies are silent. None have spoken on either the vision or the disaster now happening.

The leadership of the large CPA firms are silent. They know they are no longer accounting and auditing firms, but commercial businesses selling consulting and other services. To see this, visit their websites and see if you can find any mention of accounting and auditing as their prime mission, or even as a part of what they do.

And smaller CPA firms are too busy earning their living.

Yet accounting and its sister discipline, auditing, as practiced, are responsible for the very existence of certified public accountants. Governments license accountants to practice auditing (just as they license doctors to practice medicine) because a public interest is at stake. For capital markets to work, investors, including lenders, must know what happens to the money they entrust to an enterprise. Financial statements tell investors how their money has fared, and governments have decided that the best way for investors to be protected is for an independent accountant to attest that these statements tell the truth. To be a CPA is to be primarily a protector of investors’ interests. There is no other reason for the license.

Historically, as CPAs have performed the audit function with excellence, they’ve been invited by clients to do other tasks, including tax work and consulting. But their entree into the client’s confidence has been the audit work. Transactions today are vastly complex. Fairly accounting for everything from derivatives to pensions to securitizations is intellectually demanding and professionally satisfying work. Understanding how to audit complex transactions in vast, worldwide companies is even more demanding. An intellectually gifted person should feel proud to perform accounting and auditing well.

In auditing to protect the public interest, auditors carry a heavy responsibility governed by severe ethical standards:

The profession’s leadership desperately needs to restate the vision that auditing and its implied knowledge of accounting is at the profession’s heart, and constitutes the core competencies without which nothing else matters. And the leadership must proclaim that CPAs who practice accounting and auditing—

Will anyone stand up and lead?

©2002 CPA Journal. Legal Notices