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May 1992

Jerry Atkinson explains the new role of the PCP Executive Committee. (chairman of the Private Companies Practice Executive Committee)(includes related article) (Interview)

by Craig, James L., Jr.

    Abstract- The new name of the Private Companies Practice Section Executive Committee brings with it broader responsibilities. Now called the Private Companies Practice (PCP) Executive Committee, the organization's new responsibility is to represent and speak on behalf of all CPA firms, both regional and local. This is in addition to the PCP Executive Committee's job of overseeing the operations of the Private Companies Practice Section. PCP Executive Committee Chmn Jerrell A. Atkinson is working hard at increasing the organization's membership, which already number about 6,500 firms, and at enhancing understanding and alleviating the difficulties experienced by both its members and non-members. Atkinson emphasizes that non-members can also expect to receive some support from the PCP. He encourages all CPA firms to share their problems with the PCP so that it can better respondto the needs of accountants.

Now the PCP Executive Committee has two levels of responsibility. First, it continues to direct the activities of the Private Companies Practice Section (PCPS)--with its peer review and membership requirements. Second, it is responsible for speaking out and representing all local and regional firms, whether members of PCPS or not. The CPA Journal spoke with Mr. Atkinson to find out what the name change and responsibilities mean for local and regional practitioners. Also present for the conversation was David J. Handrich, AICPA Technical Manager, Private Companies Practice Section.

The CPA Journal.. What gave rise to the restructuring of the Executive Committee to now represent the local and regional firms that are not members of PCPS?

Jerrell Atkinson: To answer the question I would like to go back to what PCPS was, and then we can see how things have changed. PCPS along with the SEC Practice Section (SECPS) arose out of the formation in 1977 of the Division for CPA Firms. The two sections first became known because of their requirements for Peer Review. Whereas that may still be considered the main thrust and importance of SECPS with its Public Oversight Board, that has not been the case with PCPS. PCPS, with its now approximately 6,500 member firms, has become an advocate for members, seeking to not only demonstrate the quality of their services through a public peer review file, but also to help build their practices by providing products and training opportunities. In addition, the PCPS Technical Issues Committee (TIC) has become an important voice in commenting on proposed professional standards from the perspective of the PCPS member firm and its clients. Now standard setters such as the FASB will seek out the views of TIC and ask its representatives to participate in public hearings.

And so I think the AICPA asked itself a very logical question: If PCPS can do all this for its members, why can't its Executive Committee do the same for all local and regional firms? And in fact, the activities of TIC and the advocacy activities on behalf of its members, benefit all local and regional firms.

CPAJ: Some outside the PCPS in the past have viewed the section as an elitist group serving only members and holding some disdain for those that chose not to join How can it now serve those that have not 'Joined the club?"

Atkinson: I think any perceived barrier that separated PCPS firms from others has been removed with the advent of Quality Review. Now all firms whose partners and other CPAs on staff are AICPA members must be enrolled in a practice monitoring program. The most significant difference between Peer Review and Quality Review is that the Peer Review results are in a public file. All local and regional firms are now playing on a level field and we can confidently tell their story.

When non-PCPS firms take notice of what we have been doing and how such efforts can help them be more successful, we trust they will wholeheartedly welcome and participate.

CPAJ: What is PCP doing differently now that it speaks on behalf of all local and regional CPA firms?

Atkinson: Basically, we will continue the programs that have been successful over these past 15 years, but we will attempt to broaden them. Let me be specific. First, we have increased the PCP Executive membership to include CPAs who are not from PCPS member firms. In addition, I have established a number of task forces to take a hard look at what we should be doing in general and to help us focus on helping our now broader constituency. The task forces have been assigned areas that include:

The AICPA's Relationship with Local and Regional Firms. How does the AICPA communicate with, assist, and interact with these firms? How can that relationship be improved?

Continuing Professional Education. We are studying the results of practitioners to identify problems and to see how CPE providers can be even more responsive to local and regional firms' CPE needs.

The Special Needs of the Sole Proprietor. Our records show there are some 31,000 sole proprietors that are AICPA members, many of whom have no professional staff and are truly out there working alone. They have unique problems that we want to address.

Keeping the PC2 Executive Committee Relevant. How do we serve members over the long haul? What do we need to look like and be like one vear from now? Five and ten years from now? What does the PCP Executive Committee need to be doing now that we officially represent all local and regional firms?

Financial Viability. What will be the cost of properly serving our constituency and how will it be funded? The task force will focus on the finances of PCPS, the dues structure and the like.

Communication. This task force will focus on communication both among our members and to the public. We want to tell the story of our members and all the firms we represent to those who would be using their services.

Products and Services Available to Members. One of the benefits of PCPS membership has been the availability of products and services to help firms promote their practices. For example member firms can buy from Newkirk Publishers such things as year-end tax brochures, logs for recording mileage, and other such material that they can put their logo on for distribution to clients and others. We also have a service called PCPS Express. For $250 per year members are sent six to ten "hot-topic" items on taxes or business issues in camera-ready form to be reproduced on letterhead and sent to clients.

CPAJ: I hope that one of the things the task force on the special concerns of the sole proprietor will look at is the cost of the practice monitoring programs Peer or Quality Review. Quality Review administrators have told us about the financial costs of these reviews. We at The CPA Journal very much support the need for quality work by CPAs--it's the key to survival--and for monitoring that quality, but it must be done in a cost-effective way. To do otherwise will drive the sole proprietor out of the auditing business.

Atkinson: One of the things that has been added to the agenda of the PCP Executive Committee is a review of the PCPS peer review program and its irapact on the very small firm. I don't know if we will come up with an answer, but we are planning to talk about it.

CPAJ: Can nonPCPS members avail themselves of the publication and news items?

Atkinson: Generally yes, but they can't use the PCPS designation, and PCPS merebers are offered a discount. The PCPS Express is not available to non-members. Don't forget, members pay dues and therefore are entitled to certain specific benefits.

CPAJ: The acronyms TEAM and SET pop up in PCPS materials. What are they about and how will they work under the new broader charge of PCP Executive Committee?

Atkinson: Bob Israeloff of New York, the prior Chairman of PCP, was the moving and driving force behind TEAM, the acronym for "TEn At Most." TEAM meetings are held around the country to give leaders from firms with no more than ten professionals the opportunity to meet and share common problems and solutions in a structured way. It costs $100 including lunch. Current and former members of the PCP Executive Committee give of their time to help the meeting run smoothly. I started my own firm, and I'm quite willing to give back to others to help them achieve a measure of success. Total attendance for 1991 at TEAM meetings was approximately 500. This past year we had three talking points as the main ingredients of the meetings, which are practice management oriented. At the meetings, we seat the attendees at tables by size of firm. The issues are discussed at the table, one at a time, and then summarized and presented to the group. The dav ends with an open forum.

Each table has a designated leader who keeps the topic being discussed--for example, retention of personnel in the small firm---on track and the group headed toward some solutions.

CPAJ: Can non-PCPS members participate in TEAM meetings?

Atkinson: Yes. We have never restricted the attendance at TEAM meetings to PCPS members. In the past, 10% to 20% of the attendees have not been members. TEAM promotional materials are mailed to all small firms. SET--"Size Eleven to Twenty"--meetings operate basically the same way as TEAM's, but obviously with slightly larger firms.

At the conclusion of the meetings we ask "what was the most important thing that came out of the session?" We use these statements to capture the essence of what went on to be able to share with and benefit others. For example, three statements that came out of a recent meeting were:

"I need to develop a plan for retirement."

"I need to establish a formal partnership agreement."

"I need to set formal goals for my personal life and my practice."

We talk about income levels so they can see what others with similar practices are making. We talk about liability insurance. At a recent meeting 40% of those attending did not carry any form of professional liability insurance. We talk about health insurance, marketing, improving billing procedures, to name a few others.

Financially, we don't break even on these meetings. But we feel they are valuable.

CPAJ: How does the AICPA Management of an Accounting Practice (MAP) Committee fit into the new organization of PCP?

Atkinson: When I envision the organization of PCP, I see the Executive Committee with distinct areas of focus:

* Technical issues representation;

* Peer Review;

* Advocacy--at the AICPA level, at the state level, and in the market place; and

* Practice management. And so, bringing the MAP committee within the PCP umbrella solidifies and strengthens this fourth leg on which PCP stands. In the past there has been a lot of overlap between MAP and PCPS. Our annual conferences have had MAP type subjects. And certainly TEAM and SET are pure MAP programs. By combining and joining with the MAP committee, we are stronger and can offer more. And the duplication and confusion caused by two groups doing some of the same things is eliminated.

In the area of communications with local and regional firms, PCPS-- not PCP --took over financial responsibility for The Practicing CPA, the MAP-focused monthly newsletter mailed to about 60,000 members in 45,000 practice units. We saw a real benefit to local firms in this newsletter and did not want to see it disappear. The Advocate, which was exclusively for PCPS members, was phased out, with the resources from member dues used for it moved over to support The Practicing CPA.

CPAJ: Can non-PCPS members attend the PCPS annual conferences?

Atkinson: Yes. Last year about 5% of those that attended were not members. And the mailings for the conference go to all practice units listed with the AICPA, not just PCPS firms.

CPAJ: Let's talk about TIC for a few minutes. Clearly, it has come into its own, as a serious commentator on the standard setting process But there was a time when it seemed to exist tofind fault with what was trying to be accomplished but without offering realistic alternatives

Atkinson: I am pleased with the recognition TIC is receiving. Clearly one of its roles is to point out to standard setters where they have not fully considered the impact of standards on the local practitioner. And we will pull out all the stops as the standards are being deliberated to have TIC's views heard. But we are not interested in overturning a standard once it has undergone due process. TIC meets annually with FASB just to talk about the concerns of the local practioner.

CPAJ: Much of what you do on behalf of local practitioners is also being done by state CPA societies How do you see your relationship with them and how can you complement their activities?

Atkinson: There are almost 45,000 practice units in this great country of ours. Jerry Atkinson, David Handrich, and the PCP Executive Committee cannot possibly provide them with all the help and support that they from time to time will need. Therefore it is important for us to communicate with and provide more assistance to state societies in working with local practitioners. We can provide advocacy and leadership at the national level. But the bulk of assistance and guidance can best be given to the local practitioner by the local state society.

CPAJ: With the PCP Executive Committee now serving all local and regional firms, why, other than for the public file of Peer Review, do we still have PCPS? If PCPS remains, won't the notion of a two-tier or two-class system for local firms be perpetuated? Now that practice monitoring is required of all why not have one group to serve and speak for the local firms?

Atkinson: First of all, I think at some future point we will have to bring the two practice monitoring programs together. It probably will occur after firms have gone through quality review and the overall level of quality has been elevated, as it was for PCPS firms when they went through peer review. When both programs are at a certain level of maturity, I think they can be combined. But I think the public file versus confidential file will still be available as part of membership in PCPS.

So will that combining of the two programs put an end to PCPS? I don't think so. Members are seeking and are willing to pax, the price in their dues for the other benefits of membership, and for the sense of pride of accomplishment--the willingness to put their reputation on the line-- with a public peer review file... to be counted upon and committed to the things that PCPS is trying to accomplish on their behalf... to support the TIC and its efforts to influence standard setting... to increase profitability and quality, through better management. Membership in a voluntarv group such as PCPS shows commitment to the things it stands for. Without committed people stepping forward with their membership dues and their time, the movement would weaken and lose its ability to represent the constituency. And with a strong PCPS, all local firms will benefit. The more firms that join PCPS, the more resources will be available to help the cause for all.

CPAJ: What is your vision for PCP under your leadership?

Atkinson: One of the things that has happened over the years with self-regulation and Peer and Quality Review, is that AICPA membership has become more expensive in the eyes of the local practitioner. I have a vision of an active PCP helping to change that. In other words, firms will feel they are getting much more out of their AICPA membership because of PCP. To do this we have to know what is important to or of concern to them. There is a perception on the part of some firms, that AICPA only represents the large firms. That just is not true, and by an enhanced and more responsive PCP, that will become more and more evident. A reason for membership in the AICPA should be that by so doing, "our firm and those that work for us will be more successful, professionally and financially than if we were not a part of the AICPA." Membership in the AICPA should be more than life insurance.

I have a vision of more local practitioners taking advantage of MAP activities at the AICPA level and the state society level. I have been involved in MAP activities for 20 years, and it has been a benefit to our firm. Today's firms are not as aware of the benefits of MAP.

CPAJ: Jerry, thank you for speaking with us You have demonstrated a commitment and a vision for the local and regional practitioner--a vision of highly qualified firms operating in a very successful manner, both professionally and financially. Any final thoughts?

Atkinson: I would appeal to all firms and local practitioners to let us know of their problems. Write to me, or phone or write David J. Handrich at the AICPA. Mr. Handrich can also help practitioners tie into the many resources of the AICPA. By knowing the problems, we can be in a better position to serve all local and regional practitioners.

Jerrell A. Atkinson, CPA, is President and founder ofAtkinson & Co., Ltd, of Albuquerque, New Mexico. He presently serves as chairman of the PCP Executive Committee, after having served three years as member. Previously he served on the AICPA MAP committee, is a former member of AICPA Council and is past president of the New Mexico Society of CPAs


David J. Handrich, AICPA Technical Manager, Private Companies Practice Section, has among his responsibilities assisting PCP and its Chairman in helping assistance Ie member firms and other local practitioners. Handrich is not a CPA, but as a former member of staff of the Wisconsin Society of CPAs, he gained an understanding of how a member organization can assist its members.

Handrich seeks to solve problems coming to chairman Atkinson or directly to the AICPA. Atlkinson receives five or six letters a week from firms with problems.

As an example, a firm from Texas called stating the bank of its largest client was instructing the client to replace the Texas firm with a national firm. As another example, the SEC reviewing a registration statement queshoned the use of a firm because its principal office was in another state. Atkinson reports that PCPS stepped in, pointed out the firm was fully qualified to do the work and had done similar workbeFore. According to Atkinson, "We are concerned about our firms that are qualified to do the work that are being discriminated against. If they are not qualified that is a different story."

David Handrich recounted his involvement with the discrimination against small firms issue. '"Within 60 days of the time we printed the anti-discrimination statement in The CPA Letter last year, I had 25 letters endorsing that statement at the request of firms. And these letters were not necessarily on behalf of ust PCPS members. I don't look up their firm's membership status. All they have to be is AICPA members.

CPAs finding themselves in need for helpshould not overlook the manyservices available from 'their state society of CPAs. In fact there are times that Handrich finds the answer for CPAs right in their own state society.









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