Renewing a Great Profession
n preparation for the coming year, I have
spent a lot of time pondering how much one individual can
contribute to the advancement of an entire profession in the
course of a single year. Every new AICPA chairman inherits
initiatives from the past and must deal with events beyond
anyone’s control. A chairman strives, at best, to finish a
few good journeys started by others, contribute to the
progress of initiatives already in motion and point the way
to new roads not yet explored.
At the end of the
year, what does it add up to? Can a chairman’s leadership
translate into a profession whose value has been preserved
and enhanced? Because that is my goal. I believe that we can
accept no less. And I expect no less of myself.
great profession does not stand still for long; and it
cannot allow itself to slide back. New issues emerge; old
issues take on new twists. We must deal with all of them—and
build on the standing of our profession through each of
Those two words—“great profession”—form the
core of what I want to say to you. The word “great” is
identified with people who are widely admired: Ronald
Reagan, the Great Communicator; Jackie Gleason, the Great
One; and Muhammad Ali, the Greatest.
In the ideal
world, I would combine some of the qualities of these three
gentlemen: the modest but determined leadership style of
Ronald Reagan, the showmanship of Jackie Gleason, and the
speed and physical grace of Muhammad Ali.
Unfortunately, in the real world, there is always the
chance that I will end up displaying the modest style of a
young Muhammad Ali and the speed of Jackie Gleason. But
however I get there, my goal is to preserve and enhance the
greatness of our profession.
WHAT MAKES A PROFESSION GREAT?
A great profession takes a long
view. Its members inherit a legacy from the past, derive
benefit from it, build on it and pass it on to the next
generation even stronger than they found it. A great
profession occupies a position of trust. When we review our
assets, none is as important as our position of trust in the
economic marketplace. A great profession builds bridges of
communication and credibility with key stakeholders. These
include the regulators and government bodies who rely on our
skills and services to advance the public interest. A great
profession plays a vital role in the health of our economy
and our society. And a great profession renews itself. It
does so by attracting a continual flow of talented new
professionals. And it renews itself by carving new roads
that can accommodate the needs of future travelers.
The greatness of any profession is not something that can
be taken for granted. It requires constant investment and
renewal. Laurels are not something to rest on; they are
something to build on. And that is something I fully intend
to do: to build on the legacies left by the great chairmen
and chairwomen who preceded me.
A few minutes ago, I
evoked the names of three great men. Now I would like to
evoke the names of three great volunteer leaders: Jim
Castellano, Bill Ezzell and Scott Voynich. These three
helped steer the AICPA through one of the most challenging
periods in its history: Jim stepped into the toughest and
most demanding year any of us can remember, and he handled
it with tremendous fortitude and class. For his courage
under fire, I will always think of Jim as the Great
Commander. Bill took over the reins in the midst of the
challenge and launched the rebuilding process. He did it all
with humor and grace. At a time when we all carried the
weight and worries of unrest in our profession, he helped us
to see the light at the end of the tunnel. And for that, he
is in my view the Great Illuminator. Scott continued the
rebuilding process and guided the AICPA back to the solid
ground we had traditionally occupied. And after this year I
will always think of him as the Great Restorer.
Together, these three leaders put us in the position
where we can look aggressively to the future rather than
react to the past. We owe them a debt of gratitude. But
these three should not be standing alone. Each of you, as
council members, has likewise contributed to the place in
which we now find ourselves. The fact that each of you is
actively involved in the AICPA demonstrates that you are
“builders” of laurels, not “resters.”
COMMITMENT TO ETHICAL AND PROFESSIONAL STANDARDS
I’d like to spend my time with
you today suggesting how we might build on our momentum and
enhance the characteristics of greatness I have described.
Great professions do not expect someone else to enforce
their standards; they take responsibility for themselves.
Regulators serve a vital role for our profession. But let’s
not forget one thing: The role of the regulator is to set
the minimum requirements for protecting the public
interest and disciplining those who fail to meet them. But a
series of minimum standards—as necessary as they are—is not
a formula for greatness.
Greatness comes from
aspiring to high expectations and from doing what has to be
done to meet them. That is the spirit that has driven the
CPA profession, and it demands far more from us than merely
complying with the rules set down by regulators.
Many firms are now pursing innovative means of ensuring
high ethical standards. At my own firm, for example, we have
hired what you might call an independent chief ethics
officer, the dean of a business school. He has the mandate
to look inside our organization and tell us whether we are
“walking the talk” when it comes to the ethical behavior we
expect from our leaders.
Ours is not the only
method. It may not even be the best method. Other firms have
developed unique approaches to address their individual
circumstances. The point is, our responsibility must be
greater than simply meeting the minimum.
to do the right things are not always easy on the people who
make them. When I think about high standards, I am reminded
of a conversation I had with my son when he was a teenager.
Before I tell this story I need to tell you that my son is
now an adult, a husband and a father—and I am very proud of
him, as I am proud of my two daughters. But when he was
growing up, Steve was a handful. Once he got himself a job
delivering free newspapers. At first, I was proud of his
initiative and newfound work ethic. But you might say that
he showed a little too much initiative. Since the newspapers
were free, and no one was expecting to get them, he figured
there was no reason to actually deliver them. So he just
chucked the bundles into a dumpster. Only he hadn’t taken
one thing into account: His name and address were on each of
the bundles. The owner of the dumpster found the bundles and
notified the publisher, who fired my son. To be honest, when
I sat down to talk with my son, I was tempted to tell him
that he needed to lead a stellar life because he wasn’t
devious enough to get away with anything else!
Instead, I sat him down for a heart-to-heart discussion
about ethical behavior. I explained to him that he was at a
“crossroads.” I also managed to mention the high road, the
hard road, the wrong road and that the road to ruin was
paved with good intentions. At the end of my pitch, Steve
said to me: “Dad, I don’t like your roads.”
point I decided to drop the metaphors and make it clear:
Clean up your act or you don’t get to use the car—it’s the
high road or the bus! Steve was just a teenager, but even in
adulthood some want a smooth, easy road. And in our quest
for greatness, there are a vocal few in our profession who
will not like the roads we must travel any more than my son
did at age 16.
PEER REVIEW TRANSPARENCY
The original design of peer
review has become a victim of rising expectations.
Yesterday’s process has to be adjusted to meet today’s
demands. Peer review was designed as an educational and
remedial program to strengthen quality control, prevent
recurrences of problems and correct deficiencies in the
practice of member firms. It was not intended to aid the
enforcement responsibilities of others; it was intended to
be corrective rather than punitive. Members expected
confidentiality in the process—and the AICPA delivered that.
But what was accepted as confidentiality in the past is seen
as secrecy today. And it is no longer tenable.
Transparency is more important than ever because a wider
universe of people has come to rely on peer review—including
regulators and clients in ever-increasing numbers. It is
more important than ever because peer review is taken as a
guide by institutions like credit grantors that influence
the decisions of others in hiring an accounting firm.
Transparency is more important than ever because firms are
trumpeting their positive reviews to clients and potential
hires as a badge of quality. And it has become more
important than ever because most states now make peer review
part of their qualification for licensure. At the moment, 46
of the 54 states and territories either mandate peer review,
give the state accountancy board authority to do so or are
considering moving in that direction.
succeeded in earning respect for peer review. Now we must
open it up to the people who have invested confidence in it.
Over the coming year, this profession will engage in a
dialogue on the issue of greater transparency. My goal as
chairman is to at least bring our members into greater
awareness of their opportunity to move further along the
road to a great profession. And it is my hope that you and
CPAs across the country will eventually carry this legacy
forward through a successful member referendum.
quest to remain the trusted profession also requires us to
protect our credibility against those who would trade on our
reputation while failing to live up to it.
in this room have been in the position of taking over work
from another practitioner whose work was not up to our
professional standards. How we respond to such challenges
defines who we are as a profession. Do we simply clean up
the work—and leave it at that? Is this the behavior of a
Is it time to take a new look at
what we should individually be doing to actively weed out
the worst offenders of our professional standards? These are
issues that I believe we must examine closely over the next
year. I will ask you to begin this dialogue at a future
meeting. Your leadership, courage and insights can help
create a culture in our profession where there is only one
right response: acting in a way that directly contributes to
the greatness of not just ourselves, but the companies we
work for and this profession.
BUILD BRIDGES WITH REGULATORS AND GOVERNMENT
We must work
closely with those with whom we share a profound commitment
to protect the public interest. The number and diversity of
these bodies have grown exponentially in recent years. Most
notable among them is the PCAOB, but the IRS, DOL, FBI, SEC,
GAO and others have a great and growing interest in how we
carry out our professional and public interest role.
For example, just three months ago, in a statement to the
Senate Finance Committee, IRS Commissioner Mark Everson
stated: “Our system of tax administration depends upon the
integrity of tax practitioners.” Our critical role as tax
preparers serves the needs of our clients for expertise in
coping with complex tax laws but we are also seen as
critical to the functioning of the U.S. tax system. In this
regard we serve two masters, and we must continue to improve
our skills in dealing with our many public interest masters.
The AICPA must find the balance between serving the
needs of clients, representing the interests of our
stakeholders and responding to the legitimate public
interest concerns of our real and would-be regulators. We
must strive for relationships that feature open
communication and mutual respect while preserving the
ability to vigorously oppose regulatory initiatives that do
not make good sense.
The good news is that more
federal, state and other agencies than ever before believe
that the work of CPAs is critical to the functioning of our
economy. Our challenge is to ensure that we have a seat at
every table when laws and regulations are made. We have made
great progress over the past 24 months, but we are clearly
only at the beginning of a very long journey.
OUR PROFESSION’S PURPOSE
professions play a vital role in the health of our economy
and society. Each of you—whether you work in academia or
government, for a corporation or in a public accounting
firm—is involved in the process of providing understandable,
reliable and transparent information for decision-makers.
This role is vital to our society and its economy. It is in
our interest as a profession to ensure this function’s
integrity, fairness and relevance. The AICPA must continue
to ensure we fulfill that important responsibility.
One example of this commitment is the establishment of
three audit quality centers: the Center for Public Company
Audit Firms, the Employee Benefit Plan Audit Quality Center
and, most recently, the Governmental Audit Quality Center.
Joining these suborganizations is an example of adopting a
higher standard. Membership does not just represent another
plaque on the wall; it represents a heightened commitment to
specialized knowledge, following standards and employing the
tools to achieve them. My goal is that by the end of this
year the vast majority of practitioners in these three areas
will have demonstrated their commitment to quality by
joining these important centers of excellence.
accounting and reporting are not our only possible
contribution to the financial health of our society. We can
serve the public interest by offering our expertise to help
frame policy, inform policy makers and educate the public on
matters affecting their financial health.
continue our efforts to bring clarity and resolution to the
tax shelter issue while preserving the taxpayers’ right to
minimize their taxes. And we will continue to fulfill our
role in commenting on the fiscal policy of government, to
ensure prudence. This includes issues of public policy
prudence, including the viability of Social Security and
public health insurance. We will work with others who are
concerned about these great issues, lending our expertise to
help Americans understand the ramifications of policies that
have enormous consequences for our country’s fiscal future.
I’m fully committed to making our financial literacy
campaign a model for how a profession that cares about the
public interest can leverage its skills and position of
respect in every community to benefit society. When I think
of the possibilities I imagine what it would be like to
stand in the midst of an empty sports stadium. Ten people
filter in and began cheering: Their voices are all but lost
in the cavernous space. Then the cheering crowd swells to
100, then 1,000 and eventually 10,000. As the crowd grows
the sound becomes audible. Then it becomes loud, and finally
it becomes thunderous. We have 351,000 respected,
knowledgeable voices about financial literacy issues. We
need to engage those voices in making a thunderous noise
about our nation’s financial health.
AS A GREAT PROFESSION, WE MUST RENEW OURSELVES
This means both bringing in new
blood—young, bright and committed professionals who can
carry our legacy forward—and building roads in new
The heart of any profession is the
quality of talent attracted and retained in it. Thanks to a
combination of events, including the effectiveness of the
AICPA-sponsored student recruitment efforts, we are seeing
meaningful growth in enrollment in university-level
accounting programs. The recently published supply survey of
accounting program enrollment shows that enrollments are up
17% from 2000 and graduation rates in accounting are up 11%
from 2002 to 2003.
This surge could not come at a
better time since there will be a huge need for talent as
the leading edge of the “boomer” generation begins to retire
and as the resource needs of the profession grow in the
But new blood is
not the only area where renewal is needed. We must continue
to move forward with the enhanced business reporting project
to fully test the appetite of the user community for a more
comprehensive reporting model. If there is no demand, so be
it, but we must lead rather than follow in this discussion.
At the same time we must resolve once and for all the
question of “differential” accounting standards and ensure
that audit standards continue to be relevant to the needs of
not-for-profit and private companies. We have seen the
tremendous pressure for financial reporting standards in the
public company world to cascade into private companies and
even the not-for-profit sector. Some might think it is
hypocrisy to argue that these standards should be restricted
only to public companies. But this may be one instance where
what is good for General Motors is not necessarily good for
It must be a priority for the AICPA to
find the right way in this marketplace—with the active
involvement of the various stakeholders of private company
financial reporting—through our task force led by Jim
Castellano, and the Auditing Standards Board with its
mandate to improve the quality of audits.
GREAT PROFESSIONS ARE PROACTIVE
There is one last
characteristic of great professions that we must keep in
mind: Great professions don’t just accept change. They don’t
just embrace change. Great professions initiate change—for
their own good, for the public good and for the sake of the
More than 30 years ago, a professor of
medieval studies at UCLA, Lynn White, summarized modern
times in this way: “We live in an era when rapid change
breeds fear, and fear too often congeals us into a rigidity
which we mistake for stability.”
It is tempting to
cling to the status quo, simply because change brings with
it challenges. Change can be unsettling, forcing us to
rethink long-held notions and reassess our way of doing
things. Change can be a tough road to travel. Like my son
when he was a teenager, it may be a road that many would
prefer to avoid.
Many of the initiatives I’ve
described here today involve this unsettling process called
change. One of my priorities is to ensure that the AICPA is
an organization that promotes change, rather than recoils
from it—because that’s what great professions do.
the end of my year as chairman, if we have moved further
along the road to greatness, then I will have done my part.
If that happens, it will not be because of anything I was
able to do on my own. It will be because of all those great
people who join in this mission. People like you. I look
forward to making the journey with you.
The Center for
Public Company Audit Firms recently launched an
enhanced Web site that is conveniently organized
around a home page and five core areas—resources,
community, events, membership and products. The
site, with a vast array of resources in one
convenient location, is designed for CPA firms
that provide public company audit services.
Members of the center can access premier technical
content, publications and practice aids. New tools
and resources will be added regularly to keep the
content fresh and relevant.
The center is
a voluntary membership center for firms that audit
or are interested in auditing public companies. It
promotes the high quality of public company audits
and educates and informs member firms and external
audiences about issues that affect public company
audit practice. To see the site and learn more
about membership requirements please go to
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