AICPA Tells Congress to Keep Oversight of Investment Advisers with SEC

As the AICPA gears up for our 125th Anniversary next week, here’s a wrap up of a few interesting accounting topics recently making the news. You can follow @AICPANews on Twitter to stay on top of all the latest official AICPA news as well as articles impacting the profession.

CFO.com wrote that the AICPA raised concerns over the Investment Adviser Oversight Act of 2012 and urged Congress to keep oversight of investment advisers with the SEC. Introduced in the House of Representatives on April 25, the bill would transfer oversight of investment advisers from the SEC to a self-regulatory organization."Many of our members work for a firm that is registered as, or affiliated with, a registered investment adviser," Barry Melancon, CPA, CGMA, AICPA president and CEO, said in a statement. The AICPA's stance is that the system proposed under the bill would cost advisers much more in fees than current SEC oversight would.

On January 19, 2011, the SEC issued a staff report that found the current SEC-registered investment-adviser examination program faces hefty capacity and funding challenges. Three options were proposed to offset these challenges.  One would be to impose "user fees" on SEC-registered investment advisers to fund oversight. A second would authorize one or more SROs to examine investment advisers, with oversight from the SEC. A third choice would be to authorize the Financial Industry Regulatory Authority, a leading broker-dealer SRO, to examine dual registrants for compliance with the Investment Advisers Act of 1940. All three options require congressional action. "We believe that the SEC's core mission to protect investors requires adequate regulation of the investment advisory profession. The SEC remains the proper regulatory body to protect the public's best interest." Melancon said, "Providing the SEC with resources to properly enforce their rules is the best solution for investors and the public."

In the News: Accounting named one of the Happiest Jobs in America

We’ve got a lot of big things on the horizon at the AICPA: April Financial Literacy Month (we’ll be releasing survey results on the financial state of Americans) and in mid-May, we’ll be celebrating the 125^th Anniversary of the AICPA at our Spring Council meeting in Washington D.C.

Which is not to say that we’ve haven’t been busy lately! Just in the last week we released the results of our CGMA Global Economic Forecast and Barry Melancon, CPA, CGMA, president and CEO of the AICPA, testified before the House Capital Markets Subcommittee Accounting and Auditing Oversight Hearing. Melancon told members of the subcommittee that AICPA supports a strong, balanced and independent regulatory structure that protects investors but does not restrict the flow of capital.

During busy season and year-round, you can keep abreast of all the most important AICPA news by subscribing to the Media Relations RSS feed or following @AICPANews on Twitter. On to news of note from the last few days.

Proposed SOX 404(b) Changes Could Add to Investors’ Risks

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There has been quite a bit of legislative and regulatory activity over the past few months regarding Sarbanes-Oxley Section 404(b), which requires public companies to have an independent auditor attest to management’s assertions on internal controls over financial reporting. I want to bring you up to date on recent developments and the AICPA’s position on the issue.

Currently, an exemption exists for issuers with a public float of less than $75 million, a provision enacted as part of the 2010 Dodd-Frank Act. These smaller issuers were never required by the Securities and Exchange Commission to comply with Section 404(b) since enactment of SOX. However, legislative, regulatory, business and economic influences are combining to apply pressure to extend the exemption to larger public companies, believing it would reduce reporting burdens and spur job growth. The AICPA has consistently urged implementation of Section 404(b) for all publicly held companies. It has led to improved financial reporting and greater transparency, and the AICPA believes all investors in public companies should have equal benefit of the same protections.

Live Blogging the CGMA Launch

AICPA Insights live blogged from the interactive business forum celebrating the launch of the Chartered Global Management Accountant on January 31. Follow the real-time event as it unfolded in New York and London and was viewed live in other regions around the world. A launch event in Kuala Lumpur took place earlier in the day. The CGMA was established through a joint venture between the AICPA and the Chartered Institute of Management Accountants.

10 Minutes to Understanding Our Nation’s Fiscal Health

If you’ve watched the news, picked up a paper (or read one on your electronic device) or listened to the radio in the past year, you’ve probably heard about America’s debt, its bond rating and political gridlock.

Instead of telling you what fiscal challenges our country is facing, I think it’s better if you understand them for yourself. Today, I’m encouraging each of you to spend a few minutes taking a short quiz that will test how well you understand the financial matters being discussed in Washington, D.C.

Happy Holidays and Best Wishes from the AICPA

It’s hard to believe the holiday season is already upon us. From the songs and decorations, to the goodwill and celebrations, the year is drawing to a festive and busy close. For a quick look back, please watch this year-end video celebrating some of the many successes our profession enjoyed in 2011.

CPA Horizons 2025: A Roadmap for the Profession’s Future

During this past year, the AICPA’s Immediate Past Chairman, Paul Stahlin led the call for our members to participate in CPA Horizons 2025, a grass-roots initiative aimed at examining the local and global trends that will have an effect on our profession over the next 15 years. Your response was tremendous. Nearly 6,000 CPAs voiced their opinions and generated more than 75,000 comments. I thank you for all your insights on how to shape our future.

CPA Horizons 2025 built on the knowledge we gained in the CPA Vision Project, a similar effort conducted in the late 1990s. Participants concluded that the core purpose for CPAs identified back in the 1990s—CPAs: Making sense of a changing and complex world—remains relevant now and for the future. The participants also believed that the core values and competencies identified in the CPA Vision Project are still valid, and were updated to reflect changing circumstances. While the CPA Vision Project also identified some core services, CPA Horizons 2025 determined that the knowledge, skill and competencies CPAs have to offer have become so varied and diverse that the concept of core services is no longer valid. 

Independent Board is Needed for PCGAAP

For quite a while now, decades in fact, the accounting profession has been discussing the problems faced by private companies and the users of their financial statements because of a lack of relevance and unnecessary complexity in too many places in U.S. GAAP. The Blue Ribbon Panel on Standard Setting for Private Companies made recommendations earlier this year that gave us a greater sense of hope that real change was on the way. The Panel, formed by the AICPA, the Financial Accounting Foundation and the National Association of State Boards of Accountancy, came out with two significant recommendations that would permanently change private company financial reporting. One is differences in existing and future GAAP where warranted; the other is an independent board to set those differences. There is general consensus on the former; I want to focus on the latter.

Persistence Results in Protecting Taxpayers

It was a five-year battle, but working together the AICPA and state CPA societies were gratified  when President Obama on Sept. 16 signed into law a bill that includes a provision to prevent the issuance of new patents on tax strategies. We asked so many of you to send letters, and state CPA societies and members responded each time. Details on the harm tax patents could cause are discussed in this AICPA Insights blog post.

Tax strategy patents now become one of only a handful of patent types that the Patent & Trademark Office is prohibited from issuing, which includes medical procedures, nuclear technology and, now, tax strategies. 

I would like to thank each of the AICPA staff, members, states, committees and others who participated in this advocacy effort, which marks a huge victory for both the public and the CPA profession.

It is important to note that existing tax strategy patents remain in effect so tax practitioners still need to remain vigilant. Patent applications pending as of Sept. 16 were discontinued and no new applications are allowed.

This victory shows the positive results that stem from collaborative and persistent efforts when it comes to getting legislation enacted.  Congratulations to those who played a part in this process. On behalf of taxpayers and the profession, I thank you.

Barry C. Melancon, CPA, President and CEO, American Institute of CPAs.

 

Succession: It’s Not Only About The Golden Years

Polls in CPA Letter Daily offer an insight to the readers’ opinions about topics taking place in today’s world.

Last week’s poll question, with nearly 500 responses: Does your organization have a formal succession plan in place?

• Yes, my organization has a formal succession plan in place. - 23.71%
• Yes, but it is an informal succession plan. - 21.99%
• No, but my organization plans to develop one. - 18.93%
• No, and we do not have plans to create one.- 35.37%

There’s a saying that the best time to plant a tree is twenty years ago. The second best time is now.

For many years, the AICPA has been encouraging firms of all sizes to take a serious approach to and place a heavy focus on succession planning.  With 44,000 firms in the U.S., combined with an aging population, it’s simply an imperative. I’ve seen many firms that are so busy taking care of “today” that they never get around to planning for tomorrow.

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Recently, Apple demonstrated the importance of having a succession plan when CEO Steve Jobs stepped down, amid health concerns. His sudden announcement triggered a plan that was put in place well before his health forced him to step down. This preparation allowed Apple to seamlessly transition to new leadership and continued success. This plan was well communicated to employees and investors for months, reducing the potential for negative reactions. Examples like this, unfortunately, are the exception, rather than the rule.

In the last month, another event led me to believe that awareness regarding succession planning is both timely and needed, especially in the case of an unexpected life event.   

Thinking Globally Makes a World of Difference

The world is getting smaller. It becomes more apparent with each passing day. The ongoing unrest in Libya, the economic crisis in Greece, and our own difficulties with the debt ceiling have each caused global markets to fluctuate wildly. What does this tell us? For one, it makes it increasingly clear the business world is now global.  Second, it shows that most U.S. businesses need to think internationally and integrate that thinking throughout their operations to achieve economic success and long-term viability.

Businesses used to operate within their own cocoon, impervious to events outside their countries’ borders. But now, each of us must implement strategies enterprise-wide that reflect the new environment.   

Be a Part of Making Historic Change for Private Companies

Anytime you have a “first” of anything it’s an important and memorable occasion. With that in mind, my first topical blog post is on a subject I believe is critical to our profession, those we work for and those we serve. I’m talking about private company financial reporting.

Few opportunities exist where a person can say they took part in something truly historic. CPAs, their clients and employers, bankers and other stakeholders have such an opportunity before them today, and it all starts with a letter. For more than 30 years, CPAs, lenders, private company owners, investors and others have said U.S. GAAP mainly reflects the public company environment, resulting in unnecessary complexity and a lack of relevance for private company financial statements. We’re now closer than we’ve ever been to changing this, and you have the ability to push this across the goal line - finally.

Welcome to AICPA Insights

Feedback and exchange are essential components of communications today. And not just between a writer and a reader, but among the readers themselves. Through this interaction, a community is formed. A leader in social media usage by professional organizations, the AICPA has taken another step in providing a community platform among members and others through AICPA Insights, our new blog.

AICPA Insights will provide thoughts and opinions from experts about issues affecting the Institute, CPAs, the clients we serve and the businesses we work for. Our bloggers are members of the AICPA staff, and I’m sure they’ll bring a unique perspective to today’s issues. We’ll also feature guest bloggers covering a wide range of issues.

Later this week you’ll hear about efforts in developing an integrated reporting framework from our Business, Industry and Government team. My next post will focus on private company financial reporting, which I believe is one of the most important issues facing our profession and America’s small businesses and their financial statement users.

I’m excited about our new blog and look forward to all of you engaging in thoughtful discussion. I encourage you to write comments and share posts with colleagues to bring diverse views and experiences that will enrich our knowledge and perspectives.

When I became AICPA President and CEO back in 1995, we could not have imagined the technologies that someday would give us such incredible access to each other. Let’s build on the functionality and develop a robust conversation on everything important to all of us.

Thank you and enjoy.

Barry C. Melancon, CPA, President and CEO, American Institute of CPAs.