bb gscpa 07.01.2014-final · 75% of bdms agree 72% of investors agree becoming certified as a cpa...

6/12/2014

1

State of the Profession

Georgia Society of CPAs

Annual Convention

July 1, 2014

Bill Balhoff, CPA, CGMA

Chairman, AICPA Board of Directors

High satisfaction with CPA performance

91% 97%87%of BDMs of investorsof BDMs of BDMs

very/somewhat satisfied with

external CPAs

of investors very/somewhat

satisfied with CPAs

of BDMs very/somewhat satisfied with internal CPAs

BDM – Business Decision Maker

CPAs first among financial professionals in positive perception

Source: Applied Research & Consulting, LLC

CPA: Confidence-inspiring & rigorous

I would be more confident in a job done by a CPA than if it were done by an accountant who is not a CPA

I would be more confident in a job done by a CPA than if it were done by an accountant who is not a CPA

75% of BDMs agree

72% of investors agree

Becoming certified as a CPA requires more rigorous training and testing than any other financial credential

71% of BDMs agree(significant increase from 64% in 2011)

Source: Applied Research & Consulting, LLC

6/12/2014

2

CPA credential in high demand

Employers: Most desired credential

Solid salary growth

Robert Half 2014 Salary Guide Accountants & Auditors:Among Top 5 “in demand” professions

for 2014

Entry-level demand also strong

Broader responsibilities

Source: TIME Business & Money1/7/14

Accounting:“One of the largest single blocks of above-average paying jobs in the

country”

Accounting: Tops for hiring interns

Percentage of internships that turn into full-time, paid hires

31%

25%22%

Source: LinkedIn survey

Accounting Financial Services

Information Technology

Management Consulting

14%

Facing CPAs this year

Effects of EU audit reforms

Accounting standards

Private company reporting

Legislation &

RegulationFocus on auditors

6/12/2014

3

Legislation & Tax

Copyright © 2014 American Inst itute of CPAs

Cash to accrual basis of accounting

Discussion drafts in House & Senate

Impact on partners

Grassroots effort

Tax issues

• Tax reform

• Extenders

• Tax return preparer registration

• IRS services

• Due dates

• Mobile workforce

6/12/2014

4

Financial Reporting


PCAOB focus on auditors

Auditor’s report Engagement partner signing Cascade risk

Effective 2016

10 year auditor rotation20 year rotation if company tenders at 10 years

EU audit reforms

24 year mandatory rotation for companies conducting joint audits

70% cap on non-audit fees

Limits tax and advisory non-audit services

6/12/2014

5

Increased focus on consulting

“We need roundtables and task force attention on the implication of the

regeneration of non-audit consulting.”

-James Doty, PCAOB Chairman

“I continue to observe the accounting firms are actively growing their g y g g

consultancy practices. Such expansion runs the risk of damaging the

accountant's reputation.”

-Paul Beswick, Outgoing SEC Chief Accountant

“As the accounting profession becomes more committed to consulting,

their audit activities have got to be questioned.”

-Arthur Levitt, Former SEC Chairman

Changes in assurance

Compilation proposals

Definition of attest

Firm mobility

6/12/2014

6

New toolkit resources late June

Working with state societies

FRF for SMEs

societies

F/S user education campaign

Regulators view as OCBOA

“[FRF for SMEs] could be a competitive tool for banks… it’s

an option bank lenders should be aware of so as not to

be at a disadvantage in prospecting for business in the

SME space.”

Private Company Council progress

Private Company Framework

Definition of Public Business Entity

FASB issued three standards

Interest rate swaps

Goodwill

VIE exception

FUTURE2014

IFRS?

Convergence and IFRS

GAAP/IFRS convergence

Revenue recognition

standard[RELEASED]

Financial instrumentsstandards

IFRS?

Leasesstandard

Principle-based

SEC strategic plan

Affects virtuallyall businesses

6/12/2014

7

Revenue recognition resources

AICPA resources

• Business brief

• Learning and implementation plan

• Audit committee primer

aicpa.org/RevenueRecognition

• Audit committee primer

• Non-authoritative guidance

• Blog posts

• JofA articles

Supporting CPAs


• CGMA Competency Framework –Driving CIMA syllabus and lifelong learning

• CGMA exam – 2015

• Proposed Global Management Accounting Principles

• World Congress

CGMA

6/12/2014

8

Restructured ethics code released

Intuitively arranged

User-friendly online code: aicpa.org/newcode

Enforceable rules and principles not changed

Minimum substantive changes to interpretations

Non-authoritative guidance referenced

Effective December 15, 2014

Additional year for Conceptual Frameworks

Firm Issues


Profession’s commitment to quality

6/12/2014

9

Commitment to public interest

Ethics enforcement

Guidance, tools, learning, resourcesAudit Quality Centers

Quality monitoring/peer reviewStandards setting

Ethics enforcement

CPA Exam

Thought leadership

Complexity in business and underlying standards

Pace of change

Continued audit relevance

Emerging issues in profession

Co t ued aud t e e a ce

Peer review and inspection results

Regulators’ scrutiny

Expanding services

2-Phased approach to enhance quality

Near-term:

Changes to professional standards and related implementation guidance

N t l d l t d

Long-term:

Practice Monitoring of the Future

New tools, development and resources (including Future of Learning, AQC activities, and CPEA)

Amendments to the existing peer review program

Regulator EngagementRegulator Engagement

6/12/2014

10

More real-time and continuous

Technology and people

Practice Monitoring of the Future

Data from firms’ systems

Dashboard: Useful to firms and monitors

Transparent and useful

Checks and balances

Center for Plain English Accounting

AICPA PCPS national A&A resource center for firms

aicpa.org/CPEA

Services:

Written responses to written technical inquiries

Monthly “how-to” A&A reportsy p

Webcasts

Alerts

Content for firm newsletters

Future growth in public accounting

2%A&A

Core accounting services remain the central focus…

…and advisory services offer growth opportunities

Advisory service Growth

Ri k 6 5%

46%

35%

16% A&A

Tax

Advisory

Other

Revenue$94B

Risk 6.5%

Business valuation 3.5%

Forensic accounting

6.8%

Financial planning 3.1%

IT/S&P consulting 6.0%Source: IBISWorld

6/12/2014

11

Solos

2-5 Professionals

Top issues – PCPS survey

1. Keeping up with changes and complexity of tax laws

2. Bringing in new clients6-10 Professionals

11-20 Professionals

21+ Professionals

g g

3. Seasonality/workload compression

4. Retaining current clients

5. Effect of regulations

Solos

2-5 Professionals


1. Keeping up with changes and complexity of tax laws

2. Succession planning

6-10 Professionals

11-20 Professionals

21+ Professionals

3. Finding qualified staff (all levels)

4. Bringing in new clients

5. Seasonality/workload compression

Solos

2-5 Professionals




6-10 Professionals

11-20 Professionals

21+ Professionals


4. Retaining qualified staff (all levels)

5. Owner/partner accountability & unity

6/12/2014

12

Solos

2-5 Professionals




6-10 Professionals

11-20 Professionals

21+ Professionals



5. Retaining current clients

Solos

2-5 Professionals


1. Owner/partner accountability & unity


6-10 Professionals

11-20 Professionals

21+ Professionals




Looking to acquire

Geographic expansion

New niche service/industry

Compete for PE work

M&A increasing – key drivers

Looking to be acquired:

Succession

Too much tied-up equity

Positioning for international

referrals

6/12/2014

13

Succession

46%of firms have

a formal

50%of practitioners

expect 1x

44%of firms say

M&A talks area formal succession plan – up

from 35% in 2008

expect 1x revenues for their

practice, but in reality often less

M&A talks are on table

Source: 2012 PCPS Succession Survey

Third party verifications

Issues identified

Scope of services

Laws and standards

CFPB “Qualified Mortgage” rule

AICPA guidance and resources

Top cybercrimes

Tax-refund fraud

Corporate account takeover

Identity theft

Th ft f iti d t87% of security breaches

ld h b id d ifTheft of sensitive data

Theft of intellectual property

could have been avoided if reasonable security controls

had been in place.

Source: VerizonSource: AICPA Whitepaper – “The Top 5 Cybercrimes”

6/12/2014

14

Developing CPAs


• Lifelong learning for new generation

• Competencies

Future of learning

Competencies measured in CPE

• Technology’s effects – MOOCs, hybrids

FOL task force recommendations

Innovate and experiment

Ignite a passion for learning

Make learning personalMake learning personal

Measure what matters

6/12/2014

15

Student initiatives

This Way to CPAAccounting graduates

100 thousand

80

Start Here, Go Places

AP Course 80

60

40

20

‘70 ‘90‘80 ‘00 ‘10

AP Course

National Academy Foundation

Di ersitDiversity

Accounting Inclusion Maturity Model

AICPA Recruiting and Retention toolkit

Investment in pipeline

CPA Exam

10 years of CBT

Next generation exam

CPA candidate pipeline

6/12/2014

16

Professional issues & initiativesAdvocacy

• Fed/State Legislation & Regulation

• Government Fiscal Responsibility

• Tax

• Uniformity & Mobility

• Public Policy Issues

People

International CPA Exam

Financial Literacy

Prof. Excellence & Public Interest

• Tax Preparer Registration

• FRF for SMEs

• Integrated Reporting

• Sustainability

• CPA Exam

• Young CPAs

• Student Recruitment

• Diversity & Inclusion

• Learning & Education

International

• IFRS

• ISAs

• CGMA

• SOC Reports

• Private Companies Practice Section

• Center for Plain English Accounting

• Audit Quality

• Peer Review & Ethics

• Specialized Communities & Credentials

• Business, Industry & Government

CPA Reputation

Competition & Risk

Operational Excellence

State of the Profession

July 1, 2014

GSCPA Annual Convention

Bill Balhoff, CPA, CGMA

Chairman, AICPA Board of Directors

Email: [email protected] or [email protected]

Telephone: 225-922-4615

bb gscpa 07.01.2014-final · 75% of bdms agree 72% of investors agree becoming certified as a cpa...

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