state of the profession - agn international · aicpa successes firms’ opportunities jobs act tax...

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American Institute of CPAs

State of the ProfessionMark J. Koziel, CPA, CGMAVice President, Firm Services & Global Alliances

10/9/2012

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International

Technology

Value proposition

People

Succession

Landscape

Clients

Copyright © 2011 American Institute of CPAs

Global Recovery

Organization for Economic Co-operation and Development

• Uneven recovery• U.S. and Japan expected to see

recovery• Euro countries continue to suffer• Emerging markets have varying

degrees of recovery• Inflation could impact some growth

• Is the crisis over?

10/9/2012

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BRICS’ GDP to Exceed G7’s by 2035

$0

$20

$40

$60

$80

$100

$120

$140

2015 2020 2025 2030 2035 2040 2045 2050

G7BRICSin

trilli

ons

Source: BRICS & Beyond, Goldman Sachs, 11/23/07


Emerging Markets 2013 GDP Predicted Growth

0

1

2

3

4

5

6

2012 GDP Growth

G7BRICsCIVETS

Sources: CGMA Magazine 1/31/12 and businesswithoughtborders.com

10/9/2012

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Potential Services & Opportunities

Integrated Reporting• Sustainability

EBRC

Attestation opportunities• SOC reports

Risk Management

Taxes• SALT & compliance

XBRL

Business process outsourcing• Cloud Computing

Specialization and credentials

Key XBRL DevelopmentsXBRL International released XBRL International Foundation Certificate (covers general, high-level knowledge of XBRL and the XBRL Specification)• http://www.xbrl.org/xbrl-foundation-certificate

AICPA and XBRL US to release a new XBRL US GAAP Certificate Program in Spring 2013• http://www.cpa2biz.com/xbrlcertificate

New SEC rule requires use of XBRL format for Form SD reporting of Extractive Industries Payments To Governments• http://www.sec.gov/rules/final/2012/34-67717.pdf

10/9/2012

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Key XBRL Assurance Developments

AICPA Assurance Services Executive Committee (ASEC) XBRL Assurance Task Force launched internationally relevant Principles and Criteria for XBRL-Formatted Information for preparers and auditors• http://www.aicpa.org/interestareas/frc/accountingfinancialreporting/xbrl/

pages/principlesandcriteriaforxbrl.aspx

AICPA ASEC XBRL Assurance Task Force is in the process of updating SOP 09-1: Performing Agreed-Upon Procedures Engagements that Address the Completeness, Accuracy, or Consistency of XBRL-Tagged Data based on the new Principles and Criteria

New Developments in Sustainability Reporting

GRI (Global Reporting Initiative) G4 Guidelines are out for exposure, AICPA to comment primarily on assurability aspects

• https://www.globalreporting.org/reporting/latest-guidelines/g4-developments/Pages/G4-Public-Comment-Periods.aspx#G4ED

IIRC (International Integrated Reporting Council) to publish a prototype integrated reporting framework in the December 2012/January 2013 timeframe

• http://www.theiirc.org/

CDSB (Climate Disclosure Standards Board ) released Climate Change Reporting Taxonomy exposure draft (in XBRL)

• https://www.cdproject.net/en-US/News/Pages/xbrl-consultation.aspx

New SEC rule requires reporting and independent audit for Conflict Minerals• http://www.sec.gov/rules/final/2012/34-67716.pdf

10/9/2012

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Market-led issues in U.S.

Integrated Reporting

Discussion paper

AICPA providing leadership in U.S.

International council

PepsiCo Annual Report

19% financial

81% non-financial

New Developments in Sustainability Assurance

AICPA Auditing Standards Board (ASB) Sustainability Task Force to develop guidance for practitioners performing review level attestation engagements that address greenhouse gas (GHG) statements

AICPA Assurance Services Executive Committee (ASEC) launching a new task force to develop assurance and/or advisory application guidance addressing emerging market demand for supply chain-related and/or certification-related sustainability reporting and assurance requirements

IRBA in South Africa will be drafting a paper on assurance considerations for integrated reporting

10/9/2012

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“[Cyber Security] is one of the most serious economic and national security threats our nation faces.”

- President Barack Obama

Cyber Security a Growing Concern

AICPA educating members on best practices

Big Data, Big Potential

Convert data sources into actionable business insights

“Analytics arms race”

Not enough to increase data availability

Capacity to evaluate data & apply good judgment

CFO/adviser’s strategic role

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Complexity: Challenge & Opportunity

Health care

Federal taxes

State/local taxes

Technology

International

Dodd-Frank

Heightened rules and scrutiny

COMPLEXITY

Growing the Brand

Healthy, strong roots are needed to support growth.

Reporting

AuditTax

Strategicplanning

Financialplanning

Businessvaluation

ITauditing

Forensicaccounting

Managementaccounting

10/9/2012

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U.S. Legislative & Tax

DC Issues

Dodd-Frank•Broker-Dealers•Aiding and abetting•Financial planners – SEC/SRO

PCAOB Activities•Auditor’s report•Mandatory firm rotation/Europe

Hearing on Accounting & Auditing Oversight

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On ramp for companies

On ramp

AICPA successes

Firms’ opportunities

JOBS Act

Tax Issues

Tax Preparer Registration

Mulcahy, Pauritsch, Salvador & Co.

Sound tax policy

IRS Preparer Compliance Visits

FBAR and FATCA

Tax Provisions of Supreme Court Health Care Decision

10/9/2012

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Lame Duck Session

Super committee automatic cuts

2% withholding expiration

New debt ceiling

Estate tax

Expiring tax cuts and more (AMT patch)

Audit Rotation

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Global Perspective on Audit Policy• 7/21 - Dodd-Frank gives PCAOB broader powers • 10/13 – EC issues audit policy consultation

• 8/16 – PCAOB issues concept release • 11/30 – EC Proposal includes 6-year rotation

• PCAOB holds public panel discussions (2012 – 2013)• JURI recommends 25-year rotation (Vote on 12/18)

• PCAOB continues public meetings• 2/27 – European Parliament plenary vote


Mandatory Firm Rotation (MFR)

More than 27 countries have some form of MFR, including:

• Brazil, China, Italy, Portugal and Saudi Arabia

Already 11 countries have repealed MFR, in whole or in part, including:

• Austria, Canada, Singapore, Spain, South Korea and Turkey

Source: http://pcaobus.org/Rules/Rulemaking/Docket037/ps_Echevarria.pdf

10/9/2012

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Proposals since the EU Green Paper (Oct. 2010)?

May 2011 South Africa

(Audit-only firms)

Feb 2012 Netherlands

(8-year rotation)

Dec 2011India

(5-year rotation)

March 2012Russia

(5-year rotation)

April 2012-ProposedSeptember 2012-

PassedUK (10-year man.

Tender)Comply or Explain

October 2012-ProposedCanada

(3 audit proposals)

International

10/9/2012

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Exploring other expansion opportunities

CPA Exam Abroad

9,300 Sections

JapanBahrainKuwaitLebanonUAEBrazil

ThisWaytoCPA.com now accepts international students


Hong Kong Mutual Recognition Agreement

Five-year MRABasis for reciprocity between U.S. and Hong Kong accounting professionsSixth agreement with non-U.S. professional bodies (Australia, Canada, Ireland, Mexico, New Zealand, Hong Kong)

10/9/2012

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Market Forces Causing Change

International

Associations

Capacity

Geographic Regions

Market Forces


Key Global Network Issues

Firm Growth Global Networks

Brand Success New Frontiers

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Changing Landscape for Firm Growth

Single Firm

Vertical

Larger, with Competitor Evolution

Network, Association

Acquire smaller firms

HorizontalSame size combine/

merge

Organic Growth from within


Trends and Developments

Consolidation of CPA firms

Recession reduced revenue

Regulatory impediments

Global expansion Specialization

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What to Consider

Professional judgment vs. rule-based reporting

Systemic biases (e.g., firm size)

Liability, U.S. legal system

Human capital challenges

Newer associations lack long history

Newer associations evolving in time of increased regulation

Shorter timeline to success


Maintaining Brand for Success

Back up assoc. name with

quality, service, global reach

Know strategy for

crisis management

Firms to have their own crisis strategy in

place

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New Frontiers

Need to be in Brazil, China, Asia and India

• Challenges may exist in specific regions

Firm management needs to think across borders – needs to be intrinsic/systemic

Grow leadership with global insights for the future

Supporting CPAs

10/9/2012

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CGMA

World-Class Resources

Global Employer Outreach

35,000+ CGMAs so far

2011 PCPS CPA Firm Top Issues

21+ Professionals

1 – Partner accountability/unity2 – Bringing in new clients3 – Retention of current clients4 – Fee pressure/pricing of services5 – Developing a succession plan

10/9/2012

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Private Companies Practice Section

% of firms with increase in net fees

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2010 2008

Private Companies Practice Section

Decrease in net fees

0%

5%

10%

15%

20%

25%

30%

35%

40%

2012 2010 2008

10/9/2012

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Resources for Firms’ Issues

CPA Horizons 2025

10 Key Insights emerged

Core Purpose standing the test of time

Core Values substantially unchanged

Core Competencies evolved

Core Services no longer limited

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CPAs … making sense of a changing and complex world

Core Purpose

Core Values

Integrity

Competence

Lifelong learning

Objectivity

Commitment to excellence

Relevance in global marketplace

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Core Competencies

44

Communications skills

Leadership skills

Critical thinking and problem-solving skills

Anticipating and meeting needs

Synthesizing intelligence to insight

Integration and collaboration

American Institute of CPAs®

Key Insights• Technology• Pre-Certification & Lifelong Learning• Worldwide Profession• Market Permission• Trusted Attester• Pride in the Profession• Demographic Shifts• Trusted Advisor• Marketplace• Value Proposition

10/9/2012

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Financial Reporting

Private Company Financial Reporting – Recent Key Events

Private Company Financial Reporting Task Force Report,AICPA (“CastellanoReport”)

AICPA to work with FAF and FASBto explore GAAP for private companies

Enhancing the Financial Accounting and Reporting Standard-Setting Process for Private Companies, FASB

AICPA and FASB start Private Company Financial Reporting Committee

AICPA supports for GAAP differences for private companies

AICPA Council, FAFand NASBA announce formation of Blue-Ribbon Panel

AICPA supports the work of Blue-Ribbon Panel

Panel releases final report

FAF decision May 23

AICPA supports FAF’s new PCC

AICPA announces financial reporting framework for SMEs

2005 20122011201020092006 2007 2008

10/9/2012

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Privately held small & medium enterprises

Less complicated, less costly

US GAAP financial statements not needed

FAF supports as “important and complementary”

Framework to undergo due diligence

Financial Reporting Framework for SMEs

Expected release first half 2013

SEC Final Staff Report on IFRS

No recommendation on incorporation

Concerns with wholesale adoption

Active role for FASB

US stakeholder support for one set of standards

AICPA: Commended SEC staff for its thorough reviewUrged commissioners to consider reportContinued call for adoption option

10/9/2012

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Revenue recognition

Leases

Financial instruments

G20 eyes 2013

FASB/IASB Convergence Projects

Final standard expected 1Q 2013

Re-exposure 4Q 2012

Final expected in 2013Various aspects re-exposed throughout 2012, 2013

Final in 2013In April, G20 affirmeddesire for convergence projects to be completed by mid-2013

A&A Roundup

GASBStandards

Single AuditCOSO

• Internal Control-Integrated Framework

•Final Framework expected early 2013

•aicpa.org/COSO

• OMB Advance Notice re: proposed single audit revisions

• AICPA issues comment letter

•June 25 – GASBapproves two new standards

•Net pension liability

•AICPA will develop guidance for auditors

$

10/9/2012

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Developing CPAs

CPA Among Best Jobs for Growth

22% 10200K200,000 news jobs will be created during this time

Yahoo! Finance ranked accounting among the Top 10 happiest jobs

The accounting profession is expected to grow by 22% over the next 10 years

10/9/2012

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Filling the Pipeline of the Future

199020002012

Human Capital

Women

Diversity

Leadership

Quality Career

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Gen Y Changing Office Structure

Source: TIME 12/21/11

90% of employers enable work flexibility

1/3 of grads say access to social media & ability to choose their devices is more

important than salary

56% of grads would ignore/turn down a job

offer without social media access

2/3 of grads will ask about social media policy

during job interviews

37% of employees would take a pay cut

for more flexibility

125th Anniversary

aicpa.org/anniversary

10/9/2012

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Professional Issues & InitiativesAdvocacy• Fed/State Legislation & Regulation• Regulatory Restructuring• Tax• Uniformity & Mobility• Public Policy IssuesPeople• CPA Exam• Young CPAs• Student Recruitment• Minority Initiatives• PhD Creation & Support• 150 hourInternational• IFRS• ISAs• CGMA

International CPA ExamFinancial LiteracyProf. Excellence & Public Interest• Tax Preparer Registration• Enhanced Business Reporting• SOC Reports• Private Company Financial Rep• Sustainability• Audit Quality • Clarity Project• Peer Review & Ethics • Private Companies Practice Section • Specialized Communities & Credentials• CPA Horizons 2025• Business, Industry & GovernmentCPA ReputationCompetition & RiskOperational Excellence


State of the Profession

Thank You!!!!

[email protected]@cpa.com

state of the profession - agn international · aicpa successes firms’ opportunities jobs act tax...

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