David M. Walker, U.S. Comptroller General, "came home" to address the AICPA employee benefits conference "from a different perspective." A CPA who began a 15-year term as head of the General Accounting Office in November 1998, Walker is a past chairman of the AICPA employee benefits committee and a former partner of Arthur Andersen.
Walker sees his role at the GAO as that of "chief accountability officer." He told conference participants that "most, if not all, of you are also part of the `accountability profession.'" Accountability, Walker said, can help CPAs avoid the stereotyping associated with traditional accounting and auditing functions. "It's a term you're going to hear not only from me and the GAO but also from others within our profession."
What responsibilities do CPAs share as accountability professionals? "To lead by example and to be as good or better than anybody we're working with. To practice what we preach, especially if we're in the consulting, controls or risk management business. Walker added that CPAs should help others see not just historical data and the challenges of today but tomorrow's challenges as well. "Most of you are CPAs and, like it or not, CPAs are viewed as being above many other professionals. With that status comes an additional obligation--to deal with not just today's profit motive but also with tomorrow's greater good."
What challenges does the government face that CPAs should care about? The first is budget surpluses. As recently as two years ago, Walker said, the federal government was projected to have budget deficits "as far ahead as the eye could see." But, largely due to positive economic conditions and fiscal discipline, recent estimates show surpluses. Walker reminded his audience, however, that structural deficits will return because of the escalating cost of entitlement programs. He went on to caution that "if we don't save today's budget surplus, there will be no money left in 2030 for discretionary spending." So-called discretionary spending includes national defense, the judicial system, the nation's infrastructure and most programs for children.
Part of Walker's job as comptroller general is to hold Congress accountable. "Congress and the president have an opportunity to make prudent decisions to prepare for a better tomorrow." But they have an obligation--which he argues is a fiduciary one--to "address the structural deficits and imbalances in entitlement programs. If we don't, they are going to eat away discretionary spending."
Toward a secure retirement
"Social Security," Walker says, "is the foundation of retirement security, but it is one that too many Americans rely on." It was never intended to be the sole source of retirement income. While the program has positive cash flows, it is not sustainable in its present form. "We need to make sure this program becomes solvent--to ensure adequate benefits and equitable treatment for different generations." Any reform must be administratively feasible and communicated effectively to Americans. The key date for Social Security, Walker cautioned, is not 2034, as some believe, but 2014, when "we start experiencing negative cash flow."
The good news is Social Security's imbalance is not large and there are many policy options to achieve the objectives Walker outlined. He warned, however, that these options take political will and courage. There's some question whether reform can be accomplished before the 2000 elections. But if and when it is, Walker said it can be a win-win situation, exceeding the expectations of all Americans. "I say that because, realistically, any reform proposal is going to have little or no effect on current or near-term retirees. It will be more significant for baby boomers and busters, who don't expect to get much anyway."
In Walker's view, private pensions …