Establishing Formal Specialties within the Accounting Profession

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Establishing Formal Specialties Within the Accounting Profession

In its 1985-86 Annual Report, the American Institute of Certified Public Accountants (AICPA) [1, p. 213] stated, "recognizing the existence of de factor specialization among members and the desire of some to have a particular expertise recognized, Council authorized a program to accredit specialties. The Special Committee on Specialization ... will study areas of practice in which members, by meeting experience, examination, and educational requirements, can seek accreditation."

This formal creation of a special AICPA committee to pursue the accreditation of specialties is significant because this action recognizes the reality that specialization is very prevalent in the accounting profession. The special committee's report will not be available for some time; however, the primary question for resolution should be "How will the formal accreditation (certification) system for specialization of practitioners operate?" Specialization is a logical reaction to the reality within the accounting profession as changes occur in the environment. This paper summarizes the specialization issues, describes certain conditions that now especially favor recognition of specialists, presents certain advantages and disadvantages associated with accrediting specialties, and offers recommendations for implementing a specialization framework.

The accounting profession's traditional position has been that all CPAs are qualified and competent to provide comprehensive services commonly offered by public accounting firms. Consequently, it has not been considered necessary to formally create specialization classifications with supporting practice standards. However, during the 1970s, the AICPA did attempt several times to resolve the issue of formal recognition of specialization within the accounting profession. These unsuccessful efforts were undertaken by separate special committees established in 1970, 1973 and 1975. The rationale for creating these committees, together with their activities, recommendations, and reasons for their ultimate demise, has been described by Olson [3]. Two of these committees apparently had their efforts concerning specialization somewhat influenced and also diluted by the concurrent issue of whether associate memberships for non-CPAs should be allowed by the AICPA. The rationale for this issue was whether individuals working within CPA firms and having specialized knowledge should be permitted to gain membership in the AICPA even though they were not CPAs.

Moreover, during the 1970s, the AICPA's bylaws were being examined for a number of important issues regarding the scope of services provided, such as management advisory engagements and the legal implications of other provisions of the Code of Ethics. These special committees also functioned at a time when ethics interpretation 502.4 (Self Designation as Expert or Specialist) was in effect. This interpretation [2] stated, "Claiming to be an expert or specialist is prohibited because an AICPA program with methods for recognizing competence in specialized fields has not been developed and self designations would be likely to cause misunderstanding or deception. A member or a member's firm may indicate the services offered but may not state that the practice is limited to one or more types of service."

Traditionally, the AICPA Code of Ethics prohibited CPAs from promoting themselves as specialists, but the Code could not prohibit the actual trend toward emerging specialization. Ethics interpretation 502.4 was initially established to prevent self designation of a specialized proficiency since no certification structure was available to recognize specialists. The professional ethics committee in 1981 withdrew its restriction against members claiming specialist or expert status. This revocation of interpretation 502.4 represented a logical extension of the reversal in 1978 of the ethics prohibition against advertising. …