Academic journal article Journal of Accountancy

Who Are We as a Profession - and What Must We Become?

Academic journal article Journal of Accountancy

Who Are We as a Profession - and What Must We Become?

Article excerpt

The CPA "brand" will differentiate us from the competition.

Election to chairman of the board of the AICPA is a great honor' It comes by vote of my peers, which means a great deal, and it puts me in the company of past chairs. Election to such a post is a rare privilege, providing a unique opportunity to serve the profession. That's a high obligation, but knowing every one of you feels the same way about your position, and that we are all in this together makes it easier.

Turning to the great business of our Institute, I will share some thoughts about our challenges and opportunities.

First, I'll ask you to summon up a mental image: that of a human being with no nervous system. You are probably envisaging an inert blob of protoplasm, entirely powerless to perceive its environment or to act with purpose. The nervous system is what converts that protoplasm to an effective human being.

Well, an accounting system is the nervous system of the enterprise that permits it to perceive and act. It converts an inert bundle of assets to a working enterprise.

We accountants have been the people who designed and operated these enterprise nervous systems--systems that at the micro level permitted the achievement of enterprise objectives and at the macro level permitted the mercantile, industrial and post-industrial revolutions.

Our technology for doing so was at once brilliant, effective and efficient. The system involved a double entry for each exchange with the outside world, representing the benefit and the sacrifice to the enterprise. That information was laboriously and expensively captured, and once we obtained it we collected no further information--only analyzed and reanalyzed that information into balance sheets, income statements and other reports.

Now, collection of fresh information is cheap, but we still adhere to the old accounting model which implicitly assumes information is costly. As a result, we have lost control of the enterprise nervous system to other information professionals who do not share that assumption.

We CPAs need to converge with these other information professionals, just as information technology is causing computing, communications and content to converge. As information technology permits enterprises to better create and use information and knowledge, the competitive marketplace demands it. In the future, the winners and losers among our clients and employers will be determined principally by their capacities to create and use knowledge--that is, by the "bandwidth" of their nervous systems.

Our challenge--and our opportunity--is to be the principal agents by which this is accomplished. This is not a new role--it's what we've always done. But technology alters the tools and competencies, speeds the process and magnifies the efforts. The question is whether we can transform our profession to realize this opportunity.

What I've described is captured in our Vision. And it was captured by thousands of our members, who spoke their minds in future forums all around the country.

So I want to explore, Where will the Vision take us? Who are we becoming?

I want to remind you first that practical people created the Vision for practical reasons. We should always keep in mind what drove them to set us on a path that could mean tremendous change.

Software threatens to diminish some of our traditional services. It makes compliance work in tax and auditing less labor-intensive, but eventually might replace work done by CPAs. Over the long term, businesspeople and others are not going to pay a CPA to run software they can run themselves. Already, business accounting is done by software to a far greater degree than in the past. It reduces the need for managerial accountants and makes inroads on the need for compilations. Competition from non-CPAs has become more intense and promises to grow. If banks can apply credit scoring, as some now do, they can also turn to some form of automated auditing to satisfy themselves about the financial capabilities of aspiring borrowers. …

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