The US CPA Profession& its AssociationsPresented by:

Tom Hood, CPA.CITPCEO & Executive DirectorMaryland Association of CPAs

WelcomeChinese delegation

Jiangsu provincial and municipal auditors

Learning Objectives

• Understand the structure of the US CPA Profession

• Understand the role of US Professional Associations

• Understand the latest trends, issues, and innovations in the CPA profession

A profession has three major attributes

• A distinct and evolving body of knowledge• A commitment to the public interest –

licensed by the government• A code of conduct and ethics

State of MarylandCPA License

How to become a Certified Public Accountant?

The four E’s (State of Maryland Example)

1. Education – (150 hours) Bachelor’s degree + 30 credit hours

2. Examination – Pass the Uniform CPA Exam3. Ethics – Maryland requires a separate ethics

course and examination4. Experience – 1 year of experience working

with a CPA

And CPE – - 80 hours of Continuing Professional Education reported every two (2) years, including four (4) hours of ethics training

The CPA profession is part of the bigger infrastructurethat supports the US free market system. Like the pipes under

urban streets, it is often invisible until it breaks.

A useful framework to understand the CPA profession

Our infrastructure for regulating the US financial markets has been created from a series of reactions to crises and changes and

is in need of repair.

Single auditsDOL auditsAudit quality

Financial Regulatory Reform

Sarbanes-Oxley ActDodd-Frank Wall Street Reform and

Consumer Protection Act

MD ComptrollerMD Comptroller

CAQ

US Treasury

MD Comptroller

Courtesy of the Maryland Association of CPAs – 2008 edition Drawing by Carol Kirwan, CPA

Despite major challenges, the CPA profession has maintained its trusted advisor status with the public and investor communities

Both Investors and Business Decision Makers rate CPA’s at the top of all professions, right after physicians.

Accounting Firms Most Trusted Advisors

• Generally speaking, how believable do you normally find statements made by someone who works for one of these organizations or groups

• “Echo Boomers” (18-34) rated accounting firms highest– 74%67%

62%55%

51% 49% 47%

36%

Acctg FirmsBanksInvestment FirmsHealth Ins. Co.Mortgage CompaniesGov't regulatorsCredit Card Co.

Source: Harris Poll, May 18

Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB

CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB

State CPA Statutes (Law)

State Boards of Accountancy issue licenses and regulate CPAs

The (infra) Structure of the CPA Profession

SECFASB

FASBPCFRC

IASBIFRS & SME

PCAOBAICPA

ASB, ARSC, PRB

IAASB

AICPAPEEC

AICPAPEEC

IFAC

Public Company Private Company Int’l Company

FinancialReporting

Audit /Attest PerformanceStandards

Code of Conduct

Another way to look at standards & oversight

State Oversight & Enforcement of CPA LicenseCPALicensure

INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTION

Governmental auditors are also experiencing changes and convergence

• Increases in audits of ARRA

• Increases in A-133 audits• Changes in

Yellow Book

IAASB

IASB

Where do major changes come from?Most changes come from regulators and standard setters

Us – AssociationsMACPA & AICPA

OR

Them – Federal & Statelegislators Infrastructure

New laws, regulations& regulators

The history of associations – Why do we exist?

The First Amendment of the US Constitution allowed “associations”:

• freedom of speech• to peaceably assemble• to petition the Government for a redress of grievances

Bill of Rights - submitted to the states for ratification on September 25, 1789 and adopted on December 15, 1791

US Constitution Bill of Rights

Associations in America were seen as unique from the foreign perspective

As soon as several of the inhabitants of the United States have conceived a sentiment or an idea that they want to produce in the world, they seek each other out; and when they have found each other, they unite.

From then on, they are no longer isolated men, but a power one sees from afar, whose actions serve as an example; a power that speaks, and to which one listens.

– Alexis de Tocqueville

Alexis de Tocqueville1835

Maryland played an important role in the formation of the CPA Profession in the US

• Edward Cockey • First President of AICPA

• Henry Harney • concept of CPA

• Max Teichman• founding member of MACPA

Maryland was the third state to enact CPA legislation and firststate in 1928 to restrict audits to CPAs

The Profession’s Associations

The Standard Setters & Regulators

• The American Institute of CPAs (AICPA)– 450,000 + members

• CPA/SEA – State Executives Association

• 50+ State CPA Societies• The Maryland Association

of CPAs (MACPA)– 9,000 CPAs + 3,000

students

The CPA Profession Associations

• FASB• GASB• AICPA• National Association of

State Boards of Accountancy (NASBA)– 54 Licensing jurisdictions

What do we do for our members?

Connect

Protect

Achieve

Connecting our members to their Profession, each other, and the community

Connect

• Connect to the Profession• Connect to each other• Connect to our community• Drive the market to our members

Connect to students to fill the pipeline and promoting the CPA Career

Tomorrows CPA.orgNew/Young

Professionals Network

MACPA

MACPA contributes to national Accounting Doctoral Scholars program

• $16.8 million contributed• 70 firms & 41 state societies• 39 universities• 30 selected as ADS Scholars

Associations do the things individuals cannot do by themselves

Connect – drive the market to our members

New social media tools allow us to connect to more members in more ways

MACPA won 2 out of top 10

Biz blogs in MD

MACPA social media efforts featured in J of A and won 3rd place in Mobbies,

Top 75 Biz blogs & Top 50 Accounting blogs

Protect – the public interest and the CPA license and brand

Remember this? Advocacy on behalf of our members is a major value to our membersUs – MACPA & AICPA

OR

Them – Federal & State Infrastructure

New laws, regulations& regulators

Example - CPA Mobility and uniformity achieved through collaboration in profession

TX

WA

OR

CA

NV

ID

MT ND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL *GA

FL

WI

IL

MI

IN

KY

TNSC

NC

VA

OH

NY

ME

CT RI

*MA

AK

WVNJDE

DC

MD

*PA

CPA Mobility Enacted 46

CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA

*

In Process

Awaiting Governor Signature - 1

NH

CPA Mobility Legislation Pending - 2

VT

PR

GUU.S. VIRGIN ISLANDS

28

• Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies

• 47 states passed legislation in three (3) years

• Maryland enacted it in 2008

An example - CPE Regulations involved all levels – law, regulations, and procedures

Legislation

Regulations

Policies & Procedures

• SB 128

• 09.24.02 Regulations

• Fields of study

Maryland Senate & House passes bill

A Bill SB 128From State Board

LawMaryland Governor signs into law

Maryland State Board of Public Accountancy

Clarify thru regulationsAnd enforce the law

An example of how we protecting CPAs by mobilizing our members

Inform & engage members• Town Hall meetings• Publications• Web• Social media – blogs, twitter,

Youtube, and slideshare

Recent example – The Dodd – Frank Wall Street Reform and Consumer Financial Protection Act of 2010

Crisis hits news

Bureau of Consumer Financial Protection

848 pages

533 regulations60 studies94 reports

HR 4173

Protecting by advocating for members (CPAs) = real results!

Retained independent structure of financial accounting standards (FASB)

Modified provision to audit broker-dealers (PCAOB)

Exempted CPAs from CFPA registration due to existing licensing and oversight

Stopped excessive liability exposure for auditors (aiding & abetting)

Commented on SOX 404(b) exemptions

Working together with the AICPA and many State CPA Societies achieved these:

Achieve – enabling our members to deliver high quality services & achieve success

Achieve – enabling our members to deliver the highest quality services and achieve success

• Public Seminars, Chapters & Committees (over 300 programs)

• Conferences (9 major programs)• In-house Training• Web self-study – AICPA CPE Express• iTunes – Podcasts on breaking issues• Blogs – CPA Success, New CPAs,

Legislative Insider, CPA Island• Webcasts on breaking topics

Achieve - Technical skills are not adequate to keep up with the rapidly changing world

• Communication & Leadership• Strategic & Critical Thinking• Focus on the Customer, Client,

and Market• Interpretation of Converging

Information• Technologically adept

Top 5 Competencies for the future are:

We created our Business Learning Institute to research, develop and teach these skills

Achieve – Our own BLI program at the AICPA Leadership Academy

Apply online at http://www.aicpa.org/leadershipacademy

Our “soft” skills are nationally recognized!

Associations have enduring benefits for both the individuals and organizations that support them

“Association members earn, on average, $10,000 more per year than non-members” And are 19% more likely to say they are “very-

satisfied” with their jobs than non-members”

Source: Where the Winners Meet Study

by the William E. Smith Institute for

Association Research

Latest trends and issues facing CPAs

• Economy • Globalization• Technology

– Cloud– Social web &

social media• Workforce &

demographics

Increasing changes and complexity in standards & regulations

• Financial Accounting• FASB – IASB Convergence• Private Company Standards (FAF Blue Ribbon Task Force)• Public Companies – SEC Roadmap

• Tax• Tax Preparer regulation – IRS• Tax changes – Estate, 1099s, Tax rates• Sub S employment tax

• Other• Convergence – ASB Clarity project• Convergence – PEEC• SSARS 19

Three innovations you should know about in the CPA Profession

• Financial Literacy• Sustainability

Reporting (CSR)• eXtensible

Business Reporting Language (XBRL)

Financial Literacy – National and state CPA associations are committed to making a difference

www.feedthepig.orgwww.360financialliteracy.org

The CPA Profession is getting involved in Sustainability Reporting at national and state levels

XBRL is mandatory for US Public Companies and ushers in a new age of transparency and financial reporting efficiency

MACPA has been advocating XBRL for Maryland business reporting to Government and is working on a non-profit XBRL financial reporting and a non-profit taxonomy

XBRL – adoption is worldwide

Standard Business Reporting Projects:• Netherlands• Australia• New Zealand• United Kingdom• FDIC• Nevada, US• Oregon, US

Source: Conor O’KellyXBRL Int’l Vice Chair

Like the medieval carpenters who built the Great Hall at Oxford University in 1529

We are planting the seeds for the future of our Profession

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning Institute

(443) 632-2301E-mail tom@macpa.org

Twitter www.twitter.com/tomhoodWeb http://www.macpa.org

Blog http://www.cpasuccess.comBlog http://www.bizlearningblog.com

CONNECT – PROTECT - ACHIEVE