American Institute of Certified Public Accountants
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With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. Approximately 40% of its members are engaged in the practice of public accounting, in areas such as auditing, accounting, taxation, general business consulting, business valuation, personal financial planning and business technology. The majority (60%) of its members are CPAs who work in industry, government and education. However, because of the Institute's major role in self-regulation of most practicing CPAs, a large part of the Institute's resources are devoted to this function and to related programs to help CPAs maintain professional competence. The two most visible CPA practice functions are tax practice and the independent audits and similar services related to financial statements of all types of entities. Only CPAs and a now dwindling number of "grandfathered-in" non-CPA accountants are permitted to perform this audit function.
The Institute's overriding role is to promote and enhance the profession of accounting. To accomplish this, it has a variety of functions, which include: providing group member benefits; preparing the Uniform CPA Examination; developing CPA professional standards; providing technical support to CPA members in many areas of practice; operating the profession's public relations programs; providing support to the academic community and representing the profession before Congress and federal agencies.
The profession is not without controversy. In 2003, Forbes magazine named Barry C. Melancon the worst manager of the year. Forbes said, “When the big audit failures of Enron Corp. and WorldCom Inc. came to light, the last person the American Institute of Certified Public Accountants needed as their chief executive was Barry C. Melancon.” His stance (on the audit failures) left the AICPA with little say as Congress drafted reforms.”
”No one should have been surprised. It was Melancon who, just before the scandals broke, led the organization to spend $4.7 million to try to persuade its members to offer a new, easier-to-obtain credential that would nonetheless certify that its holders possessed "breadth of knowledge, strategic focus, and professional rigor.” Melancon thought this would help draw in more young people to the profession, but the proposal was rejected.”
”Melancon, who earns $600,000 a year, signed a second five-year contract in 2000.”
Since Melancon became head of the AICPA, membership remains stagnant. Recently (2006), the Wall Street Journal reported 75% of the membership is within 15 years of retirement.
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[edit] Membership Role
Like any large membership organization, the AICPA provides a number of group insurance, buying programs and similar benefits. Its life insurance trust would be one of the nation's largest life insurance companies if it was a single company rather than a membership program.
[edit] CPA Examination
The AICPA develops the Uniform CPA Exam, one of the most respected entry-level professional licensing exams in the U.S. The test has recently been changed from an annual two-day examination to a test that can be taken on a computer in a testing center. While each state has variations in the educational, experience and other requirements necessary to earn a CPA license, all states use the AICPA's exam to meet the entry-level testing requirement.
The AICPA also develops the International Qualification Examination (IQEX)
[edit] Professional Standards Setting
The AICPA sets generally accepted professional and technical standards for CPAs in many areas. Until the 1970's, the AICPA held a virtually monopoly in this field. In the 1970's, however, it transferred its responsibility for setting generally accepted accounting principles (GAAP) to the newly formed Financial Accounting Standards Board (FASB.) Following this, it retained its standards setting function in areas such as financial statement auditing, professional ethics, attest services, CPA firm quality control, CPA tax practice and financial planning practice. Before passage of the Sarbanes-Oxley law, AICPA standards in these areas were considered "generally accepted" for all CPA practitioners.
In the early 2000's, federal public policy makers concluded that where independent financial statement audits of public companies regulated by the U.S. Securities and Exchange Commission are concerned, that the AICPA's standards setting and related enforcement roles should be transferred to a government empowered body with more enforcemnt authority than a non-governmental professional association, such as the AICPA could provide. As a result, the Sarbanes-Oxley law created the Public Company Accounting Oversight Board (PCAOB) which has jurisdiction over virtually every area of CPA practice in relation to public companies. However, the AICPA retains its considerable standards setting, ethics enforcement and firm practice quality monitoring roles for the majority of practicing CPAs, who serve privately held business and individuals.
[edit] Providing Technical Support to Members
The Institute has many technical and professional committess and task forces that deal with numerous issues facing CPAs, their clients and the public. The AICPA also provides a wide array of telephone technical support, educational material, conferences and technical publications for its members. In addition, it offers specialization credentials in several areas, such as the Personal Financial Specialist designation for CPAs in personal financial planning. Other specializations are offered in the ares of business technology and business valuation. The AICPA's national technical conferences are well known for their excellence. The Institute also publishes the Journal of Accountancy, the nation's oldest technical accounting journal and has an extensive Website, www.aicpa.org, supporting all of these activities.
The Institute provides substantial support to the accounting programs of colleges and universities involved with educating future CPAs.
[edit] Public Relations Program
The Institute runs a number of public relations activities that include: having members available to the media to provide technical support in the areas of CPA practice expertise; operating an extensive high school and college student recruitment program to encourage students to consider a CPA career; and getting the word out about the vital role that CPAs play in the U.S. economy in support of financial markets, small business and entrepreneurship.
The AICPA also runs extensive public interest programs. One of the most important is an award winning program called 360 Degrees of Financial Literacy. The program is a multi-faceted effort, spearheaded by the AICPA, with the support of state CPA societies. It encourages CPAs to take a broad leadership role in volunteering to educate the American public, from school children to retirees, on financial topics that apply to their particular stage of life. This program has an extensive Website with a variety of financial literacy resources, which can be found at http://www.360financialliteracy.org
[edit] Government Relations Program
The AICPA has a Washington office and a political action committee. Many of its Washington activities have a public interest aspect. The Institute and its members make recommendations to Congress and a number of federal agencies to help them better serve the public, in areas of CPA technical expertise, such as taxation and accounting. In these areas, the Institute tries to solely be a technical resource rather than recommending policy positions. For example, in the social security debate, the Institute develops white papers that lay out all of the options and the pros and cons of each option to assist policy makers. A careful process is used to weed out any policy bias in such analyses. The Washington office also represents the profession in matters of specific interest to members.
The AICPA's Political Action Committee is a contributor to U.S. Congressional representatives and Senators from both parties who sit on various legislative committees of relevance to CPAs.
[edit] External Roles
Certified Public Accountants are licensed by individual states, so they must follow the laws and regulations of the state they are licensed in. Once achieving state CPA licensure, by federal regulation, CPAs are automatically licensed to practice before the Internal Revenue Service, with essentially the same rights and duties as attorneys. For audits involving federal monies, the Government Accountability Office has issued additional standards commonly referred to as the Yellow Book.
In addition, the AICPA was a primary source for defining Generally Accepted Accounting Principles for State and Local Governments through the issuance of an Industry Audit Guide and Statements of Position
The AICPA is a leading member of the International Federation of Accountants.
[edit] See also
- List of APB Opinions
- IASB
- GASB
