It is a tremendous honor to write to you for the first time as chairman of the AICPA Board of Directors. I begin my term after a year of severe financial disruption in our nation’s economy, and I know we all are hoping the emerging recovery gains traction.
I have spent a great deal of my life on and around the ocean, and I think of this time for the profession as being one of many massive sea changes. As we navigate these changes in the coming year, I plan to focus my energies on several issues, including:
- The globalization of business, and of our profession in particular.
- The importance of sustainability in our economy and to our profession.
- The re-regulation of financial services.
- The need to get more CPAs, especially young CPAs, involved in our profession.
On the international front, accounting is already global, even for those who work in the smallest CPA firms and the smallest companies. During my year as chairman, I will be asking you to think globally about the future of our profession and about the most important issues we face. Yes, our progress on IFRS for public companies has slowed a bit while the Securities and Exchange Commission dealt with very pressing issues that all of us would want to be their priorities. But recently SEC Chairwoman Mary Schapiro and SEC Chief Accountant Jim Kroeker said IFRS will be on their agenda and a staff priority later this fall. By the way, the current count of countries requiring or allowing the use of IFRS has climbed to 117, including all listed companies in the European Union. Canada and India are expected to transition to IFRS by 2011, and Mexico in 2012. Japan has introduced a roadmap calling for accelerated convergence over the next two years, with the aim of possible mandatory adoption in 2015 or 2016. That means IFRS will have an impact on what we do here in America. IFRS are here and here to stay.
The AICPA has been laying the groundwork for this reality. The CPA Exam will include questions on IFRS starting in 2011, for example. Probably the biggest remaining question on the global front is how private company accounting standards will evolve, especially since the International Accounting Standards Board recently issued IFRS for use by small- and medium-sized entities. During this next year, we will focus on private company financial reporting, including examination of whether IFRS is appropriate for U.S. private companies and not-for-profit organizations. You can follow IFRS developments through our Web site, IFRS.com.
Our changing times also open up another area of opportunity for CPAs. Accounting for sustainability involves considering the environmental and social costs of doing business when measuring the performance of an organization. It adds two considerations to a company’s traditional bottom line of economic viability: social responsibility and environmental stewardship. This “triple bottom line” emphasizes the link between strategy and financial performance, and between changing behavior and decision making.
The AICPA is involved in the Accounting for Sustainability project founded by The Prince of Wales (Britain’s Prince Charles). As CPAs, we can play a critical role in this exciting new area by creating the measures, providing the measurement and furnishing the proof that businesses can be both profitable and environmentally responsible. Our profession should take the lead in integrating sustainability into financial reporting and embedding it into our day-to-day decision making.
As we scan the horizon for new developments affecting the profession, we will also remain mindful of our important continuing role as the country’s trusted financial experts – highlighted by the financial crisis. Re-regulation has become a hot topic. At least a dozen new pieces of federal legislation have been introduced this year alone proposing enhancements to regulation of the financial sector. As CPAs, I believe it is our responsibility to offer specific suggestions on needed change. The AICPA has advocated for regulatory reform that enhances existing investor protections and addresses systemic risks. In fact, the SEC has already adopted a number of our proposals. As policymakers seek out objective sources of information, the profession has a great opportunity to influence the re-regulation of financial services and tax policy.
Much is demanded of our profession, but I believe we have the knowledge needed to meet the challenges we face – if we work together. Knowledge passed from member to member has always made this profession stronger. I cannot emphasize enough that volunteering on committees puts you at the forefront of current developments and makes you a better, more qualified and more knowledgeable CPA. I can tell you from personal experience that the relationships, experiences and the expertise you develop will build your career and reputation.
I look forward to working together in the coming year so we can harness change for the benefit of our profession and our country. To stay in touch and share your insights, follow me on Twitter at http://twitter.com/RobertRHarris.