Given the recent changes in tax laws concerning more favorable tax treatment of dividend income and capital gains, there is no question that nonqualified annuities have lost some of their tax appeal, despite the opportunity for tax deferral. However, taxation is only one component in evaluating the overall value of any investment.

While the article focused on the taxation of different retirement investment alternatives, it overstepped its bounds by deviating to discuss the characteristics of such alternate investments other than taxation.

The use of a .5% threshold to determine whether an annuity is too expensive to select as an alternative investment is strictly an opinion and completely arbitrary. Considering the last three years of stock market performance, most people would have gladly given up more than .5% of return to “insure” their investment—receiving the greater of the market or a guaranteed compound 5% or 6% rate of return. Over the last 36 months, many people have lost 40% or more of the value in their portfolios where no such downside protection existed.

Annuities, as with any other product, financial or otherwise, should be completely explained to and understood by potential clients. Then ultimately the client decides whether the costs are worth the benefits.

Daryl D. Jones, CPA
Orlando, Florida

As a member of our major professional organizations—the AICPA, Financial Executives International (FEI) and the Institute of Management Accountants (IMA)—I find the same basic flaw in all our codes of ethics. The codes are more corporate-friendly than employee-friendly. They emphasize “confidentiality” over “integrity” to the detriment of investors.

I believe our codes of ethics should not suggest that an employee who blows the whistle on individuals involved in illegal or unethical activities is an unethical person. As a member of the IMA Committee on Ethics, I have tried for nearly a decade to get the following whistle-blower’s statement included in IMA’s Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management: “If the ethical conflict still exists after exhausting all levels of internal review…it may be appropriate to notify parties outside the organization regarding significant matters.”

I strongly encourage the AICPA, FEI and IMA to include a whistle-blower’s statement in our codes of ethics.

Grover L. Porter, CPA, PhD
Professor of Accounting
Tennessee State University
Nashville

I am currently a CPA in industry with 18 years experience, including 4 years in public practice. The experience gained during my first 4 years in public accounting laid the foundation for the following 14 years of service in private industry. My public accounting experience clarified and cemented the principles taught in college. It gave me mentors to look up to and respect and taught me the value of integrity, hard work and paying my dues. I continue to maintain my license although I no longer practice—I am proud of the accomplishment, and I’m proud to be a part of the CPA community and what it still represents.

Kenneth J. Moffitt, CPA
CFO
Flint Auto Auction Inc.
Flint, Michigan

Through discussions at an annual reception held by the professional club at my university for students and representatives from all accounting sectors, I realized that the government sector would be the best fit for me.

Given this background, when I read “ Practitioners as Mentors ” ( JofA , Jun.03, page 39), I expected to learn that the mentoring program developed by the Boler Business School at John Carroll University would include practitioners from various areas of the government sector. On the contrary, the article states the “program draws mentors from both public accounting and industry.” Government was not mentioned, which, I believe, is an unfortunate omission.

The government sector offers opportunities and flexibility that public accounting and industry may be unable or unwilling to offer. As in any comparison, each sector has its strengths and weaknesses. Experience in the government sector may not have the prestige the public accounting (especially Big Four) experience possesses. Often salaries in government, especially starting ones, are not as generous as those offered by industry and public accounting. On the other hand, government offers family-friendly benefits such as shorter workdays, compensatory time for overtime work, generous sick, holiday and annual leave, flexible schedules, longevity pay and even work-from-home options for some positions. The work is varied and interesting, and for those who wish, there are opportunities for advancement. However, those who do not want to advance are not penalized for preferring to remain where they are. For me, the lower starting pay and lack of prestige were more than offset by the flexibility and family-friendly milieu that allowed me to work and to watch my daughter grow up.

Many areas within the government sector offer interesting and challenging accounting positions for both traditional and nontraditional students. To exclude the government sector as an option for accounting students does them a disservice.

Teri-Ann James, CPA
Smyrna, Tennessee

Our firm has adopted a much simpler approach. It includes a 7% override of gross billable revenue (less $15 per tax return to cover overhead) and 50% of revenue generated from new services created by the CPA and adopted by the firm. This compensation is in addition to the usual complement of salary, overtime and benefits.

We find this system to be revenue-additive for the firm and competitive for the CPAs.

Dale Schwartzenhauer, CPA,
CMA, CFM
Jim Johnson & Co.
Walla Walla, Washington