August 2001

Is the XYZ Really Your Vision?

I cannot ever remember waking up from a dream and saying to myself: “The CPA designation is not good enough; I need to be a globally credentialed Cognitor.” I don’t remember empowering the American Institute of CPAs to spend millions of dollars to initiate a new professional designation as a potential competitor to my hard-earned credential, the CPA license. If this ever was a dream of mine, surely it was a nightmare.

Time, and several surveys, are an indication that many CPAs are now waking up from the same nightmare; with as many as 70 percent of these trusted professionals now rebelling against the vision of Madison Avenue, which is known as the XYZ credential (formerly Cognitor).

Over the last several months, and until November when a national ballot will be cast, the AICPA has been busy “educating and informing” its members about the intent and need for a new professional designation. While the AICPA continues to make its case for the credential, this article will attempt to present the counter arguments against a global designation.

In order to refute each of the AICPA’s arguments in favor of the XYZ, it is important to be familiar with the AICPA Vision, which describes the perceived need.

Argument No. 1

The CPA “brand” does not sufficiently describe the work that we do, and we need to expand our titles so we can expand our services.

For more than 100 years, the public has looked upon members of the accounting profession as the premiere experts in accounting and auditing. In 1913, with the advent of the U.S. income tax system, the accountant became the natural taxpayer advocate. From there, the accountant has become recognized as a trusted advisor, offering various services including management advice, economic analysis, business valuation, computer system development, estate planning, forensic analysis, litigation support, and so on.

Many firms have already adapted to the dynamics of today’s world by offering many other financial services and products through alternative practice structures. My small firm has successfully developed because it markets itself as offering consistent, careful, and ethical professional advice in many disciplines associated with our credential. In a report prepared by PricewaterhouseCoopers, the firm advised the AICPA that PwC and the other members of the Big Five did not need a new credential because their names were already known.

Instead of a competing credential, we need the AICPA to redirect its efforts to promoting the strengths of our trusted profession.

Moreover, I would ask the AICPA and its Madison Avenue gurus to stop insisting that the CPA needs “brand recognition.” Brand recognition is for cornflakes and laundry soap, not for professionals.

Argument No. 2

The designation would help firms of all sizes expand their global marketability in the e-world.

Most practitioners still have a power base that is either local or regional. For those of us near foreign borders (e.g., Canada), the CPA is recognized as a source of good business counsel. Some of us even enjoy opportunities from other parts of the world (e.g., Great Britain and China) without a global designation. Then, there are the Big Five. They do not need a global designation, since they are already multidisciplined, multinational organizations. The global aspect of the credential is also in question, since Great Britain, Ireland, and Scotland dropped from the program last year at the request of their members.

Argument No. 3

The new global credential would be unregulated, and thereby would free the CPA and his many colleagues in the financial disciplines to offer qualified assistance in areas other than auditing, but with a common bond and under a common roof.

A new global credential would be an end-run around the regulation of our profession, putting less trained individuals on a par with the CPA. Our profession requires adherence to a century of tested ethical rules, completion of ever-expanding amounts of education, and a 30-year-old self-regulatory process in peer review. The Uniform Accountancy Act, which now exists in most states and a version of which is before the New York state legislature, allows us to invite other professionals into our domain as long as they live by our common rules of conduct. The new global credential would dilute the value of the CPA designation.

Could there be an alternative reasoning for the AICPA to open the floodgates to droves of new, unregulated Cognitors? Maybe it is the ease of entry without regulation and the new source of membership dues that provide the rationale for supporting a competing credential.

Argument No. 4

If we don’t develop the global credential, somebody else might.

The AICPA has no empirical evidence to demonstrate that the new credential is needed at this time or that any other organization is considering a similar endeavor. Further, there are few credentials like the CPA license that have a proven history or that could be a springboard for any new reputable profession.

Argument No. 5

This credential will ultimately be self-sustaining and will augment the coffers of the AICPA to the betterment of its members.

Recruitment, registration, and development of new Cognitors will require an enormous outlay of cash. According to the April 24, 2001, budget the AICPA presented to Council members, XYZ marketing expenses amounted to $1 million in 2000 and are projected to reach $2.3 million this year, $20 million in 2002, and $56 million in each of the next four years. All in all, the AICPA anticipates that the first decade’s advertising expenses will total $439,391,000.

How much revenue has already been channeled from AICPA membership dues to cover XYZ development? What impact has this already had on much-needed projects such as CPA name recognition, recruiting, governmental advocacy, and important state-level political agendas?

If the project ultimately fails, the AICPA will be the laughingstock of the financial community, with a bad-debt write-off that could jeopardize its solvency.

Argument No. 6

College students are not attracted to our profession, and recruiting efforts have been problematic for accounting firms of all sizes.

For the past six years, the United States has shown general reductions in unemployment. Expansion of the CPA service base has further increased a need for qualified staff. However, most practitioners with more than 30 years of experience will recall the cyclical nature of the employment trends in our profession and the “buyer’s markets” of the mid–1970s and early 1980s. We can expect reductions in the available accountancy workforce because of the 150-hour requirement fostered by the AICPA’s Uniform Accountancy Act. The XYZ credential may allow the development of new “XYZ people,” but will those individuals be of any help to the CPA profession’s recruiting dilemma? Many believe that our AICPA dues should be spent on promoting the CPA profession in high schools and colleges rather than promoting a competing designation.

Conclusion

There are approximately 330,000 AICPA members. Several states, representing substantial membership concentrations (New York, Illinois, New Jersey, and Washington, D.C.), have conducted surveys. Those members responded, even in the middle of tax season, to indicate their outright displeasure and anger over this self-serving AICPA project.

It appears that the AICPA is operating contrary to its mission, which is the establishment of professional standards and the promotion of the importance and value of the CPA’s services. I believe the AICPA Vision could be more accurately described as myopia or tunnel vision, funding a project, with our dues, which could result in the extinction of the CPA profession—over the objection of its CPA members.

The AICPA will hold a national ballot on the credential in November. At that time ask yourself the following questions:

• Who is best served by the success of this project, the AICPA or the members it serves?
• Where have our dues gone?
• Where will our dues continue to go if this project continues?
• Am I dreaming, or did someone tell me that the CPA designation is not good enough?