Reprinted from The CPA Technology Advisor, August 2006
There are approximately 138,500 tax and accounting practices in the United States. They average about 3.7 accountants per practice, which means there are slightly over 1/2 million of us out there trying to keep millions of others on track with timely and accurate payrolls, financial statements, tax returns, and, most importantly, professional advice and guidance. About 1/3 of us are CPAs, and another 1/3 are Enrolled Agents, Licensed Public Accountants, or hold some other certification such as Certified Payroll Professional. The remaining 1/3 capably serve the public without the benefit of a professional designation. We’ve also spread out of “public” accounting. In fact, fewer than 40 percent of CPAs today practice in a public accounting firm. The balance is divided between business, industry, government and education. The times have changed.
When “formalizing” the profession back in the early 20th century, our forefathers first defined a body of knowledge that encapsulated GAAP to the extent it had been developed at that date. Much like our Constitutional forefathers, they had no idea how far the boundaries of that original definition would eventually expand. Neither set of founders, although visionary, had any chance of foreseeing today’s landscape. Our original leaders saw audit and attestation as not only the bedrock but the single purpose of the profession. Today, other than a few archconservatives, most see the profession as far, far wider. Today, it includes tax, financial services, management advisory services, bookkeeping, payroll, technology, business valuation, and on and on. We have become, purposefully, a one-stop shop for all things involving business process and/or dollars. Good for us. And good for the American public for so recognizing us. But the times are still changing.
Back in the late ’70s and early ’80s the changes started. First, the payroll companies convinced us that we didn’t really want to do payroll. Next, came the FTC and out went our rules on encroachment and advertising. Along with them, many think, went our unwritten rules of civility and professional demeanor. Competition, although great in theory, began to reduce the “opinion” (remember the bedrock?) to commodity status. Tax preparation companies began sprouting storefronts. Other associations of professionals began to chip away at the services commonly associated with our profession. Financial planners and business valuation experts found expert designations outside the mainstream. State legislatures across the land extended the right to prepare financial statements far beyond the traditional profession. Our profession was being pulled and prodded in ways those forefathers could never have envisioned. We responded with the “150 hour rule,” our first recognition of an ever-expanding body of knowledge. But things continued to change.
Compare this progression to our brethren in the practice of medicine. Their body of knowledge has grown exponentially, and their response has been specialization. Until the mid-50s, a physician, for all practical purposes, was a physician. While there were specialists, they were few and far between. And the AMA was reticent to declare any physician a “specialist” for fear of offending the bedrock “general practitioner.” Times changed and the medical profession changed with them. Today, in response to an incredibly complex body of knowledge, that profession is comprised almost completely of “specialists” — to the extent that even “family practice” is a specialty and serves as the gatekeeper for access to much of the rest of the profession. Our colleagues in law have met similar circumstances and solved the problem by limited practices. While not formally embracing “specialization” (the ABA continues to wrestle with the concept), the American public readily understands attorneys limiting their practices to divorce, bankruptcy, litigation, estates and trusts, or corporate law. They have de-facto specialization.
And now we need to change … again.
So back to my original question: Is there a credential in your future? I submit that the answer depends on several things. If you’re my age (like the over 50 percent of practicing accountants who are less than 15 years from retirement), the answer is, “Probably not.” If you’re younger than that, but still over 40, the answer becomes, “Perhaps.” For the rest of you, it’s an unequivocal, “YES.”
You may know that I do carry a credential — that of CITP. As Chair of the AICPA’s CITP Credential Committee, I believe very strongly that credentials are the future of our profession. As a technologist, I believe the CITP distinguishes me as one who has demonstrated mastery of a defined body of knowledge. I further believe in the AICPA’s other specialty credentials — the ABV and the PFS. Eventually, like our friends in the AMA, we will have dozens of specialties. Tax will someday, I believe, be defined in sub-specialties such as Individual, Corporate and International, while audit may be bifurcated at corporate and not-for-profit. The body of knowledge will continue to grow in scope and complexity, and our clients, the American public, will soon figure out that no one person can master it all. That’s already in motion. And our profession’s response — specialty credentials — is in motion, too.
It would be extremely arrogant of me to assume that we as journalists, or that the AICPA or any other single constituency, has the right and only answer for the future today. But directionally, we’re on the right track. If you’re older than 50 years of age, support your younger staff members by encouraging them in their selection of a specialty. Mid-careerists: Add support and consider doing it yourself. And finally, if you’re early in your career, embrace the idea of specialty credentials. They’re going to be around for a long, long time.
- Gregory L. LaFollette, CPA (and proudly) CITP
Special note to my baby-boomer age cohort: Yes, you CAN do this! It’ll show you’re still young at heart!