¶ … CPA Profession
The accounting profession has had more than its share of ups and downs in the last two decades. The business environment in this period, led by major technological innovations, has changed drastically and become infinitely complex -- making the job of accountants far more varied. Whereas once Certified Public Accountants (CPAs) worked almost exclusively in accounting, auditing or tax preparation, now CPA firms have to handle fields such as financial planning, tax planning, business development, financial management, information systems, risk management, forensic and fraud auditing, among others. In addition, the highly publicized business scandals such as the Enron and the WorldCom bankruptcies in 2001, the resulting public focus on the accounting profession, and the enactment of important accounting legislation such as the Sarbanes-Oxley Act of 2002 have forced the CPAs to respond to the changes. This paper takes a look at some of the recent changes in the CPA profession and the current regulatory environment.
Downturn in the Accounting Profession
The 1990s saw a significant fall in the attractiveness of the accounting profession among students. This is reflected in a 25% drop in award of accounting degrees in just 4 years from 1996 to 2001 in the United States.(Inman qtd. By Colsen, p. 21) One of the reasons for this decline was that the educational model for accounting professionals had not been able to cope effectively with the rapidly changing business environment. The overly narrow scope of accounting education early on in the students' academic life as opposed to a more broad-based education coupled with the popularity of other business disciplines such as finance, marketing and management had been mainly responsible for this decline.
Realizing the need for remedying the crisis in the accounting profession, the AICPA (in 1988) made a bachelor's degree and 150 hours of higher education mandatory for AICPA membership. Since then most States have adopted the 150-hour system for an accounting degree. Even so, the value of accounting as an academic discipline and its need in the marketplace...
deceitful profession, certified public accountants would most certainly not be the first to come to mind. That is because CPAs are known and respected for their honesty. The profession goes out of its way to project that image, and there is a certain amount of truth to it. However, not all CPAs are squeaky clean and respected for their honesty. Some are quite dishonest and are putting a black
This process has been ongoing since then. One of the major differences between the two standards is going to be that whereas GAAP emphasizes rules, the IFRS is a principle-based approach. Implementing a principles-based approach has significant implications for American tax practice. Many of the specific differences between the two systems will have a direct impact on tax practice. In IFRS, LIFO is prohibited and inventory write-downs may be reversed
Loyalty to the client was clearly placed above loyalty to the overall public good and the standards of the profession. "Enron paid Andersen $25 million for its audit…and $27 million for 'consulting' and other services" which meant that Anderson had a substantial financial stake in retaining Enron as a client (Kadlec 2002). The Enron case illustrates the difficulty of self-policing within the industry. Today, providing additional services besides the
(Ibid.). Major Changes in the Accounting Profession The financial scandals proved to be a turning point in many ways for the accounting profession. The public outcry forced the legislatures to reexamine the regulatory environment for businesses, resulting in the enactment of the Sarbanes-Oxley Act in July, 2002, which is the most significant accounting legislation since 1933. It also forced the accounting professionals and their organizations such as the American Institute of
Questions about soft skills and personality traits can be quantified through various means, but to use more sophisticated measures of personality type and communication style would be beyond the scope of this project, more worthy of entire studies of their own. Thus, quantification of all variables could lead to overcomplication of the study, which increases the risk that the number of surveys returned will not be statistically significant. For this
Sarbanes-Oxley. The political pressure of the past several years following the dot.com bubble and the collapse of several major companies created a need for new securities legislation, which culminated last year in the Sarbanes-Oxley Investor Protection Act, which establishes new guidelines for the securities industry. Initially a Democratic brainchild, the act became favored by Republicans in the House when it was realized that such adjustments would be of great benefit to
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