Three Questions With The American Institute of CPAs

The American Institute of CPAs (AICPA) is the world's largest association representing the accounting profession, with nearly 370,000 members in 128 countries. The association (www.aicpa.org) sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments, and develops and grades the Uniform CPA Examination. Association executives share with us information on the economy, the international debut of the Uniform CPA Exam and tax challenges for businesses.
 
 

AICPA recently released the results of its quarterly Business and Industry Economic Outlook Survey of chief financial officers and senior-level executive CPAs, conducted with the University of North Carolina's Kenan-Flagler Business School. What were the most surprising findings?

The surprising findings include a significant jump in optimism on the U.S. economy.  CPAs serving as senior level financial executives expressed a 20 percent increase, from 28 percent Q4 to 48 percent, in their optimism about the U.S. economy. This was the most significant contributor in the newly introduced CPA Outlook Index.  This jump reduced the gap between optimism about the overall economy and optimism about own company prospects (57 percent) to 9 percent. This is the smallest differential in the Q1 2007- Q2 2011 timeframe presented in survey report.

Respondents reported this significant increase and relatively high level of optimism about the overall economy in spite of significant increases in concern about inflation and concern about the global political situation.  Fifty-five percent are now concerned about potential impact of inflation vs. 34 percent.  Only 45 percent are indicating they will pass along cost increases in their selling prices.

Political and economic instability debuted fourth among a list of significant challenges.  It fell immediately behind perennial favorites, customer demand, healthcare costs and regulatory requirements.  This reflects the political turmoil in the Mideast.

Twenty-five percent of respondents ranked supplier pricing, terms and conditions as most significant working capital challenge, significantly higher than credit pricing/availability which was the most significant challenge for only 13 percent.  Collections were reported as the top ranked working capital challenge at 36 percent.

-Carol Scott, Vice President, AICPA’s Business, Industry and Government Group

In August, the Uniform CPA Examination will be offered internationally for the first time and will take place in Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates. What drove the decision to offer the exam internationally and how will that impact the accounting profession?

The number of international candidates has been steadily on the rise. In 2010 alone, over 10 percent of all examinees traveled to the U.S. to take the exam. With demand on the rise, it made sense for us to explore the possibility of administering the exam in high-demand locations, and thus make the opportunities that come with earning a CPA more accessible.

Promoting the U.S. CPA credential abroad provides both individual and economic development opportunities, no matter where the Exam is administered. The U.S. CPA is one of the world's few accounting credentials that protects the public interest and promotes transparency. It is good for the profession to ensure that accountants around the globe are qualified and capable people. U.S. CPA licensure is one way for professionals to show their commitment to transparency and accountability.

-Michael Decker, Director of Examination Operations, AICPA’s Exams Section

What are some of the most challenging tax issues confronting today’s businesses and why?

Our constantly changing tax laws and lack of certainty are the biggest tax challenges facing U.S. business owners today.  In 2010, Congress passed tax provisions late in the year that were meant to stimulate the economy, but many business owners – especially small ones – did not have the time or the ability to evaluate the impact of the changes on their businesses.  For example, depending on when a business owner bought equipment, he or she needed to choose the correct and most beneficial depreciation method from several choices, which required cumbersome computations to determine the best alternative.

Temporary provisions that expire, but which are regularly renewed by Congress, create uncertainty and make it difficult for business owners to do long-term planning, including strategic planning for growth, new business development and hiring.  If regulatory or administrative guidance is not issued in a timely way, planning is even more difficult.  It can be difficult to change course, alter buying plans, find new or different funding, or change hiring policies in response to new, short-term, or expiring tax provisions. 

-Ed Karl, Vice President, AICPA’s Taxation Section

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