Key Takeaways from AICPA Fall Council
Twice a year, the AICPA Council gathers to discuss key initiatives within the CPA profession and inform attendees of future industry and professional trends important to their organizations.
Keep reading to find out what my biggest takeaways were from the two-day event.
CPAs: Adapting and Thriving in 2021
The profession embraced our role as the “trusted advisor” in an increasingly complex and changing environment. CPAs had a huge impact throughout COVID with PPP and business compliance.
Economies have recovered 6% in 2021 and are expected to bounce back an additional 4% in 2022 (according to leading economists.) Consumers feel the economy will take longer to recover from the pandemic.
With all the confusion, it is important to focus on turning disrupters into opportunities. Firms should focus on driving quality, trust, and continuous improvement, which the AICPA is currently prioritizing.
One interesting initiative the AICPA is working on is integrating accounting into the STEM (Science, Technology, Engineering, Mathematics) curriculum to promote accounting awareness earlier in school (K-12).
On the topic of transforming through technology: Accounting leaders are driving the adoption of financial reporting technology to measure value, growth and identify opportunities from the business information systems.
The AICPA sees ESG Reporting (Environmental, Social, Corporate Governance) as a trending opportunity for CPAs to expand financial business information to all information management and analysis which we are well suited to move into, so it is worth watching. (KPMG just announced a $1.5B investment in this space in the next three years.)
US Government: Debt, Technology, and Data
Gene Dodaro, Comptroller General, US Government Accountability Office
The GAO is the auditor for the US Federal Government tasked with providing objective, non-partisan information on government operations to improve performance and save money.
Mr. Dodaro shared that the US Government began preparing financial reports for accountability in 1996. The GAO has been able to issue reports for 22 of 24 Federal departments (excluding the Department of Treasury and Department of Defense), resulting in $158 in savings for each dollar invested in reviewing departments and from their making recommendations for improvements.
US debt is growing at a staggering rate. The AICPA is pushing to require a joint meeting of Congress each year and presenting complete financial reports for the United States Government, so Senators and Representatives are aware of US fiscal health. Mr. Dodaro pointed out that Congress only controls about 40% of the budget, and the remainder is for existing commitments (Medicare, Social Security, and interest on Governmental debt).
In 2020, US debt was 100% of US GDP, the second-highest in history (WWII was highest at 106%). Mr. Dodaro shared that updating governmental technology was a priority, particularly for the IRS to promote accurate tax reporting and enforce collections, which they will do by capturing more data digitally.
AICPA/CIMA: Driving Resiliency in Our Global Profession
Paul Ash, Chairman, Association of International Certified Professional Accountants and CIMA President
In a preview call to the Fall meeting, past-Chair Tracy Golden presented the Governance Task Force Overview for AICPA/CIMA Board. The overall goal? Restructure the two entities to operate as one organization serving accountants worldwide.
AICPA and CIMA’s restructuring plans include:
- Reducing the size of the board to 26 members
- Appointing cochairs (one for AICPA; one for CIMA) so both groups get equal representation
Mr. Ash pointed out how integral accounting was (and is) to fighting the pandemic, as our expertise helped keep businesses afloat and supported the flow of data that helped the medical and pharmaceutical companies create vaccines and provide healthcare.
CIMA now has 696,000 members, students, and engaged professionals in 192 countries and territories.
Current Political and Legislative Environment
Amy Walters, Editor, Cook Political Report
The second day of the AICPA Fall Council meeting began with discussing the issues and trends impacting the current political environment. Ms. Walters started by sharing her opinion about how the US got to its current political climate.
Politics have been divisive, volatile, and angry, built around individual beliefs around the pandemic, the economy, and the election, but the reality is that tension has been building for the last 20-30 years.
Key elements leading to our current situation:
- Politics used to focus on what was happening at “home.” But voters now are voting more on national issues that are important to them and are becoming much more partisan (voting on national platform/party line).
- National media conglomerates are driving stories with national flavor, making politics much more divided and creating more extremeness.
- Regional divides are becoming more profound; densely populated areas are voting blue, and less populated areas are voting red.
Walters stated there is very little cross-pollination making it harder for the two parties to compromise on ANYTHING.
So few priorities are overlapping with the other side that there is no empathy for that other side. This has had the impact of pushing individuals to view those on the other side as the “enemy.” Ms. Walter stated that the more you are around people ONLY like you, the more you are likely to become radicalized.
She went on to say that today, the two political groups fundamentally disagree on the basics of what it means to be American. So, how do you govern in a country that is in this environment?
Walters stated that Joe Biden ran on being the person to bring the two groups together, which it looked like he was doing the first few months of his presidency. But now, Ms. Walters feels the country is as divided as it was going into the 2020 election. Both sides feel that the “other” party representatives are a clear and present danger to the country. At all levels, they are either “pushing through” or “not enforcing” laws that the “other side” created. Most were hopeful that this Fall would bring a return to normalcy.
This definitely did not happen due to a multitude of issues, including the Delta variant, supply chain issues, rising prices, Afghanistan withdrawal, border crisis, which dropped Biden’s rating below 50%. Democrats have lost momentum on Build Back Better, and it will be forced through in a significantly pared-down version which Ms. Walters expected to be under $2T. She believes the key to the next election will be the “independent voters'” view of how Biden is doing, whether enough voters feel that they have turned the corner on this pandemic and whether they feel things are generally better or not.
Ms. Walters stated that “hyperpartisanship” has exasperated the current situation further. Today’s cable news business model is promoting constant “outrage.” At the same time, the social media business model is feeding the reader content that supports their opinion or creates outrage against the other side.
What is the solution? Ms. Walters recommends reducing the amount of news, and social media people are watching or just turning it off. She shared the analogy that it was similar to eating a whole bag of Doritos. It might be okay now, but it is better to stop after having a few, or you will regret it later.
The second thing to tone down the outrage is for everyone to be more curious about the “other” side. Find people with different opinions and viewpoints; ask them questions. This will help build empathy and understanding for people in situations different from your own.
Federal Advocacy Issues
Mark Peterson, Executive VP for Advocacy, AICPA
The meeting closed with Mark Peterson, AICPA Executive Vice President for Advocacy providing his insight on the political situation and items specifically targeted towards the accounting profession. Mark felt that Biden’s overall programs would continue to get smaller but most likely pass before Thanksgiving. Regarding the continuing resolution and raising of the debt limit will be pushed through December 3 (and possibly be extended another two weeks) before being passed as expected, but to expect the maximum amount of drama and positioning.
In addition to the pursuit of accounting as part of the STEM curriculum and promoting an annual Fiscal State of the Nation meeting, the AICPA is also promoting initiatives to speed up the determination of natural disasters and filing relief for those areas (and firms) impacted, and the slow down of the IRS sending out penalty notices via the Taxpayer Protection and Penalty Act.
This act requests that the IRS offer fair, reasonable, and practical penalty relief measures for taxpayers dealing with the challenges of the pandemic, which the IRS has the authority to administer. The meeting was then concluded.