The rules of accounting are changing. The PICPA makes sure those changes help, not harm, the profession.
Every year, dozens of new rules, standards, and interpretations are proposed that could fundamentally change how accounting professionals work and how successful they are in the long run. Most CPAs, though, don’t spend their time monitoring these proposals or reading exposure drafts. They’re busy running their firms, serving their clients, and solving increasingly complex financial problems.
Someone has to read those intended rules and spot the pitfalls and unintended consequences. Someone has to speak up before the wrong proposals become permanent.
That’s what we do at the PICPA. Acting as an early warning system is one of our most important roles, yet it is one of the least visible and least understood services we provide our members and the accounting profession at large.
The Quiet Work That Protects the Profession
Many organizations have a hand in updating professional standards. Groups such as the American Institute of CPAs (AICPA), National Association of State Boards of Accountancy (NASBA), and other regulatory bodies regularly propose rules that govern a wide variety of factors, including:
- Auditor independence
- Firm ownership structures
- Ethics and professional conduct
- Peer review and quality oversight
Proposals often are highly technical, and, in some cases, they focus on language as detailed as where a comma belongs in a standard. As dry as that might seem, the implications of these proposals can be enormous.
A poorly written rule can create unnecessary regulatory burdens, conflict with other standards, or make it harder for firms to operate across multiple states.
As PICPA’s vice president of professional and technical standards, this is the type of work I focuses on every day. We at the PICPA – staff and volunteer members – look at every proposal through a simple but critical lens: is it practical, is it reasonable, and does it maintain high professional quality?
A Profession in Transition
The accounting profession is evolving and economic pressures are growing. The need for oversight is increasing in tandem.
Accounting firms today operate very differently than they did even a decade ago. Many are investing heavily in technology, which is expensive. As clients demand more sophisticated insight, firms also are expanding into advisory services. They also are battling for talent at the same time that the cost of business operations is rising. Partially because of these forces, many firms are exploring new ownership structures, including investment by private equity firms that bring a new mindset that emphasizes return on investment.
These developments have sparked conversations about independence, governance, and oversight. Regulators are asking how firms should maintain independence when ownership structures become more complex, how states should create new rules to govern these arrangements, and how peer review should evaluate firms operating under new business models.
These are legitimate concerns. They also carry huge risks if regulation moves faster than our understanding of the implications. PICPA’s role is to make sure the profession’s voice is part of that conversation.
Advocacy Prevents Bad Policy
As an example of this crucial work, PICPA’s advocacy recently helped improve a proposal that would have significantly altered how some accounting firms are reviewed for quality. Peer review is the profession’s quality control system; it ensures firms are meeting professional standards when performing audit and accounting work.
The AICPA proposed centralizing peer reviews for firms that operate under alternative practice structures, such as firms affiliated with other entities or that have complex ownership arrangements.
The PICPA and other leaders in the accounting field raised concerns about the original proposal because it lacked clear boundaries. It gave regulators broad authority to take over reviews without defined criteria and included no timeline for reassessing the change.
After feedback from the PICPA and other state societies, the AICPA revised its proposal. The updated standard now includes a defined evaluation process, additional safeguards, and a temporary sunset provision.
Those changes, as subtle as they may sound, represent an important principle: regulation should be structured, transparent, and accountable.
Members Don’t Always See What Was Prevented
One of the hardest parts of communicating this work is that success is often invisible. When advocacy works, problematic policies never take effect and members simply continue practicing under workable standards. Few realize how close the profession may have come to serious disruption.
Whether few notice or not, we are proud of our efforts to protect the profession’s ability to adapt while maintaining the ethical and quality standards that define public trust. We commit to doing this vital regulatory and policy work because the decisions being made today will shape the profession for years to come.
The PICPA is committed to ensuring that those decisions are informed by the real-world experience of practicing CPAs. That’s why PICPA invests significant effort in monitoring proposals, submitting comment letters, serving on national committees, and engaging with regulators.
When standards change carelessly, we are all harmed. But when they evolve thoughtfully, the profession and the public it serves both benefit.
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