are cpas fretting too much?

years after enron and worldcom, cpas worry about the profession’s image. but fresh studies show recovery.

by rick telberg
[for the aicpa insider]

new studies suggest that the accounting profession is recovering from the tarnish left by enron and worldcom, and yet a significant slice of public practice and industry cpas still seem to feel the scars. “public perception and overall regulation will be the major factors impacting our profession,” worries ralph l. depanfilis, head of a four-cpa firm in norwalk, conn. however, fresh surveys of the profession’s reputation among the public at large should give worried cpas cause for comfort.
research conducted by penn, schoen & berland associates, on behalf of the aicpa, for instance, shows that the cpa profession garners high marks from business decision -makers, executives and investors, earning favorable ratings of 97 percent, 95 percent and 89 percent, respectively. in fact, business decision-makers and executives ranked cpas higher than physicians by several percentage points. cpas also ranked higher than other financial services-related professions, such as insurance agents, bankers, chief management consultants and stock research analysts.

on specific measures, cpa “heritage” attributes have improved from 2003 figures. the data show cpa attributes ratings in the areas of “committed to the rules of the accounting profession,” “reliable” and “consistently demonstrating integrity and ethics” have moved higher. these heritage values are the bedrock of the cpa reputation and are being reinforced through aicpa communications and public service programs.

when asked whether cpas and the accounting profession in general have taken steps to fix problems that had led to past accounting scandals, fully 80 percent of business decision-makers and 70 percent of executives said “yes.” while just 52 percent of investors said “yes” to that question, 71 percent of investors responding to the survey admitted they are not familiar with the sarbanes-oxley act. in addition, all three groups see cpas as part of the solution to fighting or preventing fraud (86 percent for business decision makers, 75 percent of executives and 78 percent of investors).

gallup research organization’s annual update on the images of various business and industry sectors in the country finds that the accounting profession image appears to be recovering.

but, gallup says, “even though the accounting sector fares better this year, these ratings are still lower than they were before the accounting scandals in late 2001 and 2002 at major corporations like enron and worldcom.”

gallup’s current score for the accounting sector is +28, up from +20 last year. in 2001, americans rated this sector with a net +39 score, but after the accounting scandals came to light in 2002, its net score dropped to 0.

at the top of the list is the restaurant industry, with a net positive rating of +50, followed by the computer industry (+47), farming and agriculture (+45), and the grocery industry (+43). next on the list are the retail industry (+37), the travel industry (+35), accounting (up 28 points), the internet industry (+24), banking (+24), the real estate industry (+23), education (+23), and the publishing industry (+22). the automobile industry, the telephone industry, and the airline industry also receive net positive ratings from the public.

the great irony is that it’s the smallest firms which speak most about the impact of scandals involving the big four (when it was still the big five).

in our own bay street group studies of the profession’s attitudes about itself, 51 percent of public accountants said that public confidence in the profession is a highly important issue for them. interestingly, only 40 percent of cpas from business and industry and more than 85 percent from government gave public confidence the same importance.

carl lacher of the lacher mcdonald & co. cpa firm in seminole, fla., said “fraud in the largest firms is being openly admitted to,” which cannot help but damage the reputations of many good and honest small firms.

meanwhile, the information overload from new rules and regulations is highly important to 41 percent of business and industry cpas. government cpas are not nearly as worried about it.

separately, about a third of cpas indicated that staff shortages were a highly important issue. and, the talent-shortage is not just a public firm matter. a senior executive from business and industry says that the larger salaries now paid by the big four “is creating an enhanced atmosphere of selling to the highest bidder and lack of loyalty to a current employer.” he calls this a “disturbing bubble” that could affect all employers “and we should be very mindful of where it’s leading the profession.”

for now, it may be hitting hardest on the smallest firms, sole practitioners included. one sole practitioner in dallas says that small firms like his continue to “struggle with the public perception of professionalism” that’s not helped in his market where some plumbers bill more per hour than some experienced cpas.

posted on september 26, 2005