Regulatory oversight and change is the most important issue currently facing the accounting profession.
Large-scale changes, such as the proposals by the European Commission and the PCAOB to reform audit firm rotation and the auditor’s report have potentially far-reaching implications on audit quality and competitiveness in the accounting industry. I believe that any new regulation needs to be studied carefully to ensure it will truly enhance audit quality and will not have unintended consequences for our profession or the investors and businesses we serve. In addition, we need to ensure that regulation is not so restrictive that it damages the audit profession’s Advertisement
Overall, I think the regulators for our industry both here and abroad take the approach of seeking input from many parties prior to enacting new regulations, and I believe it is important that these activities continue. However, I ultimately don’t believe independence, skepticism and objectivity can be legislated. Quality, objectivity and ability to be competitive or to maintain its status as a sought-after career alternative for the best and brightest students.integrity are values that auditors have embraced for many years and ones that have enabled our profession to be one of the most respected. To further embed these values at McGladrey, we recently created a new professional judgment framework with three professors from the Brigham Young University School of Accountancy. All assurance professionals have received a printed copy and are being trained in the framework this year.
In addition to the regulation of our own industry, the significant number of new regulations that affect the clients and industries we serve could also have huge implications for McGladrey and other accounting firms. We have to stay abreast of the changing regulations in our clients’ industries and align our work products and advice accordingly. In addition, we expect to see an increase in demand for assurance, tax and business consulting services as a result of these regulations, particularly in the middle-market companies McGladrey serves.
Companies of this size typically have more limited resources and lack the capacity to implement complex standards and regulations on their own. McGladrey’s leadership team, organizational structure and strategy are centered on providing this type of support to our private clients. With more than 6,500 employees working in 75 offices across the country, we are able to provide national and international expertise with the local touch of a service team in our clients’ markets. We believe our understanding and experience will enable us to help our clients navigate these new business and compliance challenges.
Joe Adams -- Managing partner and CEO, McGladrey LLP
Loss of investor confidence in audit firms and their opinions. Also, loss of investor confidence in financial statements. Also, loss of investor confidence in the fairness of capital markets (Mary Schapiro has made speeches about this very issue). Unfortunately, much of this has been caused by large audit opinions somehow being associated with accounting scandals and audit failures.
Dave Albrecht -- Professor of accounting, University of South Carolina Upstate
Attracting and retaining young talent has been an issue for many years, but I think that with the sharper dropoff in recent years the issue has become acute. We, as a profession, need to make a more concerted effort to fundamentally change how we work. The AICPA and various state societies are working hard to project a more attractive image tailored to the qualities that the next generation is seeking in a career, but if their experience doesn’t meet these expectations, we will continue to see a talent drain.
Mark Albrecht -- CEO, XCM Solutions/Xpitax LLC
I believe the most important issue currently is whether there will be adoption of International Financial Reporting Standards by U.S regulators and how that will affect current accountants (different rules for small business than large business?), future accountants (do schools teach the new standards or GAAP?), and financial statement uses, who may have to reconcile two equally acceptable standards, which may be inconsistent with each other.
John Ams -- Executive vice president, National Society of Accountants
How to generate sustained growth and adequately reward existing and aspiring partners.
Rick Anderson -- Chairman and CEO, Moss Adams
The accounting profession has many facets. The top challenge faced by the majority of practitioners (the small and medium-sized firms) is the overwhelming burden of new regulations and standards. This one issue impacts several areas of the firm, from quality control, risk management to training.
Where there are so many regulations and standards, it forces accountants (especially in smaller firms) to spend less time helping their clients solve real problems. The same might be true for larger firms, since the service providers are more concerned (read spend more time) about compliance and risk management, rather than on other issues the client may be facing.
How can we expect CPAs to be nimble in a world with overwhelming new regulations and standards?
August Aquila -- President and CEO, Aquila Global Advisors, LLC
There are many, but the most important one is the same one that we’ve been facing for the past six years -- the poor economy. But for us, this tough economy has been a real motivator because it enforces a constant discipline upon our teams that requires them to be much better than our competition. The crash and slow economic recovery have exerted downward pressure on tax and audit prices and made the competitive landscape very challenging. But this has forced us to get much better at everything and to develop strategies that require us to look at our clients much more holistically so that we become a business solution provider and not just vendors of technical expertise.
Our firm focuses on the aspirations of our clients and we help them achieve those aspirations. The strategies we craft for them and the products we help them deploy must all work to that purpose and must give them a competitive advantage. We must bring our know-how and ingenuity to a comprehensive package of service and provide insight that CFOs and other executives need to survive and flourish in this economy. We’ve expanded into many areas that we never thought we’d move into, such as our growing customer relationship management practice within our consulting group or our AMF Media Group division, which provides strategic branding and marketing support, public relations and corporate communications for a very wide variety of clients. The bottom line is that if we diligently hone our strategy, improve our technical expertise and keep looking at the horizon for new trends, when the economy does turn, we will be ahead of the pack in terms of reputation and capabilities and will experience even greater growth and profitability.
Andrew Armanino -- Managing partner and CEO, Armanino McKenna
Technology is clearly transforming how firms provide services to their clients. Clients are looking for their firms to collaborate with them and leverage technology to improve their capabilities and digital presence. Client accounting is probably the greatest growth opportunity for the profession, due to these capabilities driven by cloud computing. To me, embracing change and making the right technology choices to fully transform into what we are calling a digital CPA is one the most important issues going forward.
Erik Asgeirsson -- CEO, CPA2Biz
The uncertainty of the financial/economic market, which continues to give our clients concern and caution.
Kenneth Baggett -- Managing principal and CEO, Reznick Group
People are not going to like this, but I’d say: relevancy. Many CPAs are nothing more than high-priced bookkeepers and unless they move away from the idea that they’re historians with bad memories, who can only report on the past, on lagging indicators, they’re future is perilous.
You go into a lot of these firms and they’re doing very low-level work and then they sit around and complain and moan that it’s a commodity. Well, sure. It’s relatively low-value stuff, and if that’s all you’re doing, then you’re going to be stuck with government regulation and compliance revenue, and I see that as the biggest threat to our profession.
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