CIMA

AICPA’s Proposed Joint Venture with CIMA–A Member’s Perspective CON

Montana Society of CPAs Advocacy, Industry & Financial Professionals, Membership Value, Rules & Regulations, Strategic Planning Tags: , , , , , , Leave a comment

by Joshua Herbold, PhD. CPA, MSCPA Secretary/Treasurer

In this blog post, Josh will address the CON side of the proposed venture between the AICPA and CIMA. Scroll down to see previous posts on this issue from President Brenda Byrnes and MSCPA Director Clint Morrison.

Herbold Josh sitting 2014

Josh Herbold, MSCPA Secretary / Treasurer

The American Institute of CPAs has proposed a joint venture with the Chartered Institute of Management Accountants (based in the UK). While there are some benefits to such an endeavor, I believe this proposal is, overall, not in the best interests of CPAs for the following reasons:

  1. It dilutes the “CPA” brand in pursuit of membership growth
  2. The AICPA is trying to be too many things to too many people
  3. The value of the CGMA designation has not yet been established in the marketplace
  4. Closer to home: For non-CPA members, the Montana Society of CPAs will be providing benefits (i.e., incurring expenses) with no control over the revenues from those members

The following paragraphs explain these points in more detail.

Those members who have been around for a while probably remember when the AICPA proposed to open AICPA membership to non-CPAs. These non-CPA members were to be called “Cognitors,” and the proposal went on to state that the term would also refer to CPAs. This proposal was soundly (and wisely) rejected by the AICPA membership. After all, what would be the point of becoming a CPA/Cognitor if others could qualify for the same designation without completing the “four Es” (education, experience, ethics, and the CPA exam)? How would a CPA signal to clients and employers the extra effort and dedication that they put forth to become more qualified? Obviously, it would be difficult for anyone outside of the profession (and even for some of those within the profession) to determine how a Cognitor had earned that credential, and AICPA members were rightly concerned about this brand dilution. The current proposal makes things even more confusing by using the same acronym for the new organization as the American Institute of CPAs: the Association of International CPAs. This proposal allows for both CPAs and non-CPAs to earn the CGMA (Chartered Global Management Accountant) credential and become members of this new organization, and thus has the same potential as the failed “Cognitor” designation to dilute the CPA brand.

Related to that point, one of the stated goals of the joint venture is to “further advance advocacy, achieve economies of scale and better support accounting professionals.” While I agree that all of these are worthwhile pursuits, I have to wonder which accounting professionals the AICPA has in mind. Not all accounting professionals are CPAs (even though I believe that the designation and the work required to achieve it would benefit most accounting professionals). Is it the job of the American Institute of CPAs to advocate for all accounting professionals? Or would our profession be better served by having the various professional groups (the AICPA, the IMA, the ACFE, and others) participate in a consortium of some sort? Furthermore, “advocacy” is a tricky issue even within a given jurisdiction; it gets trickier when an organization tries to represent multiple jurisdictions, which is exactly what the AICPA intends to do. The AICPA is trying to be everything to everybody—a strategy which usually ends up satisfying nobody.

And the fact is that the overwhelming majority of CPAs have opted against obtaining the CGMA designation. Prior to this year, current CPAs were grandfathered in and could obtain the CGMA designation simply by checking a box on their membership renewal and paying an extra fee. Even with no other effort required to obtain the designation, “90% of the AICPA’s members declined multiple invitations to become CGMAs.”[1] Also, when faced with the choice of which designation or designations to pursue, students have yet to see the value of the CGMA. (See http://ipassthecmaexam.com/cgma-designation/ for one blogger’s take on the decision between the CGMA and CMA designations.)

Finally, we get to some details of the joint venture that could have an impact on our state society. If the joint venture proceeds, CGMAs who are not also CPAs will become members of their respective state societies through their membership in the joint venture. On the surface, that’s great! But for those non-CPA members, dues will be set by and collected by the joint venture, then shared with the MSCPA. This means that we (the MSCPA) will be providing non-CPA CGMAs with all of the same benefits of membership that every member of the MSCPA receives, yet we will have no control over the dues that these members pay. While we expect the number of these non-CPA CGMAs in Montana to be small, incurring expenses when you have no control over your revenues seems like a risky strategy at best, and a losing proposition at worst.

 

[1] While the AICPA has noted that there are more than 150,000 CGMAs worldwide, only 40,000 of those are in the US. For more details, see: Miller, Paul B.W., and Paul R. Bahnson. “Transparency, integrity, prophecy and the AICPA merger.” Accounting Today 1 Jan. 2016: 22. Academic OneFile. Web. 4 Mar. 2016.

AICPA’s Proposed Joint Venture with CIMA–A Member’s Perspective PRO

Montana Society of CPAs Advocacy, Industry & Financial Professionals, Networking, Rules & Regulations, Strategic Planning Tags: , , , , 3 Comments

by Clinton J. Morrison, MSCPA Director

In this blog post, Clint will discuss the PRO side, the advantages to the AICPA’s proposed joint venture with CIMA. Scroll down to read the recent blog post by President Brenda Byrnes that introduced this subject. 

Morrison, Clint 2013

Clint Morrison, MSCPA Director

Despite your busy schedule, you may have heard that the AICPA wants to join forces with the Chartered Institute of Management Accountants (CIMA) to create a new accounting association, the Association of International Certified Professional Accountants, while continuing to operate the membership bodies of both existing associations.  Your MSCPA board of directors reviewed this issue at its recent board meeting, and I was impressed with the vigorous discussion that took place among the board members regarding this topic.

First, it is important to point out that the AICPA dues should not be affected by this proposal, and your existing membership in the AICPA should not change.  AICPA members would automatically become members of the Association of International Certified Professional Accountants.  As a small business owner, I watch costs like a hawk, so this was the first hurdle that I was able to get over with this proposal.  Though I am a tad skeptical in this regard, the proposal does include the integration of management and operations, which should provide economies of scale and cut costs.

By joining forces with CIMA’s 227,000 members, our voice in advocacy efforts will be that much stronger.  To me, that is one of the most compelling arguments for this integration.  In an era of increasing rules and regulations for our clients and our own businesses, advocacy is important.  For me, oftentimes when I learn of a new rule or regulation, I can see the merits of its objective.  However, nearly as often, the implementation of policies and procedures in an attempt to comply with the new rule or regulation are costly at best, and often impractical particularly for small businesses.  In today’s environment, strength clearly comes in numbers, and sometimes, those numbers may be called upon to help create rules with common sense derived from professionals who understand and are affected by the consequences of such rules.

This proposal is also an extension of the joint venture between the AICPA and CIMA that launched the CGMA designation in 2012.  As such, AICPA members, typically in industry, were able to receive the designation based on meeting certain criteria.  But more importantly, these members, often accounting managers, controllers, and CFOs from small businesses, were afforded access to resources that were not readily available to them before this joint venture was launched.

Another aspect to consider is this proposal’s potential to broaden the appeal of the accounting profession to the next generation.  As an adjunct instructor at Carroll College, I regularly interact with students.   When I ask my Introduction to Business class, “What do CPAs do?” most students answer, “Prepare taxes”.  I enthusiastically respond, “Yes, many CPAs prepare taxes, along with other professionals who do not obtain the CPA designation.  But only CPAs can perform financial statement audits!” I don’t get a lot of enthusiasm in return.  It is not until I speak of the broad array of consulting services and other aspects of the accounting profession that I seem to peak their interest.  Thus, I believe that this new association will help broaden the appeal of our profession to students today, which may help encourage them to seek employment in accounting-related jobs, and once there, they will be able to realize their career goals and dreams.

Presidentially Speaking

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Brenda Byrnes, President

Brenda Byrnes MSCPA President 2015 – 2016

It’s a GREAT day to be a CPA!  Now that is a catchy phrase but what does it mean to you?  To me it is the perfect phrase to capture my feelings about our profession.  As CPAs the opportunities available to us are really quite endless.  Our education, training and background enable us to provide our clients and employers with a unique problem solving perspective and strategic way of thinking.  It’s expected when they see CPA.

At the AICPA fall council meeting in October, I began to give serious thought to the meaning behind that designation as we tackled the topic of the future of our profession.  During the meeting the representatives of the AICPA membership voted to expand the potential holders of the CGMA (Chartered Global Management Accountant) credential to others outside of CPA designation holders.  These “others” are first required to pass the CGMA exam and then adhere to the experience, ethical and education requirements to maintain that credential outlined by the AICPA.  As nonCPA CGMAs, they would be non-voting associate members of the AICPA.  The current CPA, CGMAs would maintain their status with no changes.  Please note that the CGMA is only offered by the AICPA.  Other similar credentials exist with other organizations.

So how did this vote, affect you?  Honestly here in Montana I did not see a big impact.  From my discussions with many of you about it, I do not hear much concern.  Our members in BING often struggle with garnering support from employers for their CPA so the CGMA will likely be just as troublesome as a standalone certification.  We currently have 127 members of MSCPA who have chosen to adopt the CGMA.  Now others who are not CPAs will have the same opportunity.

This vote was not an end result of planning though.  It was a strategic step in a much bigger plan.  Why belabor a topic that seems pretty innocuous to Montana?  Well the next step is that the AICPA would like your vote for their proposal to create a new global accounting membership association called the Association of International Certified Professional Accountants in conjunction with CIMA.  CIMA is the Chartered Institute of Management Accountants, a global management accounting membership organization. (follow this link for more information http://www.cimaglobal.com/)  This new association, cleverly acronymed AICPA, would represent public and management accounting professionals worldwide.  Your membership in the American Institute of CPAs would automatically afford you membership in the new association AICPA with no additional dues.

Sort of makes one’s head spin, especially this time of year?

Again, this step causes me to pause and to ponder what does my CPA mean to me and others.  Your MSCPA board of directors discussed this issue at length.  We did pass a resolution in January supporting the AICPA in its efforts to put this new association venture to a vote of the members of the American Institute of CPAs.  We viewed this as an opportunity for the membership to voice their thoughts on the future of our profession.  Will we be known as CPAs or as either CPAs or CGMAs?

Coming up in the next blogs, board members Clint Morrison and Dr. Josh Herbold tackle the pros and cons of forming the new AICPA.  I certainly have conflicted thoughts about it and I am sure you will too.  Hopefully the two perspectives will assist you in your voting.  We welcome your comments either way.  In fact we would like to feature those in a follow up to the pro/con debate. You have the option to comment below or email your comments to jane@mscpa.org.

No matter what though, I still feel IT IS A GREAT DAY TO BE A CPA!

UPDATE March 25, 2016: The AICPA’s governing Council has authorized an electronic member ballot on a proposal by the AICPA and The Chartered Institute of Management Accountants (CIMA) to create a new association representing the entire accounting profession, while preserving the AICPA and CIMA membership bodies. The organizations will integrate operations to strengthen advocacy and have more agility in responding to evolving member needs.

The proposal will keep the profession strong amid technological, demographic and international trends that are rapidly reshaping the business environment. The AICPA will continue to promote, protect and grow the CPA profession, with AICPA members continuing to receive all current benefits. From this broader platform of more than 600,000 current and next-generation professionals, the AICPA will have a stronger voice against burdensome regulations that are not in the public interest. It will also enhance and expand resources across public and management accounting.

Since the AICPA first brought the proposal forward to members on Nov. 2, it has received support from 51 state CPA societies. The AICPA Board of Directors and governing Council have both recommended approval. In addition, resolutions of support have been passed by the AICPA’s Private Companies Practice Section Executive Committee, the Business & Industry Executive Committee, the Women’s Initiatives Executive Committee, and the Government Performance and Accountability Committee.

Watch for your personal and confidential electronic ballot credentials the week of April 18 from the third-party vote administrator under the name “AICPA Independent Tabulator.” To make sure you receive this email with your unique credentials, simply add the following email address as an approved sender: noreply@directvote.net. CIMA members will be asked to endorse the proposal on a similar timeline. For more information, visit www.aicpa.org/horizons.