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Jean-Luc Bourdon

As a CPA, What Business Are You In?

And other questions CPAs should answer individually.

December 12, 2011
by Jean-Luc Bourdon, CPA, PFS

The recent CPA Horizons 2025 Report on the current state and future of the profession, along with the AICPA Code of Professional Conduct, raises insightful questions CPAs must answer individually. 

The CPA Horizons 2025 project found that “the services that CPAs provide have become so varied and diverse that the concept of core services is no longer representative of the profession.” This is a notable change. By contrast, the 1998 CPA Vision Project (PDF) mentioned the following five core services: assurance and information integrity, technology, management consulting and performance management, financial planning and international services. While the core purpose of the profession remains the same — making sense of a changing and complex world — it is a job for CPAs as a group and not a task to perform individually (thankfully!). At a personal level, this begs the question: What business am I in? In other words, what is your chosen role or function within the profession? Writing out a complete answer to this question might be harder than it seems.

Yet, the Code of Professional Conduct makes your personal answer very essential due to your very individual responsibilities as a CPA. Due care, in particular, requires an assessment of the CPA’s own ability, competence and limitations for the engagements and responsibilities they agree to tackle.

With broad answers to the question, come broad responsibilities. To limit our responsibility, errors and omission insurers encourage us to narrowly define the scope of our services. Yet, the growing interconnectedness of financial matters ever expands the scope and depth of expertise CPAs are asked to provide. Where should CPAs individually draw the line? And what are the due-care implications?

 Due Care (excerpt from the AICPA Code of Professional Conduct [ET Section 56 Article V
— Due Care
])

.01 The quest for excellence is the essence of due care. Due care requires a member to discharge professional responsibilities with competence and diligence. It imposes the obligation to perform professional services to the best of a member's ability with concern for the best interest of those for whom the services are performed and consistent with the profession's responsibility to the public.

.02
 Competence is derived from a synthesis of education and experience. It begins with a mastery of the common body of knowledge required for designation as a certified public accountant. The maintenance of competence requires a commitment to learning and professional improvement that must continue throughout a member's professional life. It is a member's individual responsibility. In all engagements and in all responsibilities, each member should undertake to achieve a level of competence that will assure that the quality of the member's services meets the high level of professionalism required by these Principles.

.03 Competence represents the attainment and maintenance of a level of understanding and knowledge that enables a member to render services with facility and acumen. It also establishes the limitations of a member's capabilities by dictating that consultation or referral may be required when a professional engagement exceeds the personal competence of a member or a member's firm. Each member is responsible for assessing his or her own competence—of evaluating whether education, experience, and judgment are adequate for the responsibility to be assumed.

Personal Questions

Clearly, due care sets CPAs on a personal quest for excellence that, in a fast changing world, cannot be placed on automatic pilot. As such, here are a few questions that might help you design your own best course and speed ahead: 

  • How do I define my personal role as a CPA?
  • What specific skills does this involve?
  • What specific service(s) do I provide?
  • How have those services and their environment changed over the last few years?
  • What changes did I make as a result?
  • What else can I do?
  • What changes do I expect in the future (see the CPA Horizons 2025 report (PDF) for inspiration)?
  • What steps will I take to be prepared?
  • Do I take a holistic approach to my client situations?
  • Which elements of clients’ situations am I well suited to integrate (i.e. estate, tax, investment, financial planning)?
  • What services do my clients need for which I do not provide expertise?
  • To what resources can I point clients or can I work with to help clients?
  • In what areas of my practice have I reached excellence?
  • What strengths helped me reach excellence?
  • In what areas would I like most to improve or advance?
  • What are the challenges?
  • How do I apply my strengths to those areas?
  • What skills, resources and support do I need to reach excellence in my chosen endeavors?
  • What specific technical skills would help my practice most?
  • What non-technical skills (communication, management, marketing, etc.) would help my practice most?
  • What technology would help my practice most?
  • What specific steps will I take to obtain the skills, resources, support and technology I want?
  • What time frame will I set to make it happen?
  • What action steps can I schedule today?

These questions provide more benefit if answered in writing. You may want to print this article and schedule a time to answer them. Your answers likely will involve adding skills and resources to your personal toolbox. Your continual quest for excellence may lead you to join an AICPA specialized community, attend a new conference, network with practitioners you wish to learn from or take a particular course, seminar, class and more.

Example

Taxes play an increasingly essential role in retirement, estate and investment planning. This trend has been driven by the decline of defined-benefit (DB) pension plans and the rise of defined-contribution (DC) plans. The choices related to tax-deferred accounts (401(k), individual retirement account (IRA), simplified employee pension plan (SEP), etc.), tax-free accounts (Roth-IRA, Roth 401(k)) and transfers between them (Roth conversion and recharacterization), increased the convergence of tax and financial planning. Tax preparers may want to adapt by joining the Personal Financial Planning (PFP) section of the AICPA, attending the Advanced PFP Conference, January 15-18 in Las Vegas, exploring the PFP and PFS education opportunities or consider obtaining the Personal Financial Specialist (PFS) credential.   

Conclusion

CPA Horizons 2025 defines the broad view of what CPAs stand for as a profession and the trends affecting it. To personally benefit from the report’s insights and pursue the quest for excellence due care requires, CPAs can start by (re)defining their own practices. From your chosen role, you can individually explore how to mold yourself to best fit its requirements.

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Jean-Luc Bourdon, CPA, PFS, is a principal with Kozak Financial Advisory, located in Santa Barbara and Camarillo, Calif. Bourdon currently serves on the AICPA’s PFS credential committee. He is past chair and member of an AICPA PFP Networking Group. Bourdon volunteers as a financial literacy advocate. His opinions and comments expressed within this column are his own. This information is being provided for informational purposes only and does not constitute investment or tax advice.

* The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management and investment advice to individuals and their closely held entities. All members of the AICPA are eligible to join the PFP section. CPAs who want to demonstrate their expertise in this subject matter can apply to become a Personal Financial Specialist credential holder.