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Cool Careers in Accounting Ep. 14 - Consistent in Our Ethics, Adaptable in Our Evolution with Barry Melancon
164 Plays1 day ago
Barry Melancon, former CEO of the AICPA, sits with host and National Instructor, Mike Potenza, to share his journey to becoming a pivotal figure in accounting and his role in leading the AICPA through transformation. He emphasizes the constant importance of ethics—especially in accounting—while reflecting on how CPA Evolution addresses the new data and technology skillsets required for the profession. He highlights accounting’s adaptability while remaining the backbone of business decision-making, and encourages young professionals to dive into the opportunities, integrity, and value that accounting has to offer.
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Transcript
Introduction and Early Influences
00:00:09
Speaker
Hey everyone, it's Mike Potenza from the Becker Accounting Podcast, and I am very excited today. When I say we have an amazing guest, I mean we have an amazing guest. For the last three decades, Barry Melanson has served as the captain of the ship for the AICPA, not even just the AICPA, but for the accounting profession in general.
00:00:29
Speaker
And Barry's had to steer through a lot of calm waters, but there's been a lot of storms, a lot of turbulent waters as well, global financial crisis, you name it. And we're gonna speak to Barry about all of that today.
00:00:42
Speaker
Now, I just want you to realize, Barry truly is a visionary leader. He's kept our profession on course. And not only kept it on course, but he's evolved the profession to really meet those ever-changing demands that we know the financial landscape dictates. So I'd just like to welcome Barry here today and say, Barry, thank you so much for being here.
00:01:02
Speaker
Mike, it's great to be with you. I'm just as excited to be here as you are. I think, you know, the the audience here of people who are in the process of becoming CPAs or thinking about becoming CPAs, ah our profession's a great, great story. And so I'm really excited to share some thoughts and hopefully help people along the way and get some new people to make the decision to become CPAs as well.
00:01:27
Speaker
I agree 100%. And we're going to talk all about that and the great opportunities in the world of accounting. But you know your story is so great, and it's so unique, and a lot of people may not know it. So yeah I really could probably spend an entire day talking to you about everything.
00:01:44
Speaker
But let's just go through some of the highlights on your 30-plus years you know with the AICPA and even before that in the world of accounting. So let's let's start way back when.
00:01:54
Speaker
Let's talk about early life, growing up. Were you you know part of a family of accountants? Not at all. ah Accounting was pretty far from my profession. In fact, really, and didn't come from a family of ah professionals, really.
00:02:09
Speaker
um yeah I was the youngest of 19 different families, as far as the 13 of my father's side and six of my mother's side. And I was sought on that first cousin line, the very youngest, and very few professionals. There was a pilot in there and a couple of other college graduates, but not really professionals.
00:02:30
Speaker
And ah so it was ah it it it was sort of fertile ground, different ground from my perspective is is becoming ah ultimately a CPA and a professional. and And I guess really maybe more important than me in that, that is a story really of our profession. If you go back a few decades, we really were a profession that in a lot of cases was a first generation.
00:02:52
Speaker
And um a profession that people could aspire to and go into. And even today, as we deal with some of the issues of diversity in our profession, ah many ah many people become part of our profession from diverse ethnic backgrounds or first generation ah professionals as well.
00:03:09
Speaker
And I think that's sort of a beauty of our profession. Many professions are about being the sons and daughters of prior professionals. And in in a lot of ways, our profession, because of its wide business connection, and I think it's reflective of my history, actually reflects that.
00:03:26
Speaker
that's That's great. It's so true. And I noticed when you gave your response, your accent and my accent sound pretty different, right? I'm a big Northeast New York guy, but you don't sound like you're from Northeast. So where where did you grow up and where'd you go to school? What area?
00:03:40
Speaker
and Now, you know, I've spent 30 years in New York. I should be almost an adopted New Yorker or Northeasterner, you know, from that standpoint. I grew up in very Southern Louisiana, about um about an hour, a little bit over an hour from New Orleans.
00:03:54
Speaker
For those of you who might remember the BP oil spill in the Gulf of Mexico about a dozen years ago, and, you know, the impact on the coastline, that coastline is where I grew up. I grew up in a very rural area, Southern Louisiana.
00:04:08
Speaker
fishing, oil and gas, obviously a big part of that um of that area. A very small town, a town called Houma, Louisiana, which at the time I was growing up probably had about 50 or 60,000 people total, maybe 100 and and And that was really my roots and in a very rural area, a fairly low socioeconomic area.
00:04:31
Speaker
um And but great people, you know, people who are the salt of the earth. A lot of my family history actually, you know, if you go back far and enough, goes back to France and a migration in our in the eighteen hundreds through Canada and then through religious persecution to, you know, exiting Canada and ending up in South Louisiana.
00:04:51
Speaker
So a really, ah really humble aspect. My father was sixth grade educated. My mother finished high school. um So I did not, you know, I did not come from a family background that was um that was really, you know, profession oriented, as we talked about earlier, are certainly not one that would drive me to sort of the the connections in the world that I was able to develop in my in my ah career.
00:05:16
Speaker
So it's a pretty amazing story that you wound up in accounting. So how what do you credit with the fact that you made it to college and that you even chose accounting as a profession? What was behind those decisions at your young age?
00:05:30
Speaker
Yeah, you know, the the the reality, I talked about first generation, but there is another element in our profession. There's a lot of people with career changes in our profession. And I went to college. I went to a very small university, Nichols State University, which was about 12 miles from my house. It was an affordability notion. I had the the grades in the background. I was very young, so I wasn't moving very far away from ah from my home. I graduated, I skipped a year in high school. So I graduated from college, very ah high school, very young.
00:06:00
Speaker
and also graduated college very young. um So Nichols State University he had a good business program, but I went to school majoring in pre-law. They didn't have a law school at that university.
00:06:11
Speaker
My view of the world was that I was going to go to law school. In my very first semester in school,
Choosing Accounting over Law
00:06:17
Speaker
um i I sort of, you know, as you as you mature in that process, looked at opportunities differently.
00:06:24
Speaker
And I ended up taking in my second semester an accounting course in the business school. And during that second semester, made the decision to change majors. I ended up with a minor in government, so a major in accounting with a minor in government.
00:06:38
Speaker
and And really, my decision was about, you know if i if I did want to become a lawyer, business law was a pretty interesting field. And accounting was the discipline that gave you all of the business disciplines. That's how I viewed it.
00:06:52
Speaker
I've heard a lot of people describe their just you know career decisions along that same line. But in you know you take an accounting degree, you're going to get exposure to management and marketing and and general business and economics and all of those types of things, statistics ah that come into play in a business degree that is also with a major in accounting. And so I made that decision to change.
00:07:15
Speaker
and And, you know, that's really what propelled me through my career. So it's really interesting. And, you know, when we had conversations, we talk about this term accounting profession. And now you decided after taking some classes, this is what you want to go into. And you spend the next 30 to 40 years working there.
00:07:31
Speaker
How would you sum up this term? What is ah accounting profession? Well, obviously, I'm biased to say it's CPA or CGMA. But the reality is if you if you take the profession globally, it has different terms that are associated. you know In the UK, you would be a chartered accountant, for an example.
00:07:52
Speaker
ah In China, be a CPA. In other language-based countries, different language-based countries, it would be termed differently. I view though, it's really the professionalization of the the the trust function in business.
00:08:07
Speaker
So I view professional accountants as the most trusted professional. And I view the accounting profession as one that is the most local, most national, and most global. And I speak to this a lot.
00:08:18
Speaker
And I think this is a very important part. If you compare medicine and law and architecture and engineering, the The reality is none of them have the sphere of influence in two ways that our profession has.
00:08:32
Speaker
The utmost trust, when you do work in accounting for someone who is employing you as, a say, a CFO or ah CFO wannabe, and are you in public practice, the degree of trust that is instilled in you of what you know about that business and the financial aspects and in public accounting, their personal lives as well because of the personal finance aspect is second to none.
00:08:57
Speaker
And I do believe we are the most trusted profession in the world. And in fact, I always cite this as well. If you look at developing economies, if you look at the economies of the world, countries of the world that move from underdeveloped to developing to developed,
00:09:12
Speaker
That process in a country always, always coincides with the creation of a professional accountancy profession. It brings trust and ethics to that
The Trust in Accounting
00:09:23
Speaker
process and allows a country to evolve.
00:09:26
Speaker
In our country, in the United States, This profession is about 140 years old, and it has been part of the evolution and the maturation of of really the most significant economy in the world.
00:09:38
Speaker
And so I'll go back to my local, national, and global aspect. CPAs, work for the main street businesses and and and entrepreneurial businesses. But CPAs also work for the largest capital market businesses out there. the Today, obviously, those would be the Apples and the in the Microsofts and the Googles, et cetera.
00:10:02
Speaker
um But in past times, it was the industrial age and the major industrial powers of the world that were accessing the capital market system. And our profession is what helps make that work.
00:10:15
Speaker
It's sort of an invisible hand. It works because of the trust we bring to the process. And today, of course, all of these businesses, including very small businesses, have international supply chains, international customer bases, or multinational operations.
00:10:31
Speaker
And the CPA profession is the glue that touches all of those different aspects. Nothing is like that. It's true engineering and architecture has some outreach, but firms in our business, the companies we work for in our in our profession really are multinational. So they can be a very tiny entrepreneurial business or the largest business in the world.
00:10:52
Speaker
And you'll find the accountancy profession having a major impact in that business. that's ah That's very well said. And those are two key words, trust and ethics. And we're going to get into you know Enron in the 2000s in just a moment. And we're going to have to talk more about trust and ethics. But let's just pick up where we left off now. So Barry's coming from a low socioeconomic background, not really a lot of professional role models, goes to college, chooses accounting.
00:11:18
Speaker
Now you graduate. What do you do next? you get a job directly in accounting, big big eight firm or small firm? Do you stay local? What happens after graduation? so So the plan was I was going to move away from South Louisiana to a big city, probably Houston.
00:11:33
Speaker
Happened to be I'm a big sports fan. I love the Houston Astros and so big baseball fan. So, again, put yourself back into the late 70s and early 80s time frame. And that was sort of the plan. I was getting married right out of school. I had actually finished school early. i had started work on my master's degree because of a very small scholarship, important scholarship for me, but a small scholarship ah during that period of time. And so the the concept was get married and that's in a summer and and then move to and find a job in accounting in Houston.
00:12:06
Speaker
The reality was a very small firm was going through a breakup in my hometown. There was not a lot of firms in my hometown. And this this sort of some partners had a falling out and a small form was firm was formed with under 10 people.
00:12:21
Speaker
And I responded basically to an ad, an employment ad. And I went to the interview and they actually offered me the same amount of money that was being offered in Houston, but in a very small town. So you can do the cost of living yeah calculations and all of those things.
00:12:36
Speaker
And so, you know, the decision was, well, I'll stay here. So I went to work for ah very, very, very, very small CPA firm under 10 people. By the time I left, it was never more than 20 people. So I never worked in a big A firm. I never worked in a big, big giant company.
00:12:51
Speaker
um And but I learned a significant amount in that environment as to as to how the world works and with the importance of the profession. So that was really my jumping off point.
00:13:02
Speaker
and And that firm gave me just an incredible opportunity. And there was a lot of turns and highs and lows in that process, as you can imagine, which I'm happy to describe. But that was the that was the the a the avenue that I took.
00:13:17
Speaker
All right. Well, first thing i I'll just have to say is nobody told me you are a Houston Astros fan. I'm a Yankees fan, so maybe I could get that edited out. We'll have to see how that goes. But ill yeah, I'm with you. We wanted to go off track and talk about the Yankees and me give you a hard time. We could have a lot of fun right now.
00:13:34
Speaker
All right. Touche. Touche. All right. well we'll We'll let bygones be bygones. All right. So um you're at this firm and just out of curiosity, did you stay for a while? Did you rise up, become partner? Or when did you decide that you were going to you know leave the firm and go ah in another direction?
00:13:51
Speaker
I'm a firm believer that as an individual, you are who are the people around you. That's not grammatically beautiful language, but it is symbolic of the importance of people who are around you in your career, all stages of your career. And it's one of the beauties of our profession. They're incredibly important.
00:14:10
Speaker
quality people that you are associated with in work. Now, I went to work in that firm. the The real quick story here is um i was I went into the ANA side, accounting and auditing side.
00:14:23
Speaker
I was with the firm about nine months. And one of our clients offered me a job. Now, I'm going to give you these numbers and they're going to be sound really awful for all the young people thinking about becoming accounting. But this is 1980 numbers.
00:14:39
Speaker
And so please understand that that you you have to inflate those, et cetera. um But I was making a little over $15,000 a year and I had a job offer for $25,000. And that's a lot of money. That's a big increase after being at a firm for about ah nine months.
00:14:57
Speaker
And i yeah I had the confidence in myself on that offer came in over a weekend on a on a phone conversation. And I walked into the office on the Monday morning and walked down the hall to the managing partner of our firm. And I said, hey, I'm making this amount of money. I have a job offer of this. Can we talk about it? And there were two partners in the firm at that point.
00:15:18
Speaker
And the in the managing partner said, let's go to lunch. And we had about a two-hour lunch. um And in that, I expressed my desire to be a partner in the firm by 25. they expressed...
00:15:32
Speaker
and they express An unbelievable amount of confidence in me. They explained what partners make, what life was like. And they really painted a picture that I concluded that I didn't want to sort of begin my career and not make that goal that I had and not find out what a partner in a firm was really like. So I turned down that job.
00:15:56
Speaker
um They did not offer me any more money, by the way. They said, you have to make the decision based on the facts and circumstances that you have. Shortly thereafter, i was I was senioring the largest audit client of the firm, a very successful ah manufacturing company that supported the oil and gas industry.
00:16:16
Speaker
And I continue to grow very significantly in my role. I did make partner in that firm by 25. And they pretty much told me that based the track and what they had seen in me that I would make that.
00:16:29
Speaker
And I did. um But it interestingly, when I made partner in the firm, by the time we had brought in a different partner, so there was now three and I became the fourth partner. And sort of three of the partners were on the accounting and auditing side and one was on tax.
00:16:46
Speaker
And they said to me, you you know, we want you to become a partner, but you're going to have to re-educate yourself on the tax side, which I agreed to do. um But there was a couple of caveats. I said, but I want to continue to be responsible for two of the audit clients. One was the highest profile and one was the one I just mentioned, which was the largest audit client.
00:17:07
Speaker
And that I would retrain myself on the tax side, which I did. um So it was an incredible learning experience. I was exposed to all sorts of different kinds of businesses and how they worked.
00:17:20
Speaker
And then there's a whole story about why do I ultimately leave that firm, which I know you'll understand. drill into. But it was a wonderful experience. The people, the clients.
00:17:31
Speaker
I can tell you the the thought process of my relationship with clients back in from that very small firm, I still gravitate and have throughout my career.
00:17:43
Speaker
Wow. it's and so I'm always amazed to hear that 25-year-old partner. like I remember myself at 25, I was still learning to tie my shoes at that age. And you're partner of a public accounting firm. i mean it's just it's ah It's amazing.
00:17:58
Speaker
It leads you to just understand that you know it's a different time, but at the same time when people have goals, how important those are and how you work to meet those goals. And it obviously served you very well.
Leadership and Modernization at AICPA
00:18:09
Speaker
Now, I know somewhere before going to the AICPA, you get involved with the Society of Louisiana CPAs. Did you go there as a full-time role or did you do that when you were a partner at the original firm?
00:18:23
Speaker
There's a lot of stories to that. So tell you the story about the job offer. The day I became a CPA, literally back then, before the computerized CPA exam, two times a year the exams were offered. I took the exam. I passed off four parts.
00:18:37
Speaker
The grades come in on ah on a Saturday. I walk into the office on the Monday morning, and I'm um'm a CPA. And literally one of the partners of the firm walks down the hall to congratulate me.
00:18:49
Speaker
And um he says, Barry, I'm going to call up the Louisiana Society of CPAs and I'm going to take myself off of a this committee that I'm on and I'm going ask them to put you on this committee. So again, back to my you are who are around you.
00:19:03
Speaker
um The very first day I was a CPA, I was on a Louisiana Society professional committee and I ended up through volunteerism over those next three other from becoming a CPA probably over the next five years.
00:19:19
Speaker
um on all sorts of different committees, chairing the legislation committee, the political action committee, because of my background and in government that I mentioned earlier, i chairing a technical conference committee, ending up on the board of the society.
00:19:34
Speaker
And so I got a lot of exposure, but that was through a volunteer process. Three years after I'm partner, um the person who is the CEO of the Louisiana Society, so I was not working at the Louisiana Society, the person who is the CEO of the Louisiana Society accepts a different job, interestingly, a job at the AICPA.
00:19:57
Speaker
And some members talked to me about taking on the CEO role of the Louisiana Society, which would mean that I would have to leave the public accounting firm and also move to New Orleans.
00:20:09
Speaker
um the yeah you know There was a process, but the people who were talking to me, was pretty apparent if I was willing to do it that they would be very interested in me doing the job. And so I was named at that point um CEO of the Louisiana Society, which I ended up serving in that role for seven years.
00:20:30
Speaker
And, and in you know, the decision there was it was something that I really enjoyed doing. I had only been partner three years, but I had been partner three years. And um it was it was I always knew I could go back to public accounting if that role didn't work out for me or I didn't.
00:20:49
Speaker
you know, get the value that I wanted out of that that role. But it was an incredible role. We did some incredible things in Louisiana, Louisiana legislature, pro-profession activities, and also a lot of involvement on the on the national stage. So that propelled me from there.
00:21:05
Speaker
Wow, that's amazing. And I'm sure that was a great springboard into your next major career and position. So let's go back about, you know, 30 years. Let's go to 1995. You're transitioning from that role to the AICPA. Give a little background. How did you move into the AICPA? And what was your first role for the AICPA? And how old were you at the time?
00:21:28
Speaker
So actually, i left the Louisiana Society in 1995 to become the CEO of the AICPA. So there was no other role. It was directly to CEO. I was, it's an interesting story. I was 37. They actually selected me before that. I was 36. They held off on the announcement because they felt like the, one of the members of that committee tells this story better than I will, but they felt like from a news release perspective, it would sound better to say that I was 37 instead of 36.
00:21:58
Speaker
ah The process started about 18 months before. It was a fairly long and orduous process. So um there was a process. And in in the search firm that was doing that process had reached out to me to apply. I actually said no at first. I felt like at my age and experience that there wasn't any chance that I would be selected for that position.
00:22:21
Speaker
And then ah couple of months later, they came back to me again and said, no, people really want you to apply for this position. And if you apply, you'll be one of the finalists interviewed. Uh, from that point, it's up to you, but you will be one of the finest, uh, finalist interviewed.
00:22:36
Speaker
And that's pretty much how the process went. And like I said, it was about an 18 month process. So early in 1995, I was selected. I didn't actually start to a couple of months later. And, um, that required a move to, to New York with my family. I have one son. And, uh, at first he was, he was young. He was about 11 then. And, and he was, he was, um,
00:22:58
Speaker
Excited about it at first, but then when it really came to fruition, he wasn't so excited about it, but ah ended up yeah obviously being fine in New York, etc. So it really was a step of, you know, a short period of time in the firm partner, partner to CEO for Louisiana Society, then to CEO for the American Institute.
00:23:19
Speaker
Wow. So 37 years old. Amazing. So three years as a partner, a couple years before that experience, seven years with Louisiana Society. Now you are 37 years old and you're heading the AICPA, right? The biggest accounting institution there is.
00:23:36
Speaker
Now, at a young age, late 90s, I'm sure you went in there with, you know, a lot of ideas on what you wanted to do. You talk about going from paper and pen exams to computer exams, all of that.
00:23:47
Speaker
What was your thought process going in? How are you going to transform this into a modern type of institution? What were the big goals and objectives you had? Okay. Well, you know, like when you're selected at that age, I knew that I had certain challenges, but I also knew that I was being brought in to make change, right? That was one of the, I think, the things that you have to attribute to the the selection committee and the board of the institute at that time. They really wanted change because they were picking someone who clearly was of a different generation and was going to create, you know, they anticipated creating something much different.
00:24:25
Speaker
um but But there were hurdles. I mean, I had not worked in a large firm. I had to to win over a lot of different constituencies who you might imagine said, who's this guy, you know, would be the the the the response for a lot of people. I do tell a story.
00:24:41
Speaker
And because we're going to talk about Enron a little bit later, I do want to share this story that, um again, you are You are who are around you. And the you know when I started the role, I knew I was gonna make a lot of change, but I went out and I reached out to, which you would expect to be normal, to the CEOs of the the big six accounting firms at that time. and it already gone from eight to six.
00:25:06
Speaker
And to meet them and to talk with them. And the very the way the schedule, the luck of the schedule worked, the first person that I had an opportunity to meet in that of the CEOs of the six largest firms at that point was a gentleman named Larry Weinbeck. Larry Weinbeck was the CEO of Anderson, Arthur Anderson at that time.
00:25:27
Speaker
Ultimately, the creator of Anderson Consulting, Anderson Worldwide, the organization, just an incredible, incredible person. had never met him before. There were a couple of the big six CEOs that I had known in other avenues before, but I had not met him. So he's the first person that I meet.
00:25:46
Speaker
And at that point, Anderson was the largest professional service firm in the world. Their offices were probably about a six or seven ah block walk from the AICPA.
00:25:58
Speaker
And um i tell this story because literally I try to think about this story every day for like five seconds or so just to remind me of it.
00:26:09
Speaker
I'm walking down, walking up technically Avenue of the Americas in New York, and I'm thinking to myself, What am I going to say to this person, the CEO of the largest professional services firm in the world?
00:26:22
Speaker
And you can imagine in those six or seven blocks, which you might be thinking in that space. And as I walk into his office, he says, he sticks his hand out. We we introduce each other. he says, let's go to lunch. It was a late morning.
00:26:35
Speaker
And we go to the sidewalk cafe. We sit down. And these are the first words he says to me. Larry Weinbeck is no longer with us. Unfortunately, he's deceased. But these are the exact words he says. He says, Barry.
00:26:46
Speaker
I don't know anything about you, but I know that people picked you for this role and I have faith in those people. And my only advice to you is be yourself.
00:26:59
Speaker
And what could possibly be most more powerful than a statement that any of us would ever receive in our in our lives and whatever we're undertaking for someone to say, be yourself?
00:27:11
Speaker
And I try to remember that because um it goes back to the substance of you question. I knew I was coming there to make change and I was committed to making change. um I did a... In the first 90 days, a major reorganization of the AICPA.
00:27:25
Speaker
um In the first couple of years, we created a vision process that engaged. This was pre, really effectively pre-internet. The internet technically ah existed, but you certainly didn't use it like you did today.
00:27:38
Speaker
um we We had town halls throughout the country engaging members on what they saw for the future. We put a vision process out, the tagline of, which I think is still apropos today, making so CPA is making sense of a changing um world.
00:27:56
Speaker
And if you think about it, there's nothing there's there's nothing more true than a statement like that. Making sense of a changing and complex world was the tagline. And so um it it embodied, we developed the five type um skills, the the the five services, the five ethical competencies, et cetera, that were important in that process.
00:28:19
Speaker
We did a refresh of that later on in my career, but basically those sort of tenants remain the same and I think really drove the profession. So it was about changing from a technological perspective, a speed of change perspective. AICPA was viewed as slow and prodding.
00:28:36
Speaker
AICPA was viewed as skewed to just the largest firms. we We tried to break all of those molds. um We really, I think, try to give permission to the profession to do and think of itself in a different way.
00:28:48
Speaker
And i think we've been really successful about that. In the first four years, we created CPA.com, which was an internet-based ah entity. It wasn't called CPA.com day one because we didn't own that. We later acquired it.
00:29:01
Speaker
But um it was about creating a technological platform differently for the profession. And I know you want to talk about the CPA exam, but very early on in that process, ah we we put very high on the priority that we had to change the CPA exam. So it was about strategy and vision.
00:29:18
Speaker
a different perspective of the profession. The notion of trusted advisor really came about big time in that process, the most trusted advisor. um And in those early years, it was about being aggressive and so in speed to market and speed to change because that was what was was important.
00:29:36
Speaker
Well, as a CPA, as someone who lived through the changes as you were implementing them, I remember I was like, oh my God, oh my God, like it seemed like a lot was happening, but it was all for the best. And and I know everybody was appreciative of all of that planning and you know everything that you did to help modernize the profession as well as you know the AICPA itself.
00:29:56
Speaker
Now, I have heard a story, and you have to tell me if this is true or not. He said, someone told me that you don't understand you know Barry's day to day. He has to travel a lot, see so many different firms, give so many talks.
00:30:07
Speaker
I heard a number that out of 365 days a year, i think you travel five hundred days Is that possible? like snap yeah What's going on with the travel? That's not a trusted advisor answer. The reality is for most of my career, I was on the road well over 50%. Usually I would say about 60% of the time.
00:30:27
Speaker
um And then once we created a global footprint for the organization in a different way, coming out of COVID, ah it was literally about 200 days a year that I was on the road. And, you know, the world of technology allows you to function in your role as is is chief executive officer, and but also to be in very many different places. So interacting with members, regulators, being around the world, you know, obviously interacting with your with the staff of the AICPA.
00:30:55
Speaker
You can do that in my reports in a very virtual way. And it really could along along the way, even early in my career. And so I i was... i was You know, my office was technically in New York back then, ah didn't always stay in New York for the whole time. But the the reality is, is that I did travel a lot and I and I i made a lot of presentations to partner groups and state societies, which are critically important to the profession.
00:31:22
Speaker
um And then outside the U.S. as well. I've been to I think it's 40 countries and I think I've spoken in like 31 or 32 of those countries. so Wow. i I hope they gave you a little time to relax and take a vacation here and there.
00:31:35
Speaker
A little bit, yeah. Balancing it was always a challenge. My my wife would say no to that. I answered that question, by the way. All right. So i want to go i have two separate roads I want to take you down. First one I want to go down is you know the series of catastrophic financial events that happened around the world that you had to steer the ship through.
00:31:53
Speaker
And then at the same time, while this is happening, you're also balancing coming up with a whole new CPA exam and what was involved. So let me take each one at a time, starting with It's now early 2000s, right? We have the Enron scandal, massive accounting fraud, misuse of those SPEs, the other special purpose entities to hide debt.
00:32:13
Speaker
And you hear about this or discover this for the first time. What is your immediate reaction? Is it fear? Is it panic? What's going through your mind? Well, two things. One, nothing ever happens at an organization like the AICPA or in a role that a CEO has because of just them.
00:32:31
Speaker
So let you you said you and a couple of those. e k Yes, I was involved in all of those things, but we have incredible staff. The staff today is phenomenal, but throughout that history was phenomenal.
00:32:43
Speaker
and incredible volunteers. So um the the reality is it's always a piece of collaboration and a piece of working together. So I just think that's a real important, not only for this question, but for all of questions. Sure.
00:32:57
Speaker
um and you know I heard about it. I was at a conference. ah with We had a group of about 100 people together talking about the future. And I was called out of that meeting to and by our communications folks to to talk a little bit, to give me a little bit of a briefing on that process.
00:33:14
Speaker
I would not say fear. i would not say um that was what probably anywhere in my career. Fear would have been ah would never have been the right term. um but But I knew it was going to be significant. Obviously, early on in those things is how much how can you get data? How can you find out what's true, what's what's not true? Some of that was confidential and in in the element of what it was, but Enron was a major company that had failed or was failing.
00:33:42
Speaker
And um that, you know, by its nature, anytime you're touching our profession, because there's going to be an audit involved, there's always going to be that connection of thinking through that particular process. So our team was on the phone to the Anderson folks. We're learning as much as we could.
00:34:00
Speaker
and And it really, it became a
Impact of Scandals and Legislation
00:34:02
Speaker
series of meetings. We had meetings with other large firms. We had meetings collectively with people, obviously with regulators um throughout that process.
00:34:11
Speaker
um you know Many, many, many, many interviews and and in different forms, print media, television media, testifying before Congress in the months that succeed you know the that came behind that, succeeded those those early events.
00:34:27
Speaker
um But, you know, there was always a sense the profession will be fine. there there would always There's always been histories of failings. I mean, we could go back to the the economic crisis of the late that led to this Act of always the potential for legislation.
00:34:45
Speaker
um And so dealing with the legislative and regulatory response was a big part of what we did. We weren't the only people doing it. Obviously, the firm the largest firms, those that audited the large public companies were particularly engaged in that process.
00:34:59
Speaker
Really smart people were engaged in that process, obviously lawyers. And it was, you know, how do you every day was a different sort of. element of how do you sort of, you know, get through this process. And there were ebbs and flows. I mean, the intensity would die down. The intensity would pick back up.
00:35:18
Speaker
Clearly, they the I think maybe the simplest part, because you mentioned special purpose entities, the failing of a company like Enron, the the reality, and people always put Enron and WorldCom in the same sentence.
00:35:31
Speaker
WorldCom is later. So we're dealing with Enron. And um reality is there's a piece of legislation that would later become Sarbanes-Oxley that is essentially dead in Congress.
00:35:46
Speaker
um But one set of events occurs, and that was a news break. And we had a little bit of a head i had a little bit of a head start on that, and our head before the headlines had some heads up on that.
00:36:01
Speaker
was the the the shredding situation at Anderson, in which on the on the advice of a lawyer, there were certain documents that were shredded at Anderson. And there's a There's a famous meeting I was in when that came to light. And I remember writing with the person who was with me in that meeting on a piece of paper, ah man on the street.
00:36:24
Speaker
Shredding was something that man on the street could understand. ah Special purpose entities, Enron was in the business of selling futures on everything, the weather, everything. Those were very complex accounting issues.
00:36:38
Speaker
but that the man on the street wouldn't focus on. um But shredding was something that the media, Congress, and frankly, the man on the street could gravitate to and understand as not being appropriate in their minds.
00:36:51
Speaker
You know, interesting, ultimately, the indict the Anderson was indicted on that, but that indictment was reversed by the Supreme Court after it had failed. So there was a lot of mis-facts in that process, but the reality, that was the headline grabber. And that really created more momentum for legislation.
00:37:09
Speaker
But the second event was the failing of WorldCom, which was actually a very simple business failure where the CFO was accused and would be considered fraud of taking repairs and maintenance and capitalizing them on the balance sheet to increase profitability or a net income.
00:37:28
Speaker
And again, man on the street, a person who operates at Delhi can understand that the amount of inventory you have affects your bottom line. So anyone with sort of any business connotation um has that element. And so those men, that's that second sort of company failure, and there were some minor ones in between, but WorldCom failure,
00:37:49
Speaker
created a, you know, a wave of momentum that legislation would in fact pass. And so that was really the triggering event. And actually, we were for a lot of the legislative changes. We we had proposed some things that the SEC could have done and was trying to do regulatorily.
00:38:07
Speaker
um we didn't get a lot of credit for that because we were sort of considered the bad guys. But a lot of what was in Sarbanes-Oxley, not 100%, probably 90% of was We actually support it and um and had been supporting it prior to Enron.
00:38:26
Speaker
But the legislative process that the bill passed very shortly after the failure of WorldCom.
00:38:32
Speaker
That's really a great walk down memory lane with respect to Enron and WorldCom and putting it into a light that's understandable for people that may not have lived through that. And you bring up Sarbanes-Oxley. We don't need to spend a whole bunch of time on Sarbanes-Oxley, but we know we wanted added transparency, more disclosures, you know more liability from the CEOs and the CFOs to make sure this doesn't happen again.
00:38:53
Speaker
How do you feel it's impacted these publicly traded companies? And is it still serving its purpose today? I think Sarbanes-Oxley is a net annette positive from the capital market systems of of the United States. And it's been in certain pieces of it have been emulated around the world.
00:39:11
Speaker
It doesn't mean it's all perfect, but no legislation ever is. But I do think that I actually think the number one thing, and very few people actually talk about this, that had a really significant element of impact. It's sort of a combination of points.
00:39:28
Speaker
on um where we are today in the capital market system was the empowering of audit committees, I think was a very significant piece of that legislation. That's not to downplay any other pieces of the legislation, but that was a very significant piece.
00:39:43
Speaker
It really solidified legislatively the independence of an audit committee, the role of an audit committee vis-a-vis the auditor, the role of an audit committee and the audit of the board process.
00:39:53
Speaker
And so i I think that was a major element of Enron and World, you know, outflow into Sarbanes-Oxley Enron and WorldCom. um I think part of that, one of the most controversial pieces was was set called Section 404, and you referenced it, the internal control aspect where businesses were, certain size businesses were required to have internal controls and an attestation against those internal controls.
00:40:20
Speaker
And the way that was implemented day one was had some hiccups in that process. But, you know, sort of version two and version three probably made a big difference. And I think most business leaders today would say that the commitment to a control structure with third party eyes on that.
00:40:37
Speaker
and And the board's eyes on that was a positive for business as well. I think those two things really produced big dividends. And you roll the clock forward. We go to Madoff. We go to the failure of Bear Stearns.
00:40:50
Speaker
And I think what proves my point actually is while that was ugly and the the the the fraud of ah Bernie Madoff was ugly, um most of that was not affiliated with the financial reporting system. Yes, Abair Stearns failed and some others.
00:41:08
Speaker
That was a capital markets lack up as opposed to probably what you would consider an audit involvement or an audit profession involvement. The profession was much more in the periphery of that particular next wave.
00:41:22
Speaker
um And i think ah i think you the existence of Sarbanes-Oxley actually gave a lot of I don't want to say protections because that's not the right term, but a different set of facts and approaches that change the outcome in that second wave.
00:41:38
Speaker
All right, fair enough. So now, the after Enron and a market crash, then the economy comes back. We're at 2006. We're humming along. you know Global economy is very strong.
00:41:50
Speaker
And you just alluded to you know global financial crisis, Bear Stearns, Lehman Brothers, subprime mortgage lending, all of this. And we get another crash, 2007, 2008, and eight in this big crisis.
00:42:01
Speaker
So now you have to, after dealing with Enron, now you have to deal with this. So when you hear about this again, no fear, right? Well, you made that point, which I totally respect. But what's the thought process now that, hey, this has happened.
00:42:13
Speaker
What are we going to do next to you know try to deal with this situation? Well, you know, the and Bernie Madoff was an audit by ah a firm that was avoiding the regulatory system, a very small firm.
00:42:26
Speaker
ah Interestingly, in the sightings of the SEC against Bernie Madoff, yet they actually the SEC is the only time in history i actually cited the... um the action of ah of a CPA who was avoiding our own regulatory process, the AICPA's own regulatory process in that finding against that individual.
00:42:47
Speaker
um And I think that pointed to, again, it wasn't a profession-wide issue as it much as as a facts and circumstances element. A capital market liquidity system a problem, um and then a rogue situation that was was a key component of that.
00:43:07
Speaker
you know Obviously, legislation came out of that. But I think to prove my point, Mike, Dodd-Frank was a huge piece of regulation that came out of that. And I think today it's still the largest piece of business legislation ever passed anywhere in the world, measuring it on the number of pages. I think if you print out the bill two-sided, it's more than six, its stack it all up, it's more than six feet tall, how long that bill was.
00:43:36
Speaker
The reality is, is one of the key components of that process is that our profession was exempted from that regulatory reach. It was a big part. I mean, there's some really interesting meetings that I was in making the case that the profession should should be exempted from that ah because of the other regulatory regimes that were in place and working ah from from that standpoint. And ultimately, ah ah Congressman Barney Frank agreed with that. He was the House author of that.
00:44:05
Speaker
ah Senator Chris Dodd of Connecticut was the Senate author of that. ah ah you know, and and and they both agreed. Congressman Frank was was had been in times in his career critical of the profession, ah but when presented all of the facts and circumstances, he was very rational in thinking on that, and he exempted the the profession from that bill. And so that is, I think, a testament again to how the profession took the changes at all levels, embedded it to the best we possibly could, took our role very seriously and in a committed way. And, you know, you're talking about something that a decade or so later that is happening um that that obviously was high profile. But again, the profession was more on the periphery of that.
00:44:57
Speaker
So you're you know you're still, I'm not going to say new at this point, you know you're now um you know more than a decade into your role at the AICPA. and But you've dealt with early on Enron and WorldCom and Sarbanes-Oxley and then this but global financial crash and then you know Dodd-Frank and all of this.
00:45:15
Speaker
That's going on on one avenue, but like parallel to this, we talked about the new CPA
Modernizing the CPA Exam
00:45:20
Speaker
exam, right? Going from that old paper and pen that anyone that is my age and older remembers twice a year, big pier on the river, wherever you took that exam, now we're gonna modernize it, go to a computer exam.
00:45:31
Speaker
There had to be, I assume, you know a lot of issues, a lot of challenges, but at the same time, a lot of success transitioning from the traditional paper and pen to the computerized format. So can you walk us through that process and let us know what were the big challenges and successes of the process?
00:45:48
Speaker
Well, you have to remember, before the debate on the computerization of the exam, only a few years before that was a huge debate about putting a plastic four-function calculator on the exam.
00:45:59
Speaker
So prior to that, there wasn't even a calculator on the exam. And that was... had only been implemented a few years. And in the late 1990s, we began the process. and and And the words I used in a lot of speeches was that you can't tell the world that you're you're this leading edge profession, that you're this local, national and global profession, that you're the most trusted advisor, you and that you're technologically astute profession. You can't tell the world that and have
00:46:31
Speaker
a paper and pencil exam. It just doesn't compute to the man on the street, back to my man on the street notion. And it certainly doesn't compute to the student on the street that is thinking about becoming a next generation CPA.
00:46:45
Speaker
And i I pushed very hard, but I wasn't the only one, but I pushed very hard. Now, you know, the states control the CPA exam, ultimately, the state regulatory agencies. We provide the exam and the grading of the exam to the states.
00:46:58
Speaker
So you can't just unilaterally make that decision. Oh, we're going to change the exam. It has to be communicated and sold and hear people's different input. And, you know, we put simulations ultimately in the exam. It was a major project. I will call out Orlean Thomas, who was a senior executive on our team.
00:47:17
Speaker
who led that project, ah the cooperative work with the National Association of State Boards of Accountancy, NASBA, the people who who were working through that process there, and ultimately a lot of volunteers on on how to design questions and how to make the transition there. It was multi-multi-year and tens and twenties of millions of dollars, more than $40 million dollars to actually make that switch.
00:47:44
Speaker
um And it had to be done well, right? You couldn't have failure because the credibility of the profession, the credibility of of of what people who were aspiring to be CPAs would think about as related to the exam, the security had to be you know, beyond reproach.
00:48:02
Speaker
And so it was ah it was a very significant undertaking and investment, frankly, upfront investment. At the time, it was the largest investment ever by the AICPA at any one project.
00:48:14
Speaker
I have to remind people though, that the CPA exam is really a marvel in some ways. you know we We in the US are in a country with 50 states, 51 initially with the District of Columbia, ultimately today, 55 different jurisdictions when you include you know Puerto Rico and Guam, et cetera.
00:48:36
Speaker
And so you have this individual notion. And we are a country governed by a constitution that one of its founding principles is states' rights.
00:48:47
Speaker
Yet our CPA exam is well is uniform around the country well more than well over 100 years. And many of the other professional exams are not uniform around the country. In fact, I don't know that any of them are.
00:49:02
Speaker
And so um the the forethought of people in our profession, both from the regulatory perspective and the profession's perspective, more than 100 years ago about having a uniform exam, albeit in that environment, a paper and pencil exam,
00:49:19
Speaker
ah is really phenomenal. And so the computerized exam allowed us to to do that, allowed us to to to to defeat some of the other challenges of moving a paper and pencil exam around the country, but also we had to maintain the uniform nature nature of it.
00:49:37
Speaker
And so we had to have every state on board. it it It would not work. It was not going to be in the best interest of the profession if every state, if we couldn't have that universal approach. And and we were able to maintain that, again, through partnership, state boards, NASBA, the AACPA, and the volunteer aspects. And it was launched in 2004 with the with for its time, some pretty sophisticated advances but on how you test, um you know, use of simulations and the like.
00:50:06
Speaker
And frankly, many, many, many iterations since then have all been successful in that process. and And really, back to my statement of you can't be, you know, a forward-looking,
00:50:20
Speaker
a you know tremendously aligned with the times profession and have a paper and pencil exam you can't just do that once and be an exam that doesn't continue to change and so um that is you know we're very fortunate where where we are today and and we continue to use the cpa exam as as a is really i think a true great story globally as to how assessment really takes place and but it was a huge undertaking and it was a huge a huge challenge.
00:50:49
Speaker
One last point, and I think you'll find this interesting, Mike, particularly coming from Becker. I used the reference of the calculators. In the end, it was far more controversial in the profession and in regulators to put ah ah literally a $1.99 calculator on the exam than it was to go to the computerized exam.
00:51:11
Speaker
And you you know there's some lessons learned there. That was the major change from the tradition of you take an exam with a pencil and a ruler and you make the mathematical computations.
00:51:24
Speaker
The use of a calculator actually was the gateway to really getting to a much more significant change ah that of the computerized exam. that That is very funny, and that that is a great story to make that connection between the calculator and the computerized exam.
00:51:42
Speaker
Now, this was about 2004, and simultaneously while this is happening, we know that this is the same time when states are starting to approve the 150-hour rule from licensure from 120. And that went on all the way to about 10 years later, 2014, before all 55 jurisdictions had adopted that rule.
00:52:02
Speaker
Now, I know the exam in that time changes somewhat, but I think the first major change to the exam happened right after that around 2017. And, you know, that's where you get higher level analysis questions, written communication questions.
00:52:17
Speaker
So my question to you is how much of the exam changes in 2017 in these higher level questions can you tie into the 150 hour rule becoming, you know, ratified by all jurisdictions?
00:52:32
Speaker
Well, all things have connection. But I would say, if we're honest, the elevation of the education standards was really about elevating the profession to a much hot nationally to a much higher level of standing on par with professions like medicine and engineering and and law, etc.
00:52:53
Speaker
And that was important positioning for the profession and and one in which the profession, if we really go back in history in the 50s and the 60s and the 70s, was viewed way more of a trade than it was as a profession in the mind's eye of a lot of people.
00:53:09
Speaker
And elevating those education requirements was really part of that. That really had. Now, that's not to say changes in the exam were oblivious to that, of course, that that there is some connection.
00:53:22
Speaker
The far greater connection to the changes in the exam is the rapid change in and the technological implications of how audits are done, what financial reporting, where it's going.
00:53:36
Speaker
what how business is done and the technological implications to business in general. And also things like international accounting standards, modernization of accounting to be reflective of a modern business environment, changes in the auditing standards to be reflective of of technology driving changes and how audits are completed.
00:53:59
Speaker
i think it met massive tax changes that had occurred you know along the way. Those things all are are all probably more attributable to to that next wave of changes.
00:54:11
Speaker
But you did say this in your question, but I i want to make this point. The exam always changes. It changes year to year on on the content to some degree, what's tested, major elements of change about um you know sort of bodies of knowledge as opposed to content changes because the world is changing and standards are changing or two different things.
00:54:35
Speaker
So the world, ah the exam is always keeping up with those, the second part of that, standards changes and and and things of that nature. But fundamental content thinking is a more rigorous process that takes that takes place periodically.
00:54:50
Speaker
Okay. So you make these changes in 2017, and we see a little dip in enrollments and people going into accounting, which is normal when you have major changes to the exam. and And there was a lot of advisory groups that have been formed to try to figure out why is a pipeline diminishing? How can we turn it around? and And you know You ask 10 different people, what's the cause of it? You get 10 different answers. you know Who says lower starting salaries compared to maybe other professions? And they don't realize how quickly they increase over time or additional 30 hours or COVID-19, so many things.
00:55:21
Speaker
And then last year, we go up come to cpa evolution. And I think we're starting to see the trend reverse now where the pipeline is starting to increase. So what's your take on that you know period of decline, maybe some reasons for it, and what you see happening now with CPA evolution in the new example?
Enrollment Challenges and Future Trends
00:55:37
Speaker
format?
00:55:38
Speaker
Again, all things connect to some degree. Some things have greater impact than others. First off, the human capital element in our profession has always been cyclical. ah From the period of 1990 to 1999, we had a 50% decline in people in that decade majoring in accounting.
00:55:54
Speaker
Why? Because the internet had a huge impact on people's interest in accounting. The late 1990s was the birth of accounting. But we get to the the birth of um ah the implications ah ah of the internet with had implications on where people wanted to go.
00:56:09
Speaker
So to be clear, people wanted to go into technology unless best minds came into accounting. By the time we get to 2005 or 2006, we have record numbers of people majoring in accounting.
00:56:20
Speaker
have the computerized exam in place by that point. And, you know, People thinking about the internet as a panacea for everybody to go make millions and millions has changed as well, and that reverses.
00:56:31
Speaker
Now, to the era that you're talking about, there are a lot of ah lot of implications to the human capital element. First off, and you you pointed out, salaries is a big deal. Demographics is a big deal.
00:56:42
Speaker
We have generations, some that are bigger than others. you know we have um ah you you know We have different sort of interests that different generations have into the process.
00:56:53
Speaker
um the The salaries, what's expected of people, work-life balance, all of those things have implications. And it's very easy for people to pick a thing, education requirements or salaries or whatever.
00:57:08
Speaker
The reality is it's some combination of all of those things. On the down and on the up. But the most fundamental thing that led to the CPA Evolution Project was the hiring patterns of the talent and skill sets that people were looking for in hiring.
00:57:24
Speaker
And so let's let's peel back that onion a little bit. We're talking about the years right before COVID, basically. And what has happened in that is that our own information shows that while total hiring in public accounting firms was relatively flat,
00:57:43
Speaker
ah accounting from pure accounting majors at that point in time was actually declining, which meant that firms were hiring people with different skills. The terminology of the day was data analytics and other kind of technological skills that were present in that process.
00:58:00
Speaker
And so the demand of total hiring was the same, but the mix was starting to change. And so that required a look at what was the mix of what was in the CPA exam, knowing, of course, the CPA exam also drives what is the mix in an accounting curriculum that people use at the university level.
00:58:19
Speaker
um And so, you know, I now, you know, I mentioned Arlene Thomas, who did the computerization exam. Now Sue Coffey is in a very similar role um at that point in time.
00:58:30
Speaker
And we asked the question, if you roll the clock forward, let's say from the 2017, 2018 period, to 2030 or 2035, is it more likely that the person who signs off, Apple was the largest company in the world at that point, the person who's signing off on the Apple audit, are they most likely to be a GAAP, generally accepted accounting principles, GAS, generally accepted auditing standards expert, are they more likely to be ah systems and technology expert?
00:59:06
Speaker
Fair question. No one can answer the question with certainty, but a fair question. And you at least have to provide for the notion that systems, both systems that drive internal control, but systems that drive accounting and financial reporting, et cetera, were going to be a very significant process. And so how do we build that type of thinking into the exam process?
00:59:28
Speaker
And so we propose that with our friends at NASBA and the state boards of accountancy and to the profession of let's change the mix. And what came out of that discussion was, and the body of can we just constantly increase the body of knowledge that everybody has to have?
00:59:44
Speaker
Or is there ways to design the four-part exam so that people can have a general knowledge of a lot and a specialized knowledge of some deeper dive? And that's what led us to the multiple part and the sort of the core plus one concept.
01:00:01
Speaker
that CPA evolution is all about. And we focused on systems, we focused on you know tax activities, and we focused on accounting as sort of the disciplines with different names today. But that's how they were described um you know coming about in that process.
01:00:18
Speaker
And we went again, just like the computerization of the exam, a very deliberate and and conscientious, I would say, engaging of people in our AICPA Council, the state societies, the state boards of accountancy, the regulatory community, the federal and the national regulator community, I think, ah to really make sure that we were doing the right thing in that process.
01:00:40
Speaker
ah We were able to convince people that was the right process. We got consensus and then we went about making the changes that are that are now in place. And, you know, it is driving what the background of an accounting degree looks like, which I think is essential to the future of the profession.
01:00:57
Speaker
Yeah, I think you're just spot on with everything. And as someone that's been teaching for Becker, teaching people to pass this exam since literally 1998, it's been great. I mean, it makes a lot of sense that, hey, we have our three cores, but I need a deep dive. I need you to be an expert in one of these areas that you will need to work with throughout your career. And Who knows what 2030, 2035 holds? So yeah I applaud the effort, and I think it's working out very, very well. So it was really great foresight on your part and AICPA.
01:01:29
Speaker
And just talking about today, like 2025 right now, We know there's a lot going on with alternate pathways and some states want to go to 120 as one pathway, but still keep 150. Let's just talk historically. You alluded to 150 earlier. We discussed it a bit.
01:01:45
Speaker
But just looking back historically, the big thing about 150 was to elevate the profession. So can you just give a little light on how you think it was successful and how it really did elevate the accounting profession?
01:01:58
Speaker
Well, I think it required the profession to be to to be taken way more seriously than it was in the marketplace before. And and there's an exception to that. Audits of public companies was already was there.
01:02:09
Speaker
but But again, when you think about my notion of of local, national, and and international, the the element of the profession in the mind's eye, the entrepreneurial businesses, of of regulators in a different way, of markets in a different way, private sector markets as well,
01:02:27
Speaker
I think it really did do that. ah it was like It allowed different ah disciplines like technology to come into play. and And firms today are highly diversified. Those disciplines were reflective of their personnel.
01:02:40
Speaker
And in hopefully in many instances, those individuals are CPAs. I guess the best analogy I could give you, Mike, on this is i will tell you, and and I lived this, if if if you took the stereotypical 100,000 person town in the United States of America in the 1970s, and you walked down that main street, which is where was was the symbolic of what business was like in that 100,000 person town.
01:03:06
Speaker
And you asked the question in the mid 1970s, who are the movers and shakers in this on this main street? What professionals? The answer you would get if you were honest about who were the mutant were in the 1970s, it was the doctors, it was the corporate lawyers, and it was the civil engineers, the people who did government work projects.
01:03:30
Speaker
If you started that, if you did that same thing in the, let's just say that the 20 teens, you know, 2010s into today, and you walk down that same 100,000 person town, if you're honest, who are the movers and shakers today?
01:03:48
Speaker
It's the trial lawyers, it's still the civil engineers, and it's the CPAs. And to me, that sort of impact on society, career success capabilities of this profession has changed dramatically.
01:04:07
Speaker
And that sort of is is just my sort of simple benchmark of looking at how the profession has evolved. Now, to be fair, you asked the question about ah the education requirements, 150 hours.
01:04:21
Speaker
To say that's the only thing that impacted that would be absolutely wrong. It's not the only thing, but it was a contributor to that. Okay. Fantastic. ah I think that makes a lot of sense.
01:04:33
Speaker
Now, i if you could just hang with me for a few more minutes. I just have just a couple more questions I have to ask because I really would love to hear your opinion on this. let's just You're talking about the future. We're talking about technology, right? There's things we're dealing with now that are changing the way we live.
01:04:48
Speaker
blockchain, crypto, other digital currencies. you know There's risks now with respect to money laundering, financial crimes going undetected. How do you envision the CPA exam being married to all of this new technology and being tested? Will it just be through the new ISC, the Information Systems and Controls exam? Or is it something that is yet to be determined how you marry these concepts together?
01:05:15
Speaker
Well, I think being consistent with the core concept, I think some of that will be in the core. It is inevitable that some of that is going to be there because first off, it's it's being embedded in regulation. It's being embedded in standards.
01:05:28
Speaker
It certainly is. It relates to some of those things, the notion of what is audit evidence from an audit perspective. um So there's certainly a accounting pronouncements that are coming out in those areas.
01:05:39
Speaker
So, you know, in the core of understanding all of that, I think that that is a that continues to be a component. So when we were going through CPA evolution, the example I used to use derivatives of accounting is one of the most sophisticated elements of accounting.
01:05:53
Speaker
Is it important for every person, every CPA to understand the detail mechanics of derivatives accounting? The answer to that question is no. But should every CPA know what a derivative is? The answer to that is yes.
01:06:05
Speaker
And so it's sort of if you apply that logic to what you just described in cryptocurrencies and other types of of ways that that that tech that technology is driving you know currency exchanges, transactions, et cetera, the answer to that is going to be yes.
01:06:20
Speaker
um Does it end up being, you know you know, we got a core plus one with three sort of options today. Does that end up being another option in the future? could. It could easily.
01:06:31
Speaker
it could be embedded into the systems element. You know, maybe that's the initial element to it. It could. I think facts and circumstances have to apply from from that standpoint. And so,
01:06:43
Speaker
i I do think, though, that that is part of the business world. And by the way, it's not just the big capital markets world. It's small business world as well. It's the investment world as well.
01:06:54
Speaker
And so I think it's a very important part that gets embedded gradually and then to a greater degree. All right. So we'll just kind of wrap things up because you've shared so much information and you've been so generous with your time. i we really, really appreciate it. But I want to ask now, just kind of looking back, doing a little reflection, what are the accomplishments from your role with the AICPA that you're most proud
Barry's Legacy and Future in Accounting
01:07:17
Speaker
of? And what's the legacy that you want to leave behind for future accountants?
01:07:23
Speaker
Well, I think legacy is determined by other people, so I'll let other people make that. I think the accomplishments, look, there's a lot that I and that i can make. first First, um you know things like the combination of AICPA and SEMA, the elevation of management accounting, the making of a global footprint for the profession emanating from the U.S.,
01:07:41
Speaker
in a much different way, I think was well will be talked about for decades to come. I think that that is a really important notion. We talked a lot about the computerization of the exam. That was a really strong signal to where this profession was going. And I think that...
01:07:56
Speaker
um it It was way more than just the exam, is I guess what I i would say. The creation of CPA.com, providing the technological capabilities to smaller firms, I think is a critical element that will be with us 40 years as well um and and is is a critical component.
01:08:17
Speaker
um But, you know, and there are many, many, many, many others. I think the way I would say it is that what I'm most proud of is I think And I say we, because it was certainly, as I said earlier, not just me.
01:08:31
Speaker
We tried to create an environment of permission for the profession to succeed in a much broader way than its traditional notion of accounting and auditing and tax.
01:08:44
Speaker
We tried to create, with within the the commitment of being the most trusted advisor and wrapped in ethics, that the profession's role should be, it was in the public interest for it, to be much broader, much more entrepreneurial, and much more um aligned with the evolution of where the world was going.
01:09:05
Speaker
And I think that permissioning was grabbed onto by really smart people in our profession really successful people in our profession, really committed people in our profession to really bring the profession into that notion.
01:09:19
Speaker
And I think when you look at the size of firms, the next tier of firms, the entrepreneur or nature of firms, the sophistication of ah people in corporate world, i think I think the profession, the men and women of the profession have really done that really well.
01:09:35
Speaker
And in a lot of ways, professional bodies were about saying the things you couldn't do. And we really tried to shift that to be about a profession. Not only can you do this, but you really ought to think about doing this in a broader way.
01:09:50
Speaker
Wow, yeah. it's There's so much for you to be proud of, ah not you meaning you and the AICPA in your tenure there, that that is just one point. And and there are a lot of firms that are you know very thankful for all that vision that you had.
01:10:03
Speaker
Now, let me just ask you this. What's next? What's the role that Barry sees himself playing in the future of accounting, if any? Where do you see yourself going from this point? Well, I'm doing a lot of things. My family might say too many, but i'm i I picked ah one of the next tier of firms to be an independent chair. I'm not partner in the firm to be the and and independent chair.
01:10:29
Speaker
a non-executive chair, if you want to call it that, of Baker Tilly International. I think the next network of firms is is a very exciting and and growing aspect of where this profession is going to go, including on a global basis. I've done a tremendous amount on a global basis, and that was a very interesting thing for me to be able to do. I'm doing some work with some companies that serve the profession.
01:10:51
Speaker
I'm doing some work with ah with an AI startup that I think is really about building capabilities of helping young people get business acumen quicker in their careers so they can be more successful in their careers. That is of interest to me and I think very important to the next generation of CPAs.
01:11:08
Speaker
i'm I'm doing some work with some not-for-profits that are in different areas of the world, you know different areas of the sort of the ecosystem, including um you know helping young people understand how government works and you know in a real rational way. And so those those are the different types of things that I'm doing. I continue to do some work with CPA.com in the technology space for, yeah again, smaller firms and working in that space. So I'm going to touch a lot of different things and I'm sure there'll be some other things that'll come about that will bring some interest as well.
01:11:41
Speaker
um But I have a love for this profession. It's been great for me. And um I think it's it's just begun as far as its evolution. And so it's sort of exciting to still be able to see different aspects of it.
01:11:54
Speaker
Okay, so last question for you, i promise. You have so much information, but if you could give advice to some you know young person right now who's a junior or senior in high school, or maybe they're just starting their college career, if you could give them advice with respect to choosing accounting as a profession, why does someone want to go into accounting today and make it their profession?
01:12:20
Speaker
The easy answer is the world is gonna change so much that it is very, very, very hard to predict if you're, let's just pick a 20 year old, what you're gonna be doing and how you're gonna evolve in that process.
01:12:34
Speaker
And being aligned with a profession that is really on the inside of all of those decisions on how businesses evolve, how technology evolves, how it's put into practical use, how the public is protected in that environment.
01:12:49
Speaker
It in ah is really in a way um being in a position that dead couldn't be better described. And you add to that, are a profession that is viewed as the most trusted profession in the world, that is highly ethical and trusted in a world that just wants trust, that wants sort of that rock to point to to point to that they can always count on, the world that your siblings and your friends are going to work in.
01:13:17
Speaker
And um we have that stature as a profession because of the generations of people that have come before you. And if those two things are important to you, um i don't think there is a better professional career that that you can have.
01:13:33
Speaker
And if if you halfway in your career, you want to be an entrepreneur, you want to create the next new technology or the next new business innovation, the background that you have in our profession is going to propel you to be successful in that process as well.
01:13:47
Speaker
And so yeah it brings all of those attributes. I like to say I had the greatest job in the world because I got to work. You couldn't have a collection of people who were more ethical, more intelligence, did more for society than the people who are in our profession.
01:14:04
Speaker
And if you are a person who's motivated by that, joining a profession like that can be incredibly rewarding. And so if I was 20 years old, I would definitely know everything I know, I would go into this profession because of all of those aspects.
01:14:22
Speaker
um I have an eight-year-old grandson. I went to his grandfather's and grandparents' day at his school about a month ago, and they had to write um they had to write what they thought their career path would be on on things that were posted on a bulletin board And you know it's a relatively small class. And he posted you know a CPA profession on that.
01:14:45
Speaker
I think that was a great point. But the other good point of that, he wasn't the only person in that class that posted CPA. So i think I think the world needs a group of highly competent, ethical people who can see the big picture, but also can see this this the smaller picture and and basically be the mind that helped navigate wherever this world's going to evolve to.
01:15:10
Speaker
And I think our profession is going to do that. Yeah, I agree with you 100%. And I look at your career, all the things you talked about from working for a public firm to going to a state society, going to the AICPA, now going back again to a public firm in some capacity.
01:15:25
Speaker
There's so many more doors and so many more opportunities in our profession than in a lot of other professions. I mean, When you're an accountant, you're a CPA, and you understand the the language of business, the sky is the limit. and And that's where I try to always relate to students as I speak to them, just letting them know about these boundless opportunities within the world of accounting.
01:15:46
Speaker
So Barry, listen, on behalf of all of us at BECCA, I sincerely appreciate you taking all this time out of what I know is your incredibly busy schedule and you share your experiences, your insights in the AICPA, the world of public accounting, the history of accounting, so much great information we got from you.
01:16:04
Speaker
And you've been doing it for 30 plus years and always doing it and inspiring others as you give your talks and you meet with them. and And I really know, I have no doubt that you're going to continue to drive the world of accounting in some way, shape or form. So we really do wish you the best of luck on future endeavors. We thank you for all of your dedication to our profession over the last three or four decades.
01:16:26
Speaker
And hopefully you and I can sit down again and talk about all the new stuff you're doing in another ah year or two, because I'm sure it's going to be some great stuff. So Barry, thank you again. Thank you so much. Thank you for having me. I enjoyed being with you. And thank you for the work Becker does to help bring along the next generation of CPAs. That's important to the profession. So keep up that good work as well. Mike, good being with you.
01:16:48
Speaker
You too. Thank you, Barry. Wow, that was some interview with Barry. Now we're done the interview, but I want to make sure everyone's aware that you can earn CPE credit just for listening to this podcast.
01:17:00
Speaker
All you need to do is just visit the show notes to get your credit. And good news, if you're already a prime CPE subscriber, you can earn these CPE credits at no extra cost.
01:17:11
Speaker
All you need to do is log in to finalize them. Alright, I want to thank you again and i hope to see you all in a future episode of Cool Careers in Accounting.