Friday, June 29, 2012

AICPA - more

When I made my post, "American Institute of Certified Public Accountants," I was unaware of this article, "CGMA ploy brings Cognitors back as CoGMAtors; is AICPA 2.0 next?" which appeared March 1, 2012 on the Accounting Today web site.

The authors of this article clearly and succinctly express my views and concerns on this issue. Unfortunately, my agreement extends to their assertion, "Do not expect the Elite to repent and resign, no matter how embarrassing the situation. They are entrenched and got there by wittingly or unwittingly sacrificing some or all of their self-respect. Surely they would deny it, but their actions reflect these three premises: The institute exists for their benefit, they deserve to be on top, and they can do no wrong."

I also agree with this suggestion, "Do not resign your AICPA membership. Although you may be thoroughly repelled, even disgusted, the institute needs as many principled members as possible to vote this scheme down and provide real leadership."  Unless a critical mass of caring, concerned AICPA members come together to restore the focus of that organization to serving its CPA membership and the profession of public accounting, nothing useful will be accomplished. Bailing out of the AICPA, as desirable as that may be, will do nothing to slow the "Elite's" devaluation of Certified Public Accountant as a meaningful professional certification. In fact, CPAs who are not members of the AICPA should seriously consider joining and adding their voice to those who oppose the course being taken by the current leadership.

Thursday, June 28, 2012

Here's a radical suggestion.

I suggest, after seeing a YouTube video of a woman being bullied, that people who want "to do something" get out their check books and donate money to the nearest shelter for abused women.

Just sayin'.

Wednesday, June 20, 2012

Faculty and Boards of Visitors

One of the great myths of public higher education in Virginia is held by the faculty. They think they make the final decision on anything. The faculty have input on a lot of decisions and sometimes that input is given significant weight by the actual decision makers, the Board of Visitors. One of the things the faculty don’t get to do is decide whether or not the university president is fired. Even though they don’t have final decision authority, faculty members are a valuable and motivated resource to use in making decisions about the mission of a university and how best to achieve that mission.

Another great myth of public higher education in Virginia is held by the Board of Visitors. They think they don't have to worry about faculty views and concerns unless it is convenient to do so. They think the decision style they use running their businesses should be used in their roles of being the final decision authority of their respective colleges and universities. Too many of them believe that once they’ve made a decision, such as coercing a president into resigning, that the rest of the organization should just quietly deal with it and move on. They aren’t used to having their decisions challenged, particularly in public, by those beneath them in the organizational chart.

At the University of Virginia, the Board of Visitors, particularly the rector and vice-rector (fancy academic words for chairman and vice-chairman), screwed up big time.  Those two individuals decided the UVA president needed to go so she’s gone. Maybe they did it the way they did in a misguided effort to minimize public controversy; if so, they really do not understand the academic environment or the deep emotional investment faculty, along with staff and students, have in the well-being of their institution.

Maybe rector Helen Dragas and former vice-rector Mark Kington were bluffing when they told president Teresa Sullivan they had the votes to fire her or, maybe they weren’t.  The way the entire board fell into line when they finally all got together, it seems they weren’t bluffing. Personally, I wish she had forced a meeting with the entire board before giving up to be absolutely sure the votes were there to force her out. Perhaps she didn’t do that because she realized this Board of Visitors was just never going to get it, was never going to understand the differences between running a first class university and running a business.

Complaints by Dragas that Sullivan wasn’t moving fast enough to make changes supports my belief that Dragas just does not understand that running a major university is not like running a business.  Even though the faculty have no legal authority, only a fool would ignore them while making decisions affecting their professional lives and the university as a whole. Any competent change agent will tell you that the people affected by the change have to buy into it. The way you get that buy-in is to involve the affected people in the process from day one even if that involvement is only consultive. Sullivan did that in moving towards useful , successful change at UVA; that got her fired. Let me be clear. Sullivan was fired for using the correct process for bringing about effective, correct, desirable change at the University of Virginia. That process is slow but, any decision process other than absolute dictatorship is slower than a dictator prefers.

The timing of this action by Dragas and Kington does show some understanding of academe. They did it when the presence of faculty and students would be lowest. If that is how they selected the time, they learned that dedication and caring trump vacations and summer jobs.

Today’s issue of Charlottesville’s  The Daily Progress reports that vice-rector Kington resigned right after the BOV appointed Carl Zeithaml (dean of the McIntire School of Commerce) as interim president. He didn’t actually admit he had screwed up but he at least recognizes that healing is needed at UVA.

A potential exodus of talented faculty may be starting. In the same article, The Daily Progress reports that William Wulf (AT&T Professor of Computer Science and University Professor) has resigned. Wulf is quoted as stating in his resignation letter, ”I do not wish to be associated with an institution being as badly run as the current UVA.” Note that few faculty members who can’t find another job will be able to do what Wulf did. 

The ones who do leave will be the best and the brightest, the ones with the skill set that allows them options other than working for an organization they believe to be incompetently or unethically managed. I’m not saying everyone who stays at UVA couldn’t find another job.  I am saying it takes a great deal of moral courage to do what Wulf did. Also, in a faculty as large as UVA’s there are, without doubt, those who will stay because they believe the Board of Visitors did the right thing even if in the wrong way. Others will remain because of a sense of duty to the university, either hoping they can help fix the problems or being resigned to going down with the ship.

There is one thing I am fairly certain of.  Teresa Sullivan will not return as president of the University of Virginia without several more resignations by the Board of Visitors.

Monday, June 18, 2012

American Institute of Certified Public Accountants

I’m a member of the AICPA.  I get really useful, relevant materials that greatly assist my practice of public accounting. I also get cheap insurance. So despite what I say below, I don’t believe the AICPA is all bad.

The AICPA's mission is to provide members with the resources, information and leadership that enable them to provide valuable services in the highest professional manner to benefit the public, employers and clients. In fulfilling its mission, the AICPA works with state CPA organizations and gives priority to those areas where public reliance on CPA skills is most significant.”

The mission statement used to be to provide CPAs with resources, etc. but no more.  Since you do not have to be a licensed CPA to be a member of the AICPA it is not surprising that “CPAs” was changed to “members” in the first sentence . The last sentence of the current mission statement reads like an afterthought.

The “AICPA Values and Vision Statement” doesn’t mention CPAs at all. The first sentence reads, “The AICPA is the premier national professional association in the United States.” While that may be true, it used to read, “The AICPA is the premier national professional association in the United States of Certified Public Accountants.”

Over the past few years, a member of the AICPA could acquire another AICPA issued professional designation by claiming to have the required experience and paying a few hundred dollars. Part of the marketing campaign was to get in early so you wouldn’t have to take the exam which would become mandatory for the new designation in the near future. Examples include Certified Information Technology Professional (CITP) and Certified in Financial Forensics (CFF). With the newest “certification for dollars” (Chartered Global Management Accountant), people don’t even have to be AICPA members to get a few more letters to tack on behind their names.

Voting membership is now available to non-CPAs who have done everything (gotten the education, passed the exam, obtained the experience) but have never bothered to actually get licensed as CPAs.  This is purely an effort to gain members and to increase revenue for the AICPA.  It has nothing to do with serving what, so far, is still the core constituency of the AICPA, Certified Public Accountants.
I am not the only CPA member of the AICPA who believes the top management of the AICPA has forgotten its original mission, its primary reason for existing. The primary mission of the AICPA was and should be to help CPAs be better CPAs.  Another  important function was and should be to enhance and protect the CPA brand. I, for one, do not see "certification for dollars" sold by the major CPA professional organization as protecting the CPA brand or assisting CPAs in being better at what we do.

I'm not sure if I'm being cynical or just fatalistic when I ask when is the Institute going to put forth the idea of changing the organization's name to something like Global Institute of Accountants (GIA)?  Since you no longer have to be a CPA to be a voting member, or even an accountant, it appears to me to be a real possibility.

If the AICPA were really concerned about the profession of being a CPA we would be seeing more focus on business ethics, as one example, than on growing our membership by adding non-CPAs to the rolls. As another example, if the AICPA were really concerned with enhancing the CPA brand then, the first, iron clad requirement for all these new certifications would be possession of an active CPA license.  That latter used to be the case but the CGMA is the first exception.

So what do I recommend? First,  the Virginia State Board of Accountancy should revise its rules so that only AICPA members who are licensed CPAs are allowed to use the phrase “Member of the AICPA”  on their signage, business cards, advertising etc.  A similar rule should be put in place for membership in other organizations using CPA or Certified Public Accountant in their names.  Failure to prohibit such use could easily create the impression that those non-CPAs were licensed Certified Public Accountants.

Second, I suggest anyone seeking professional services use professional designations only as a first filter in making a choice of provider.  If the AICPA will give you a credential simply because you say you have the necessary training and experience, then what are some other designations worth?

As I said in the first paragraph above, the AICPA is not all bad. In fact, it is a good organization of high value to CPAs. It should be noted that most of the useful work is done by volunteers and by AICPA staff who are well below the policy making level in the organization.  I am concerned, however, that the Institute is heading down a path that will make it less useful to Certified Public Accountants.  Its injudicious approach to membership requirements and manner of granting other certifications will make it less credible as an organization to government, business and the investing public.

Friday, June 15, 2012

The Tolling of Interstate 95

In my role as a Chesterfield Planning Commission member I was appointed, in January of this year, to the Richmond Area Metropolitan Planning Organization (or RAMPO). RAMPO exists to allocate federal highway money to specific projects in the Richmond area.

To do that, we need to know what highway projects are being funded from other sources so we don't duplicate efforts and stuff like that. Yesterday, we got an update on the tolling of I-95 proposed by Governor Bob McDonnell back at the start of his term. VDOT is moving forward on that idea. Their proposal is a single toll station in Sussex County north of Emporia collecting from traffic travelling in both directions. The toll would be $4.00 each way ($12 for 18 wheelers). To reduce avoidance tactics,  those leaving I-95 one or two exits before the toll station in each direction would pay $2.00 and those entering I-95 one or two on-ramps after the toll station would also pay $2.00. Thus, through travelers would, in theory, still pay $4 (or drive on local roads for even more miles). This plan is expected to generate $40 million per year.

There is a pot of federal money for maintenance of Interstate highways. Virginia gets money from that pot but if a toll is put on I-95, none of that Federal Interstate maintenance money can be spent on I-95. We will still get all those dollars but they will have to be spent only on the other Interstate highways in Virginia. So it appears as though the effect of tolling I-95 will decrease the amount of maintenance done on I-95 by $10 million and increase the maintenance on other Virginia Interstates by $50 million. That wouldn't be a bad deal except I-95 needs  more maintenance, not less.

But, there's an out according to the VDOT person making the presentation. Other federal highway money (he used bridge replacement as an example) isn't restricted to a specific set of highways but is often restricted in other ways as to how it can be spent. Another Interstate's maintenance activities could get a chunk of this $50 million being taken away from I-95 (say, $10 million used to replace a bridge) and transfer over to I-95 a similar amount (say, $10 million of bridge replacement money).

This is all well and good as long as I-95 needs more bridge replacement money than is currently planned to be spent on that highway. Well then, the VDOT guy would say, transfer safety money instead or some other specified use money to meet I-95's needs.

All well and good again as long as the restrictions on how these other pots of federal highway money can be spent don't keep enough of those dollars from being used on I-95.

 In short, $50 million per year currently planned for use on other Virginia highways will have to be spent on I-95. If that doesn't happen, the drivers paying tolls on I-95 will be funding maintenance of other Interstates in Virginia.

The VDOT proposal also calls for "open road tolling." That is, drivers will be expected to have transponders in their vehicles like EZ-Pass and to pay their tolls using that technology. As is the case on 895 and the Powhite Parkway, photos will be taken of toll evader's  license plates and they will receive a bill in the mail. Guess for yourself how many out-of-staters will respond favorably to that. (Don't forget, VDOT also wants to add a $1.00 per month fee for having a transponder in your car.)

Finally, I'm not persuaded that tolling I-95 is worth the costs. First, I find the projected toll revenues and operating costs to be optimistic at best. Second, the costs imposed on people in Sussex county to either pay $2 to $4 each way for local trips or to drive out of their way are ignored. Those costs, measured in dollars may be low in the greater scheme of things but they are significant to the people bearing those costs. Just ask Brandermill/Wood Lake residents who pay around $8 per day in tolls just to drive to and from work. (By the way, I don't whether people who live in Brandermill or Woodlake and work in downtown Richmond to have much sympathy for the potential plight of Sussex county commuters but, I expect those Chesterfield residents can guess the reactions of affected Sussex citizens.) Third, the qualitative costs of having additional traffic on US 301, US 1 and other local roads can't be measured in dollars so, even though they exist, those costs are ignored.

Public hearings haven't been scheduled yet but we're promised they will happen some day, real close to the time the application is due to the federal Department of Transportation.

For not much more information on tolling I-95, go to VDOT's Interstate 95 Corridor Improvement Program web page.