Life has always tossed me a set of rules. While not all of them may be followed, they do exist. And while pondering this thought, I come up with at least three sets that have guided my life and profession. The first is encompassed within Biblical rules. These have never changed, but my understanding of them has. We all have an underlying set of standards by which our character, our integrity and virtues are set. I would challenge any reasonable person to find a more enhanced set of rules to follow than those clearly established in the Holy Bible.
The other two sets of rules that have molded me are professional rules. The first set of professional rules is the AICPA Standards that establish the rules for accounting, reporting, auditing and ethics. These rules are extremely important to each and every CPA. Without these standards the profession would have no consistency. We could all simply choose to define certain assets in any fashion we wished, which wouldn’t work. We could all choose to measure ethics under our own set of values. Again, that would not work. And while the lines may be fuzzy at times, our professional standards have survived the test of time during my career. They have generally given a consistent set of rules that should be used thus providing an environment that has proven to be successful thus far.
The third set of standards is the tax law, which includes the Internal Revenue Code, IRS Regulations, Committee Reports, instructions on the forms, court cases, IRS audit manuals and a vast array of resources that make up the tax rules for the US Government system. Added to that there are South Carolina tax laws, blended with the tax laws of all other states and even non U.S. jurisdictions that must be respected and followed. These rules are somewhat difficult as they seem to constantly change in various ways. I get email updates each day on changes and/or clarifications of the tax laws. The rules are challenging, but do provide some limitation of tax reporting that all professionals should use as a base for computing tax liabilities under the facts and circumstances of each client.
While CPAs are expecting rapid and continuous change in the tax laws, the Professional Standards are somewhat slower to change. But change they will. When I started my CPA career, the FASB had just been formed. Today we have the FASB, as well as international standard setters. And by December the profession will be given the recommendations of the Blue Ribbon Panel relative to their suggestion to establish a new board for private company standard reporting. The debate in my early career was for or against “Big GAAP and Little GAAP”. The titles may have changed, but the core of the discussion has not. This board will only be able to “recommend”. They have no authority and will merely be reporting their recommendations.
Once this Blue Ribbon Panel reports its recommendations I believe it is the responsibility for each and every CPA to be “proactive” in this matter. Recently we had about 87,000 of the 350,000 members of AICPA vote on a membership issue. I would hope that individual CPAs would weigh in more vigorously on these upcoming recommendations. Watch your mail and email from SCACPA and the AICPA. The recommendations will come your way via multiple sources. And as SCACPA members, I would hope that many of the 6,000 CPAs in South Carolina will express their opinions related to this subject.
Watch out for those rules. Let’s be proactive on this subject. I would rather have a hand in making the rules than simply letting the rules “make us”.
Blogger: Charles ‘Eddie’ Brown, CPA