The certified public accountant of the future will do more than prepare tax returns. A lot more, according to Robert McDermott Jr., a CPA with Goluses & Co. in Providence and chairman of the Rhode Island Society of CPAs’ committee on CPAs in the 21st century.
The committee foresees the 21st-century CPA offering a full menu of consulting services as well as selling insurance and securities–activities that are strictly off limits for Rhode Island CPAs today.
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“He’s going to be more of a business partner, an advisor,” McDermott said. “It’s going to be a lot more than an auditor or a tax advisor.”
Proposed legislation developed by the American Institute of CPAs and the National Association of State Boards of Accountancy would clear the way for the brave new world of CPAs by easing some of the restrictions currently placed on CPAs. The legislation, dubbed the Uniform Accountancy Act, also would replace the hodgepodge of various state accounting regulations with one set of rules and regulations governing the profession.
“It’s trying to unify the 50 states because of the changing environment, the globalization,” McDermott said. “Right now we’re working with 50 different state laws.”
For example, if a Rhode Island CPA moves to another state, he might not be able to get licensed to work as a CPA in the new state because of differing education and experience requirements.
A handful of states including Massachusetts have passed the Uniform Accounting Act more or less as envisioned by the national CPA groups. And about half of the states in the country have passed some form of the legislation, according to Harlan Boyd, General Counsel for the National Society of Accountants in Virginia.
The legislation was introduced in Rhode Island for the first time last year, but the measure wasn’t passed by the General Assembly.
“Last year it was in its infancy, and, like in many states, it just never made it out of the starting blocks, which is typical,” McDermott said.
The legislation had not been reintroduced as of last week, but observers expected the Rhode Island Accountancy Modernization Act of 2000 to be introduced by the end of the month.
The legislation is controversial among CPAs, who are divided on whether accepting commissions for securities or insurance sales would jeopardize the traditional independence of CPAs. Some local CPAs privately said they are against relaxing the prohibition against commissions because such a move might hurt the aura of integrity and independence CPAs have built up over the years.
Supporters of the measure say CPAs need more flexibility to compete in today’s financial services market.
There also is some disagreement over the legislation between CPAs and non-CPA accountants. The National Society of Accountants, which represents mostly non-CPAs, worked against the legislation in Rhode Island last year because it would have required the CPA designation for certain kinds of accounting work that non-CPAs currently are permitted to do here.
The society’s Boyd expects the Ocean State to be a hot spot for the issue again this year.
“I am expecting Rhode Island to be one of the most active states this year,” he said. “I’ll probably be making several trips there.”
Beyond allowing CPAs to earn commissions, the legislation also seeks to eliminate the current requirement that CPA firms be owned entirely by CPAs. Under the proposed legislation, only a majority of a CPA firm’s ownership would have to be CPAs.
“This would basically take the handcuffs off of CPAs, which now are basically looked at as business consultants and business partners by our clients,” McDermott said. “But, unfortunately, we have to sub out a lot of this work such as computer consulting because we can’t have a computer expert who is not a CPA as a partner in our firm.”
CPA firms are free to hire computer experts without making them partners, but McDermott said it’s tough to get and keep top-notch computer consultants without being able to offer a partnership in the firm.
In the meantime, Thomas Antoske, an independent CPA in Smithfield, already is beginning to broaden his practice beyond the traditional tax and auditing duties associated with accountants. Antoske specializes in handling elderly care, which usually is fragmented between insurance agents, attorneys and accountants.
“The CPA is an independent function, and what we sell is our independence and integrity with regards to putting all these people together,” Antoske said. “We’re really a quarterback to make sure the plans and goals of the elderly are adhered to.”
“In the past,” he added, “CPAs were pretty much stereotyped. They came in at the end of the year, did the financial statements and tax returns and off they went.”
