‘Accounting’s most important man’ warns against lowering standards

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Barry Melancon, who has been called “the most important man in accountability” for his 30-year leadership of its professional organization in the United States, has sent a strong warning to his successors that they should not compromise values ​​in an effort to attract more people to the profession. .

Melancon is stepping down this month as the longest-serving CEO of the American Institute of Certified Public Accountants, overseeing a profession transformed by new technology and private investment but finding itself in trouble hiring people.

With young people attracted by high salaries and low financial and technological entry requirements, the number of people taking the agency-administered CPA exam has you fell a lotand accounting firms have sought improvements to make certification easier and faster.

In a wide-ranging interview with the Financial Times, Melancon expressed skepticism about some of the firms’ claims, and said the race to “below normal” could come back to haunt the industry.

He said: “We are a very trusted profession and we live in a world where there are not many ways to trust someone. “We need to respect the respect we receive from the community and from businessmen and from the authorities.”

The lack of accounting has been blamed by some companies for possible errors in their financial statements, and some US local governments and companies have complained that it is difficult to find auditors.

After initially resisting job pressure, the AICPA in September proposed to repeal the requirement that accountants have the equivalent of five years of college education, known as the rule of thumb. 150 hours – a year over 120 hours of regular courses.

Melancon made it clear that he had doubts about the need for such a change. “The 150-hour rule elevated our work, which in the 1970s was more like a craft than a job. It has raised the value of people in our work, and the quality of our work, and to deny that is to deny history. ”

Melancon was the last head of the AICPA when he took office in 1995 at the age of 37, and he has not hesitated to make changes in the past. He insisted on computerizing the CPA exam when others refused, and made the certification available internationally. He also advocated the creation of financial systems and other technologies that can be shared among firms. Accounting Today magazine has consistently ranked him as one of the most influential people in the profession.

The new spotlight is on information about the on-the-job training that the AICPA has created as an alternative to a fifth year of university education for CPA candidates.

The FT reported that a group representing major accounting firms wants a simple system than proposed, which will require managers to ensure that new people acquire a certain amount of skills, or “specific skills”.

Critics say the scheme is too complicated, expensive and self-serving, but Melancon said ensuring new accountants have special skills is important to prevent a “low-standards problem” where the doctor doesn’t I don’t know anything that can bring dignity to this work.

“Companies don’t take their investment in the people they hire lightly, so it shouldn’t be a big change for most firms,” ​​he said.

The proposed changes come against a rapidly changing workplace landscape, with less demand for low-skilled, repetitive jobs and new opportunities for accountants to apply their skills their business and finance to help customers.

“The first-class standards in our work will decrease . . . because of technology, and the traditional pyramid structure of the social media firm is not going to be the structure of the future,” Melancon predicted.

“We must develop investments in order to improve the skills that quickly put people in the middle part of the firm or in the financial process, where the work is very important.”

Also changing the nature of this work is the arrival of private equity, which has acquired a third of the 30 largest US firms from 2022. As well as promising to finance technology, the agreements provide relief for older partners and equality to inspire young ones. . However, the authorities have warned that private investors are threatening the objective of the inspection work, while the need to increase profits could lower the standards.

“I don’t think that a traditional collaborative structure is the only way our work can work,” Melancon says. Acknowledging the trials, he added that “anyone who thinks (private equity deals) will all be a match made in heaven is wrong”.

Ultimately, accounting firms are likely to find investors who can retain them for the long term rather than replace them, he said.

For a final prediction before he retires, Melancon uses words he’s had in his office for decades. He says: “Change will not be delayed like today.