The Definition of a CPA

I’m going to digress from the subject of taxes for a moment and talk about another problem: the changing image of the CPA. With the ENRON debacle and the pending demise of one of the largest auditing and consulting firms in the world, how should you look at the accountant down the street?
Think of it like this: When you need medical advice, you go to a doctor, and then it is often recommended that you get a second opinion. When you want legal advice, you go to an attorney. If you didn’t like what he has to say, you find another attorney, a sort of “second opinion.” But when you go to your accountant, that’s it. Whatever he says goes. Ask a few questions, get some information, but once out of the accountant’s mouth, that’s the way it is. And let me tell you, it’s nice to have that kind of reputation.

But all of that is changing. The various scandals in the national media have people looking at CPAs and wondering if they really are all they have been built up to be.

The truth is that most CPAs don’t audit Fortune 500 companies. Most CPAs don’t do any audits at all. They are employed in every industry doing everything imaginable. But they have a background in accounting so they understand the numbers.

In Knoxville there are quite a few practicing attorneys who are also CPAs. There are several doctors who hold CPA certificates. There are also engineers, bankers, general contractors, corporate executives who hold CPA certificates. Every year the FBI recruits heavily from the accounting programs of the area colleges. As it turns out, accounting is a great background from which you can get into any business you want. Because every business needs accounting.

So, what about your neighborhood Certified Public Accountant? ENRON and Arthur Andersen haven’t changed him in the least. He still spends his days preparing financial statements for small businesses, talking about tax planning with clients, preparing tax returns, helping set up business information systems. He still works fifty or sixty hours a week or longer because that is what it takes to keep in touch with his clients and to keep up with the changes in the rules. He also coaches little league, goes to PTO meetings (he’s probably the treasurer), and does all the same things that you do, with all the same worries that you have. He even wishes he had someone else to do his tax return. Nothing about him has changed and you shouldn’t judge him by the actions of people in Houston or Chicago. He worked very hard to get the designation and he has built his business on integrity and independence. He’s a great addition to the neighborhood.