Stay informed with free updates
Simply sign up Accounting myFT Digest – delivered straight to your inbox.
Barry Melancon, dubbed “the most important man in accounting” for his 30-year leadership of its US professional body, has sent a stark warning to his successors not to compromise standards in a bid to attract more people to the profession. .
Melancon retires this month as the longest-serving CEO of the American Institute of Certified Public Accountants, overseeing a profession transformed by new technology and private equity investment but finding itself in the midst of a hiring crisis.
With young people lured by high salaries and lower admission requirements in finance and technology, the number of people taking the CPA exam administered by the institute has increased. It fell sharplyAccounting firms have called for reforms to make qualifying cheaper and faster.
In a wide-ranging interview with the Financial Times, Melancon expressed doubts about some of the companies' claims and said the race to the “lowest common denominator” could come back to haunt the profession.
“We are a very trusted profession and we live in a world where there are not a lot of standards of trust,” he said. “We need to respect the respect we have from the public, from the business community and from regulatory bodies.”
Some companies have blamed the shortage of accountants for potential flaws in their financial statements, and some local governments and U.S. companies have complained about the difficulty of finding auditors.
After initially resisting pressure from the profession, the AICPA in September proposed eliminating the requirement that accountants have the equivalent of five years of college education, known as the 150-hour rule — a year more than the 120 hours of study typical for a college degree.
Melancon explained that he had doubts about the need for such a change. “The 150-hour rule has elevated our profession, which in the 1970s was more trade-oriented than career-oriented. It has raised the quality of people in our profession, the prestige of our profession, and to deny that is to deny history.”
Melancon was the youngest ever president of the International Association of Chartered Accountants when he took office in 1995 at the age of 37, and has not shied away from pushing changes in the past. He insisted on computerizing the CPA exam when some in the profession resisted, and made the qualification available internationally. He also advocated creating auditing systems and other technologies that could be shared between companies. Accounting Today magazine has consistently ranked him as the most influential person in the profession.
A new flashpoint concerns the details of the on-the-job training that the AICPA designed as an alternative to the fifth year of college education for CPA candidates.
The Financial Times reported that the group, which represents major accounting firms, wanted to acquire… Simpler system Proposed, which would require supervisors to certify that new recruits have acquired dozens of specific skills, or “competencies.”
Critics say the plan is too complex, expensive and subjective, but Melancon said ensuring new accountants have specific competencies is vital to preventing a “lowest common denominator problem” where an unskilled practitioner could bring the profession into disrepute.
“Companies don't take their investment in the people they employ lightly, so this shouldn't be a big change for the vast majority of businesses,” he said.
The proposed changes come against the backdrop of a rapidly evolving workplace, with less need for armies of junior staff undertaking repetitive tasks and new opportunities for accountants to use their business and financial acumen to help clients.
“Entry level positions in our profession will be reduced… due to technology, and the traditional hierarchical form of a public accounting firm will not be the structure of the future.
“We have to advance investments in efficiency enhancement that move people more quickly into that middle part of the company or finance function, where the career is most valuable.”
The landscape of the profession has also changed with the arrival of private equity firms, which have acquired a third of the 30 largest US companies since 2022. In addition to promising to fund investment in technology, the deals provide a windfall for older partners and equity to incentivize younger partners. . However, regulators have warned that private equity ownership threatens the objectivity of audits, while the need to maximize profits could lead to lower standards.
“I don't think the traditional partnership structure is the only way our profession can work,” Melancon says. While he welcomed the experience, he added that “anyone who thinks (private equity deals) will all be marriages made in heaven is not right.”
Ultimately, accounting firms are more likely to find investors who can hold them over the long term rather than flip them, he said.
For one last prediction before his retirement, Melancon uses a quote that has been sitting in his office for decades. “Change will not be as slow as it is today,” he says.
