BIG vs SMALL
REIMAGINING THE ACCOUNTING PROFESSION
UNDERSTANDING PUBLIC ACCOUNTING
Rob Farrow, SBA, CPA, CGA
Whether we’re in business and simply trying to understand our market, or in government attempting to develop policy, we need to rely on good statistical information to frame our thinking. As a Canadian CPA in public practice, I have been concerned with the leadership and direction of our newly-amalgamated profession. As a result I looked to the experience of public accountants across North America.
I started looking seriously in about 2017 and 2018. I found myself reading articles by Jeff Buckstein an Ottawa-based business journalist in the Canadian Accountant.
Canada’s independent news source for the accounting profession
In particular there were 2 series of articles that are worth reading:
SEISMIC SHIFT and DEMOGRAPIC CRISIS
- Is there a demographic crisis looming?
- Who will succeed today’s CPA practitioners?
- Is practice still attractive?
From our perspective the problem is that CPA Canada was not representing public practitioners – particularly small firms.
The CPA designation can take you from the beginning of your career to the top position in any type of organization, in any sector of the economy. Along with comprehensive financial management skills, a CPA designation provides you with the soft skills that can make you an effective senior executive.
CPAs hold many executive positions, including:
CEO or President
A CPA background and experience is highly respected and many CEOs and presidents come up from the accounting and finance department.
CFOs are responsible for advising the board and CEO on the financial direction of the company, and a CPA background can be the key to a CFO’s success.
You need to understand not only what the risks are, but what to do about them. CPAs are trained to see the big picture. When community and not-for-profit associations need help, they go to a CPA first.
Board of Directors
The board of directors is the highest governing authority at any company and the insights of a CPA are always welcome.
Accounting managers such as budget directors, auditing managers, comptrollers and more, require a special mix of qualifications that can only be learned through a CPA designation.
Clearly, CPA Canada was downplaying the importance of public accounting – particularly in small practices.
Earlier we discussed what appear to be inflated claims of incomes for CPAs in British Columbia – where I practice…
According to CPA CANADA:
A CPA designation can help ensure a high starting salary and opportunities for advancement over time. According to the CPA Profession Compensation Survey, the mean average compensation of Canada’s professional accountants in all working sectors, age ranges and regions in the country was $141,000. CPAs employed in industry topped the compensation list with an average of $163,000, followed by professional services at $142,000. CPAs in mining, and oil and gas led most sectors with mean averages of $194,000 and $203,000, respectively. Statistics Canada estimates average yearly earnings in Canada in 2013 to be about $47,000.
The study used self-reported data, which in our view is less reliable than the 2020 Job Bank Report – which is based on the same Statistics Canada estimates. The figure used for CPA BC was a median income of $108,000. Our estimates at SBA CANADA are that the median income of CPAs in BC is actually approximately $76,000. Financial managers ($92,246) and Senior Financial Managers ($133,687) earn more, but there are fewer of them and they aren’t all CPAs.
Perhaps CPA CANADA downplays public practice because incomes are lower than in industry. However in a country dominated by small business, there are fewer opportunities in industry. In our experience many CPAs who work in “industry” as consultants, are in fact working in tax, regulatory compliance and bookkeeping. That smells more like unregulated public practice than industry to us.
By contrast the AMERICAN INSTITUTE of CERTIFIED PUBLIC ACCOUNTANTS is primarily concerned with members in public practice. Or at least that was true until about 2017 – but more about that later.
The structure of the profession in the US is somewhat different than the structure in Canada.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
In 2017 – the last year the AICPA reported the data in this way – their members were largely engaged in public accounting. It is likely true that the percentage of public accountants within NASBA is similar. They are after all “CERTIFIED PUBLIC ACCOUNTANTS”.
About the National Association of State Boards of Accountancy
Since 1908, the National Association of State Boards of Accountancy (NASBA) has served as a forum for the nation’s Boards of Accountancy, which administer the Uniform CPA Examination, license more than 650,000 certified public accountants and regulate the practice of public accountancy in the United States. NASBA’s mission is to enhance the effectiveness and advance the common interests of the Boards of Accountancy in meeting their regulatory responsibilities. The Association promotes the exchange of information among accountancy boards, serving the needs of the 55 U.S. jurisdictions. NASBA is headquartered in Nashville, TN, with a satellite office in New York, NY, an International Computer Testing and Call Center in Guam and operations in San Juan, PR. To learn more about NASBA, visit www.nasba.org.
We have obtained public information about important issues for US CPAs from the Source: The AICPA Private Companies Practice Section (PCPS).
PCPS Top Issues Survey Results
Unlike CPA CANADA, the AICPA seems more focused on public practice. This probabably makes sense because more than half of their members are engaged or employed in public practice (ecluding “retired and other”).
We believe that CPA CANADA needs to put more emphasis on small CPA firms. It is these small firms that bring the CPA brand to the community as a whole. Without them, the profession will become less relevant to ordinary Canadians and the brand will suffer.