- Nothing in the laws or rules relating to accountancy corporations alters the duties and responsibilities of a licensed person to and professional relationships with his clients and others.
- Each shareholder, director, and officer holds a license issued by the Board.
- The name of the corporation shall contain and be restricted to the name or last name of one or more of the present, prospective or former shareholders.
- The words "accountancy corporation," "professional corporation," or "corp." "incorporated," or "inc.," must be used in conjunction with the name of true firm.
- Multi-office firms must ensure that each office is under the direction of licensed person as resident manager.
These rules are similar to those adopted by the Council of the AICPA when its Rule 4.06 was amended on May 6, 1969 to permit the incorporation of member firms. Several local and regional firms have exercised the option, but until all states adopted an incorporation provision (or a federal charter comes into effect), the incorporation of national firms remains in doubt. The incorporation of CPA firms would not limit their liability with respect to professional services, but it might provide for more flexible organization.
Approximately 403,000 accountants occupied positions in industry in 1970, of which 37,247 (9.24%) were CPAs. Accountants are distributed among the major industrial groups in these proportions: manufac-turing-41.28%; finance, insurance, and real estate-17.07%; wholesale and retail-16.62%; communications, transportation and other utilities-10.19%; business and repair services-7.15%; entertainment and recreation-7.3%; and agriculture, forestry, and fishery-.5%.
The accountant occupies a variety of positions in industry, ranging across such functions as accounting, auditing, cost accounting, financial management, budgeting, controllership, and systems analysis. Within the accounting category, the progression generally is from accountant- chief accountant - controller or financial vice-president. Beginning salaries for accountants with bachelors or masters degrees are comparable with those in government and public accounting. Salary surveys indicate that accountants compare favorably with engineers and lawyers at all levels of employment, and obtain higher compensation than business graduates in other fields.
The work of the accountant in industry is varied and highly challenging. He is concerned with future planning and directs and coordinates the preparation of forecasts, budgets, and other financial plans. The processing of financial in-formation falls within his area of competence; in this regard he is responsible for designing and supervising the financial information systems of the firm. The accountant in industry is also charged with protecting and conserving the assets of the firm, and the title of controller is often used to describe the accountant whose principal concern is internal control. The accountant is also responsible for record-keeping and supervises the activities of bookkeepers and clerks.
A number of accountants in industry assume the position of treasurer, which means that they are responsible for the planning and control of the cash resources of the business. Other accountants become internal auditors; as such they review plans and operations and render reports to management which often lead to significant improvements in efficiency.
The accountant in industry is responsible for the preparation of financial reports which are distributed widely to stockholders, creditors, government agencies, and other interested parties. He prepares a variety of reports for management-all directed toward the need for providing timely information for decision-making purposes-and is often an integral member of the top management group. There are very few areas in which his expertise is not required.
Accountants have done well in industry. A survey by Richard C. Bradish in 1970 shows that accountants occupy more top-level positions in industry than those from other academic disciplines. The population for the survey included the Fortune listing of the 500 largest industrials, the 50 largest merchandising firms, and the 50 largest transportation companies.
Recent developments have served to improve the professional status of the accountant in industry, of the management accountant as he or she is often called. First, the National Association of Accountants (NAA) began its own professional designation program in 1972. The designation is known as the Certificate in Management Accounting (CMA) and is administered by the NAA's Institute of Management Accounting. In announcing its certification program the NAA noted that: "More and more people-inside the business world and out-realize the significant changes which have been taking place for years in accounting and in the role of the accountant in business. No longer is he simply a recorder of business history. He now plays a dynamic role in making business decisions, in future planning and in almost every aspect of business operations."
This new accountant is called a Management Accountant and he sits with top management because his key responsibility is developing, producing and analyzing information to help management positions. In response to the needs of business and at the request of many in the academic community, the National Association of Accountants has established a program to recognize professional competence and educational attainment in this field-a program leading to the Certificate in Management Accounting.
A second impetus to management accounting has come from the movement to eliminate the experience requirement for the CPA certificate. Until recently two years of experience (in most states) has been required in addition to passing the CPA examinations to qualify for certification. Essentially, the experience must come from completing a prescribed set of duties within public accounting. Those seeking careers in industry have thus been detoured through public accounting in order to be certified or have simply pursued management accounting careers without the benefit of the CPA designation. We note here that a committee of the AICPA has recommended elimination of the experience requirement and that several states have now acted to implement that recommendation. This move encourages direct entrance into management accounting without impairing the ability to secure the CPA certificate. The NAA hopes, of course, that the CMA certificate will become the hallmark of excellence in management accounting.
Accountants in Government
In most federal agencies, accountants are hired initially at step seven and can progress steadily to the position of chief accountant at a scale of GS 15 ($26,898-$39,971). A 10% premium is attached to starting salaries for those who possess the CPA certificate or graduate degree.
The U.S. General Accounting Office (GAO) performs a function analogous to that of public accounting-it audits the operations of the federal government and renders its findings to Congress.
As of June 1972, GAO had a staff of 4826 of which 2628 were accountants, 500 were specialists from other fields, and 1698 consisted of supporting personnel. The ratio of non-accountants to accountants on the professional staff has increased steadily in recent years, as has the hiring of students with graduate degrees.
A recent publication describes the activities of GAO in the following terms: "Our management audits go beyond the mere verification of financial transactions. In reviewing management performance in Federal agencies, we evaluate management planning, organization, control and decision-making in relation to operating results and program accomplishments. Out reviews and evaluations delve into varied programs and activities involving most substantive fields and technical aspects of our national economy. We take pride in having pioneered in the review of management performance and developing techniques for making these reviews. Our management review work enables us to fulfill our responsibilities to the Congress and, concurrently, to stimulate more effective and efficient management within the Federal Government."
Often referred to as the government's "watchdog," GAO has compiled a significant record of accomplishment. The agency makes an average of 900 audits a year, prepares more than 4000 decisions by the Comptroller General, and submits more than 700 legislative and legal reports to the Congress each year. Its recommendations have led to estimated savings in federal government operations of over $200 million a year for each of the past five years, while the GAO operating budget is only $63 million annually.
Many of the activities of GAO have received wide public attention. GAO has inquired into such far-ranging matters as the safety of nuclear generating plants, the effectiveness of drug rehabilitation programs, and the improvement of health care systems. The accountant in government agencies such as GAO is concerned with total organizational efficiency and not simply with the maintenance of financial records and reports. In most instances he is charged with preparing and managing budgets, in designing and operating information systems geared to the needs of his agency, and plays an active role in most of the major activities of the agency. The occupations and titles of accountants in government are as varied as they are in industry.
GAO, however, is the focal point for accounting in government. It is the responsibility of this agency to design and monitor financial information systems for all federal agencies.
GAO operates from 16 regional offices in the United States and 30 sub-offices in the major cities. Its international activities are housed in offices in Honolulu, Frankfurt, Manila, New Delhi, and Saigon. Increasingly the Congress looks to GAO for advice on new programs under the broad charge of "giving advice to the Congress."
The U.S. General Accounting Office was created by the Budget and Accounting Act in 1921. In general, the audit authority of GAO extends to all departments and agencies of the federal government, with the exception of the Federal Reserve System, the Comptroller of the Currency, and activities of certain intelligence agencies. Where audit authority exists, GAO has unrestricted access to all facilities and records, and the law provides that such agencies will furnish to the Comptroller General the information he may require concerning their powers, duties, activities, organization, financial transactions, and methods of business.
The Comptroller General of the United States is appointed by the President with the advice and consent of the Senate. His term is for a maximum period of 15 years and he is subject to removal from office only by Congress through joint resolution or by impeachment.
The major activities of GAO fall into the following categories: (a) providing direct assistance to the Congress (this function was expanded by the Legislative Reorganization Act of 1970); (b) performing audits and reviews; (c) prescribing accounting principles and standards for all agencies of the federal government under the Budget and Accounting Procedures Act of 1950; (d) rendering legal decisions as to the authority and appropriateness of contracts, procurements, and disbursements by all federal agencies; (e) settling claims for and against the United States, including claims for salary and other compensation under the Federal Claims Collection Act of 1966; and (f) participating in the regulation of federal elections under the Federal Election Campaign Act of 1971. In the latter regard, GAO prescribes regulations on the use of communications media by candidates for federal elective office and on charges for using communications media. The law requires that GAO serve as a national clearinghouse for information on the administration of elections. Also, GAO is required to supervise, audit, and report on the election practices of the presidential and vice-presidential candidates.
