AICPA Cognitor Concept Divides the Profession

By: Rick Telberg

Oct. 28, 2000 (SmartPros) ? The debate at the Fall Council meeting of the American Institute of CPAs over the creation of the so-called Cognitor cuts to the heart of the accounting profession and has left many CPAs and non-CPA accountants reeling, divided, angry and confused.

In a political compromise, the Council approved a substitute resolution offered by the Ohio delegation which supports the new credential for a “global business professional” but requires the institute to conduct further research and to “prepare a business plan to include financial projections demonstrating the viability of this endeavor; as well as market research results and an analysis of the implications for student enrollment,” SmartPros reported from the scene. The new credential will be up for a membership vote at the AICPA Spring Council Meeting.

Here’s a sampling of opinion from a completely unscientific survey. These are just some of the on-the-record reactions. Some of the off-the record reactions are unprintable.

“In November 1997 we listed information on 15 certifications available to accountants. We just updated that study and find there are now over 30, most of which have come on-line since 1997. I just am not sure we need another one.”
– Ron Mano, professor, Weber State University.

“Once again the AICPA is concentrating on a minority of its members (super large firms) and ignoring the people who need their help the most - the vast number of small firms who make up its membership. It seems their efforts are always directed towards the Big Guys. The biggest need in our profession today is attracting people into it and convincing them to stay when they join. The AICPA needs to take the forefront in that regard and I can’t see them doing anything. Perhaps the institute is pursuing this path of Cognitor because they see no future in our profession as mere CPAs, as there won’t be anyone left.”
– Allan Boress, CPA, and a noted marketing consultant to CPA firms.

“I was aware of several delegates who were going to the meeting with no decision or no 100-percent clear direction from their states. They were trying to maintain an open mind, but seemed focused a little heavy on the political-ness of this whole thing. Seems like they came up with a good “Plan C” compromise, all issues considered. Barry, et al., will consider this a “win” and now have the traction (permission?) they need to continue to pursue the end goal. My advice would be, that now that they have this behind them, everyone involved will need to concentrate their efforts on communicating this thing properly for it to gain the next step in the process.”
– Janet Caswell, CPA, Austin, Texas, and one of the most progressive thinkers in the profession

“I was at Council, and did take the mike in support of the substitute resolution. Personally, I believe that the concept of a global designation makes a great deal of sense, and I would far prefer to be ahead of the curve than behind it. I applaud the AICPA leadership for their courage and vision in raising this potential to this level of consideration. Now, though, it’s time to talk about the actual strategies and tactics - that is, now we have to work out the details. The resolution, as it was passed, allows us the time and the permissions to carefully and deliberately consider those details - along with the involvement of members. No matter what the outcome of this discussion, we owe ourselves, our clients, our constituents and the future students the opportunity for the consideration of this concept. Regardless of how the process ends up, we will be a better profession for having participated in this discussion.”
– Bea Nahon, a leader among solo-owned and small firms.

“When I told the Arizona Society of Practicing Accountants, a National Society of Accountants affiliate, at a board meeting about the word ‘Cognitor,’ they all laughed , and asked what was that? The public will do the same. Again, another idea from the elitist ivory tower. The AICPA, since about 1927, has spent millions to make the term “CPA” a household word. Can you see in the average household, the husband taking out the trash and his wife say: ‘Honey don’t forget to throw out the letter from our Cognitor?’ The real question is what individual, or individuals, is going to make all the money setting this up?”
– Jack Schabow, a Phoenix non-CPA accountant and financial advisor.

“True to form, the AICPA is turning the silk purse into a sow’s ear. A broad-based knowledge credential that includes SOME CPAs does make sense. However the way the AICPA is approaching it makes no sense. The problem comes in trying to include ALL CPAs, most specifically those of us who do attest work. It is simply not possible to reconcile our independence ethics, principles and rules with the driving concepts of ‘Cognitor.’ ”
– Jim Hudspeth, CPA, Olalla, Wash.

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Posted on October 28, 2000
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Council Meeting Could Test AICPA Leadership

By: Rick Telberg

Oct. 19, 2000 (SmartPros) ? Those expecting major breakthroughs at the upcoming Council meeting of the American Institute of CPAs may be disappointed.

In fact, it appears that the AICPA’s two big ideas — floated for last May’s meeting, concerning the global business designation now nicknamed Cognitor and the plan to launch a commercial business portal — are barely ready for unveiling, or, in fact, may be unraveling.

The 300-odd member Council is due to meet Monday and Tuesday, Oct. 23 and 24, in Las Vegas. Meetings of Council, which is made up largely of current and former state society presidents and AICPA committee chairs, was long a place for the profession to hash out issues and controversies. Since Barry Melancon’s ascension to chief executive, and perhaps as a credit to his vision and leadership abilities, Council has become little more than a rubber stamp for AICPA-staff initiatives.

The biggest of those initiatives is perhaps the dot-com portal, sometimes called cpa2biz.com, which would both sell products directly to accountants and also provide participating accountants with a vehicle to sell Web-based services to clients. It remains an elegant business idea, but the climate for Internet businesses has turned decidedly cooler since its conception, and the AICPA has had difficulty rousing support from rank-and-file members for the plan. A new, more modest plan focusing on the economies of Internet delivery of services to members could muster more support and understanding.

While the portal plan has garnered little support or interest, the plan for the global business designation — first code named “the Miami project,” then “XYZ,” and most recently “Cognitor” — has generated vocal opposition. And, in fact, several United Kingdom-based accountancy institutes have pulled out. Opponents regard the plan as a threat to the basic CPA/CA brand and a boondoggle that could only be paid for by a successful portal. Click here and here for more.

Also on the agenda of the meeting is a report on the state of accounting education. It won’t be a happy message. Undergrad enrollments are down 23 percent in recent years and the authors of the report will be recommending a vast overhaul of the college curriculum. But will they lay the blame where it really belongs? The fact is that the Big Eight, Six, now Five have long driven college programs, only to abandon them in recent years for non-CPA candidates. Colleges have been left jilted and confused as their key outlets for grads dried up. Click here and here for more.

The climax of the meeting may come on the last day of the last hour when Securities and Exchange Commission Chairman Arthur Levitt is scheduled to speak. In fact, AICPA officials at first rejected his request to appear at the meeting, which clearly did not sit well with Levitt. He could deliver another scolding to the profession about their public duty as auditors, or he could surprise the profession with news of a grand compromise on independence. Click here for more.

In any case, there won’t much good news for Council members to cheer about. Grand plans have withered and the profession is under pressure from Washington.

Ironically, accountants are in demand in the marketplace as never before. Firms are busier than ever. Salaries are rising steadily. Careers are strong. And the rank-and-file professional may be doing better than his or her own institute. Maybe the real leaders here are the members.

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Posted on October 19, 2000
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Battle for Mid-Market Accounting Software Heats Up

By: Rick Telberg

Oct. 12, 2000 (SmartPros) ? Old-line players in business and accounting software for mid-sized companies are struggling to muscle up as a new breed of competitor looms on the sidelines.

The Sage Group plc’s decision to appoint Ron Verni president and chief executive to oversee all U.S. operations is just one in a string of events that suggests that the battle for the mid-market company is getting tougher.

The Verni move puts Peachtree’s Verni in charge of the U.S. Peachtree, Sage, and Best lines. But also, in recent months, Great Plains acquired Solomon and Real World. AccPac, a part of Computer Associates, scooped up SBT. So, with Navision the battle for the mid-market has quickly settled down to four major contenders. And yet, they are running hard.

The reason, as in so many businesses today, is the Internet. A whole new breed of upstarts, which promises to deliver and service companies’ software needs cheaply and seamlessly over the Web, are entering the fray. And it’s no accident that the up-and-comers are using and adapting technology designed for the Fortune 1000, making companies like Lawson, SAP, Ariba, and Oracle sudden new factors in the mid-sized and small-business markets.

In just the last few weeks, for example:

Chicago-based FiNetrics made a deal with eReliable Commerce Inc., a Naperville, Ill.-based business-to-business e-commerce services provider to launch of the first private-label version of FiNetrics’ online accounting application, OutNumber, which is powered by high-end accounting software vendor SAP.

Los Gatos, Calif.-based Intacct, meanwhile, has hooked up with Fort Worth, Texas-based CBS Payroll, and plans a fourth-quarter launch that would challenge providers such as Margate, Fla.-based Virtual Payroll, at virtualpayroll.com; Ceridian, based in Pine Brook, N.J., maker of Powerpay.com; and San Mateo, Calif.-based NetLedger.

Speaking of Netledger, the San Mateo, Calif.-based company, which is backed by Oracle, is working with San Francisco-based eBenefits to develop fully-integrated, virtual human resource services.

New York’s Silicon-Alley-based Virtual Growth, which is powered by Lawson, is rolling out the Web-based Virtual Accountant with initial sales into 30 companies.
Chief executives Verni at Sage, Doug Burgum at Great Plains, Randy Keith at Navision US, and David Hood at AccPac certainly have their work cut out for them.

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Posted on October 12, 2000
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