The American Institute of Certified Public Accountants (AICPA), as the name suggests, is a professional organization that governs professional accountants. In general, these accountants are referred to Certified Public Accountants or CPAs. AICPA is said to have over 350,000 members all spread over a wide range of institutions, companies, organizations and countries. It is estimated that AICPA is operational in over 125 countries and its main task is to impose standards and ethics in financial reporting. In particular, the institute is concerned with professional conduct when performing audits of commercial organization, governments (local, state and federal) and nongovernmental organization (NGOs). AICPA was formed over 125 years ago and its offices are located at Ewing New Jersey, New York City and Washington DC . The institute is also concerned with standards and the professionalism in setting accounting exams as well as monitoring training and curriculum.
The formation of AICPA dates backs to 1887 under the registration name American Association of Public Accountants (AAPA). However, the institution has since undergone several name changes. The institution was renamed Institute of Public Accountants (IPA) in the year 1916. A year later, the organization changed its name to American Institute of Accountants (AIA). The final name change was in 1957 when the organization settled for American Institute of Certified Public Accountants (AICPA).
AICPA’s mission is to equip its members with information and resources together with guided leadership in order to allow the members to perform their professional duties with the utmost professional standards. In doing this, AICPA works with other CPA organizations in the country all for the benefit of its members, the general public and employers.
Setting professional Standards
One of the most vital functions of the AICPA is to set standards for financial reporting. Before the 1970s, AICPA always held a near total monopoly in determining the standards of financial reporting in the United States. However, in the 1970s, the AICPA decided to set up a different organization that would be solely responsible for financial reporting standards. The new organization, Financial Accounting Standards Board (FASB) was officially tasked by the AICPA to set up what was to be referred to as Generally Accepted Accounting Principles (GAAP) . The general decision to have some accounting standards was extended to auditing, taxation, business valuation and CPA firm quality control. However, the accounting standards that were developed were referred to as ‘generally accepted’. This is due to the fact that AICPA is not a governmental association it does not have the jurisdiction to impose laws on the members of the organization.
Hence in the year 2000, policy makers at the federal level were concerned that standards would not be enforced without the backing and the jurisdiction of the federal government. The policy makers were also concerned that audits by companies under U.S. Securities and Exchange Commission should have their standards regulated by a federally structured authority. As a consequence, the Sarbanes-Oxley law was legislated by congress to have federal authority over reporting. The law called for the creation of Public Company Accounting Oversight Board (PCAOB). The board was tasked with overseen and setting the standards of CPA in public companies. However, the board sets and implements these standards under the guidance of AICPA.
Role and Benefits to the public
a) Providing crucial information
The AICPA has a wide variety of roles and responsibility to the general public. The organization runs several public relation programs that assist the general public understand the operation of corporate America in terms of financial reporting. One of the leading programs that have been developed by the AICPA is referred to as the 360 Degrees of Financial Literacy. The program is mainly concerned with educating the general public on issues regarding corporate America. In general, the role of AICPA is to coordinate with state and local CPA associations to voluntarily educate the public on the accounting standards. The concerted effort by the organization is to have an educated public about corporate America and also encourage public accountants to offer information to the public. The program also has an extensive website that assists the public in getting to know general reporting principles.
A second program that has been developed by AICPA is ‘Feed the Pig’ program. The program is an extensive ad campaign to have young adults between the age of 25 and 34 to develop a saving culture. The campaign has used the idea of the saving accounts depicted deposits pigs but in this case the pig is an adult. The campaign has also developed a very comprehensive and dedicated website that educates young adults on the benefits of saving as well as the financial information on the products that are available to them.
b) Role in guiding legislation
The AICPA, as earlier stated, has offices in Washington DC which plays s key role in providing relations with the government. One of the most important roles is in acting as a lobbyist during legislation by congress. Here the organization represents its members, both employers and employees in monitoring and advocating for legislation that touch in accounting and financial reporting. This allows policy makers and government regulators to be fully educated on matters pertaining the accounting profession in order to make relevant and important policies.
The AICPA also has committees that overlook several operations within the organization. One such committee is the political action committee whose role is mainly political in nature. The committee seeks to find its relevance in congress by contributing members to the special committees of both Congressional Representatives and the Senate. The committee does this by ensuring presents of its members in subcommittees in both political parties.
Conclusion
Professional organizations and institutions play a very vital in setting up standards and professional ethics in directing their members. In general, accountants have the basic role of determining the financial state of an organization, be it a corporate, a governmental institution or a non-profit making organization. However, the possibility of misleading the public through financial reporting can increase due to several reasons. The AICPA understands these issues and since envisaged setting up professional training and financial reporting within the vocation. Thus the organization first sought to develop reporting standards that have extensive disclosure rules and requirements. This allows the public understand the complex figures that the accountants have arrived at. Other roles that AICPA has taken up are ensuring that the public is well educated on other complex aspects touching on finances and accounting. The professional body has also taken up the responsibility of guiding the government and policy makers at different levels of leadership in coming with sound and relevant policies.
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Miller, F. P., Vandome, A. F., & McBrewster, J. (2010). American Institute of Certified Public Accountants. Boston MA: VDM Verlag Dr. Mueller e.K.
