¶ … CPA Profession The accounting profession has had more than its share of ups and downs in the last two decades. The business environment in this period, led by major technological innovations, has changed drastically and become infinitely complex -- making the job of accountants far more varied. Whereas once Certified Public Accountants (CPAs) worked almost exclusively in accounting, auditing or tax preparation, now CPA firms have to handle fields such as financial planning, tax planning, business development, financial management, information systems, risk management, forensic and fraud auditing, among others. In addition, the highly publicized business scandals such as the Enron and the WorldCom bankruptcies in 2001, the resulting public focus on the accounting profession, and the enactment of important accounting legislation such as the Sarbanes-Oxley Act of 2002 have forced the CPAs to respond to the changes. This paper takes a look at some of the recent changes in the CPA profession and the current regulatory environment.

Downturn in the Accounting Profession

The 1990s saw a significant fall in the attractiveness of the accounting profession among students. This is reflected in a 25% drop in award of accounting degrees in just 4 years from 1996 to 2001 in the United States.(Inman qtd. By Colsen, p. 21) One of the reasons for this decline was that the educational model for accounting professionals had not been able to cope effectively with the rapidly changing business environment. The overly narrow scope of accounting education early on in the students' academic life as opposed to a more broad-based education coupled with the popularity of other business disciplines such as finance, marketing and management had been mainly responsible for this decline.

Realizing the need for remedying the crisis in the accounting profession, the AICPA (in 1988) made a bachelor's degree and 150 hours of higher education mandatory for AICPA membership. Since then most States have adopted the 150-hour system for an accounting degree. Even so, the value of accounting as an academic discipline and its need in the marketplace...

The unprecedented bull run of the American economy in the 1990s also contributed in taking the sheen off the accountancy profession as the "stars of the show" such as Information Technology and Management related professions attracted the brightest and the ambitious. (Colson)
Effect of the Business Scandals

Even as the educators and accounting organizations were grappling with the formidable problems faced by the CPAs, a downturn in the U.S. economy (exacerbated by the 9/11 terror attacks) coincided with the Enron, WorldCom, Global Crossing and other business scandals. Since the highly publicized scandals involved filing of inaccurate and misleading financial statements prepared with the collusion of accounting firms, auditors and financial managers, the prestige and public image of the accounting profession plummeted to an all-time low. Most business analysts predicted that it would take a long, long time before the image and credibility of the accounting profession could be restored, if ever. Ironically, the widespread business scandals proved a turning point for the accounting professions and CPAs (at the start of 2004) are poised to regain their role as respected professionals. The business community, in fact, now expects the CPAs to act as "ethical beacons for the business world" besides performing their core function of accurate and honest accounting. (Telberg) There are a number of reasons for this unexpected upturn, some of which are discussed below.

Sarbanes-Oxley Act & its Effect on CPAs

The badly shaken investor confidence in the wake of the Enron scandal forced the legislatures to reexamine the regulatory environment for businesses and the accounting profession. The result was the enactment into law of the Sarbanes-Oxley Act in July, 2002 -- the most significant accounting legislation since 1933. Parts of the Act affecting the accounting field include the creation of the Public Company Accounting Oversight Board,…