Who’s Who: The Valley’s Top CPAs For Accounting Profession, a Time for Deeds, Not Words Guest Column Nancy Wheeler-Chandler Enron, Adelphia, WorldCom, Global Crossing The impact of the financial demise of these corporations has been nothing less than devastating to investors and our financial markets. And even though the wheels of American justice are grinding away at the wrongdoers it’s time for the rest of us to step up to the plate to help restore the investing public’s confidence in corporate governance and our financial markets. To be frank, the past year has been a time for the CPA profession to get in touch with its roots. We were shaken along with the rest of America and we have reaffirmed our commitment to the profession’s core values: integrity, competence, independence, lifelong learning, objectivity and public protection. Every day, tens of thousands of honest, hard-working CPAs in California go to their firms, businesses or government offices and keep their clients’, employers’ and the public’s best interests in mind. That’s why it has never been more important for business owners to sit down and talk to their CPAs. Not only did Congress recently pass the Sarbanes-Oxley Act, but several bills have passed through the California Legislature as well. It is important for you to understand the impact of these new laws on your business. In some instances, particularly if you run a public company, your relationship with your CPA and your corporate reporting responsibilities have changed significantly. But even privately held companies need to pay attention, for this very simple reason you may be next. Generally, for purposes of the federal legislation, if you hail from a privately held company, you will have few, if any obligations, under the new rules. However, state boards of accountancy have the latitude under the new federal rules to adopt federal standards for private companies. If this happens, you could be subject to a ban on consulting and tax services as well as other aspects of the Sarbanes-Oxley Act. There is an ongoing discussion within the CPA profession about whether standards for public companies should apply to privately held companies. I believe the majority of CPAs prescribe to the view that a distinction should be made for privately held businesses. In a privately held company, the CPA frequently is the only accounting professional a client may know who has the skills to advise them on complex transactions. In addition, with a privately held company, the CPA works in an environment in which the “stakeholders” such as bankers or other lenders can and do communicate with them directly and are sophisticated enough to perform their own due diligence. By comparison, the public’s investment decisions to a great extent are based solely on a public company’s financial statement. In a public company, investors and stakeholders generally have no direct access to the CPA who conducted the audit and most investors lack the sophistication to make their own interpretations, beyond what the financial reports claim. Therefore, it makes sense that restrictions are far more stringent for public companies than for private. As California moves forward with the regulatory process, it is critical that business leaders and CPAs talk and analyze the impact of proposed regulations not only in terms of their own relationships, but more importantly in terms of the effect on the public and consumers. California likes to be on the leading edge of change. If the ultimate impact of proposed regulations is not carefully considered, the unintended consequences could seriously impact your business and costs for California consumers. Right now, there is a fundamental need to restore confidence in the marketplace and in American business. At the California Society of CPAs, we have embarked on an ambitious program to educate our members about the new laws and to encourage them to take leadership positions in implementing them. It is now time to get back to work and show the American public that the business community supports honesty and doing the right thing. We have entered a time of deeds, not words, and those companies and CPAs that act on recent reforms to implement them and restore confidence will have positioned themselves well for the future. Nancy Wheeler-Chandler is chair of the California Society of Certified Public Accountants, the largest CPA association in California with almost 28,000 members. She is also a partner in the Encino CPA firm of Hecox Horn & Wheeler.