The Sharblog

Global Playing Field

The stock market has been on a wild roller coaster ride in recent months with wide swings in value often from one day to the next. Most of the explanation lies in one word – “Greece.” Is it just me or is anyone else amazed that such a small country can have such a dramatic effect on U.S. and world markets? The population of Greece is about 11 million and its GDP is about $300 billion. 

The effect of Greece is just further proof that we are now in a global community where we are all interconnected  and what happens anywhere on the planet tends to reach us all eventually, whether it is business/economics, an outbreak of influenza or environmental factors. And the global community is changing. The U.S. and Europe used to be the “top dogs” in the global community, but now we are being challenged by some new up and comers in the likes of Brazil, Russia, India and China, commonly referred to as the BRIC countries. In 2000, the GDP of the BRIC countries was $2.7 trillion. In 2010, it had grown to $18.17 trillion. And future projections have the BRICs outpacing the GDP of the G-7 countries in about 20 years. So the playing field and playing conditions have changed drastically from what they used to be. As Dorothy said, “we are not in Kansas anymore” and we are not likely to go back.

That’s why I am amused when I hear people talking about how we need to go back to what it was like in the 1950s when the U.S. ruled the world in manufacturing and there were lots of great jobs for working-class people to earn a decent wage. While that all sounds good, we aren’t in the 1950s anymore. In the 1950s, the world had recently come out of World War II. Most of the developed world – Europe and Japan especially – had been devastated by the war. They had to rebuild their entire infrastructures, and they did so thanks to billions of dollars from the U.S. under the Marshall Plan and thanks to lots of “stuff” that we sold to them. During this time, we really didn’t have any competitors in building and manufacturing things. We dominated the world markets. Most of the BRIC countries were “third world” or close to it.

No matter how much we long for the 1950s – they aren’t coming back. We have to compete in the world in which we now live, and it includes other major players, including our new BRIC competitors. We are living and competing in a global economy with global markets, driven to a large extent by new technologies that did not exist 50 years ago. That doesn’t mean we can’t be competitive, just that the world is different and it will require new ways of effectively competing. The first step is acknowledging that fact and then setting out to do the hard work to be successful in that new environment.

 

Survey Says

How much of your tax dollar do you think the government wastes? According to the results of a Gallup survey issued last week, most Americans think the answer is 51 cents of every dollar. This is the first time since Gallup started asking this question in 1979 that Americans believe more than half of federal spending is wasted. The low point was 38 cents in 1986. And most Americans believe that the federal government is the biggest “waster” compared to state and local governments, where they estimate the waste at 42 cents and 38 cents respectively, reinforcing that most Americans have greater trust in government the closer it is to them.

This Gallup survey correlates with another survey done last year by the Pew Research Center where just 22 percent of Americans said that they can trust the federal government almost always or most of the time. This is among the lowest such measures in half a century. A dismal economy, an unhappy public, partisan-based backlash and discontent with Congress and elected officials in general have created what Pew called "a perfect storm of conditions" associated with distrust of government.

Moving to approval ratings of President Obama and Congress, we don’t see much better results. The president’s latest Gallup job approval numbers are at 41 percent approval and 50 percent disapproval. Congress comes in at an amazing 15 percent approval and 82 percent disapproval. 

So this is where we are now. Most people don’t trust their government and they think it’s wasting a significant amount of the money we send it as taxpayers. This is not a good place to be as a country. And I don’t care what party you support. While I don’t have any survey results to back it up, my hunch is that things aren’t a whole lot better in other countries around the globe. From reading the newspaper and watching TV, our European counterparts don’t seem to have a high level of public admiration either, and if you move to other parts of the globe – like the Middle East – outright insurrection and revolution are taking place. So the whole world population is in a funk right now about their governments and the leaders in charge. The current economic mess has a lot to do with it.

Yet, in this dismal environment we still have people who are willing to run for office in this country. Look at what’s happening with the race for the Republican nomination for president. It’s a huge field of candidates. (I personally hope it will get narrowed soon as it is difficult to keep them all straight. You almost need a scorecard!) It shows that no matter how bad it gets in America, there are always some men and women who believe things can get better, and who want to try and make it happen by serving in leadership positions. And that includes the current president. Let’s hope they are right and it happens soon. It can’t get much worse.

A Global Credential?

I talked in my last blog about the changes that are taking place to the CPA exam. Among those changes is a move to offer the exam internationally. That movement will start next year when the exam is offered in a few international sites on a test basis. If all goes well, it is likely that will lead to an expansion to other international sites. Currently, about 10 percent of the CPA exam takers are foreigners who travel to a U.S. exam location to take the test. So this change will make it easier and less expensive for these types of candidates.

Some U.S. CPAs may be saying - why do I care? I already have my CPA license, and why should we make it easier for foreigners to take the exam? Well, I don’t think this is just a case of AICPA and NASBA trying to be altruistic and helpful to foreign exam takers. I think it is also a matter of trying to make sure that the CPA credential maintains its elevated status in the international marketplace. And that is why all CPAs should care about this matter.

Historically, the U.S. CPA exam has been the “gold standard” of accounting exams, and the CPA credential has been recognized as the most prestigious of accounting designations. But just because a person or business is successful today does not guarantee future success, and that is also true for the CPA credential.

Over the past few decades, there has been a growing competition among accounting credentials around the world. One of the main competitors is the Association of Certified Chartered Accountants, a British accountancy organization which offers the Chartered Certified Accountant qualification (ACCA) and has been working aggressively to promote it and get it accepted in countries around the world. It is currently estimated to have around 140,000 members and 404,000 affiliates and students in 170 countries. If you wound the clock back about 20 years, most CPAs who knew about the ACCA would have laughed if you told them it would become competitive with the CPA. Well, they would not be laughing now.

So a major part of this evolution on the CPA exam relates to making sure that the CPA credential is not marginalized in the international marketplace. Like it or not, we are operating in a global marketplace for goods and services. And that marketplace also includes accounting credentials and knowledge workers. AICPA and NASBA are to be commended for taking this matter seriously and for adopting strategies to maintain the elevated status of the CPA worldwide. Providing the CPA exam in international locations and establishing a means for successful foreign candidates to obtain their CPA credential are important steps to help maintain the dominance of the CPA in the world market.