AICPA News is a round-up of recent announcements and alerts from the American Institute of CPAs and the Chartered Institute of Management Accountants.
Business Leaders’ Optimism About U.S. Economic Outlook Soars after Election Outcome, AICPA & CIMA Survey Finds
Business leaders registered a huge shift in positive sentiment about prospects for the U.S. economy and their own organizations in the wake of the recent U.S. presidential election, according to the fourth-quarter AICPA & CIMA Economic Outlook Survey. The quarterly survey polls chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.
Two-thirds (67%) of business executives said they were optimistic about the economy’s prospects over the next 12 months – a dramatic rise of 41 percentage points from the previous quarter. It’s the highest the measure has reached since early 2020, when it stood at 74 before cratering due to pandemic-related business shutdowns and travel bans.
Business executives’ outlook on the global economy also improved markedly, with those expressing optimism rising from 19% to 41%, quarter over quarter.
Inflation reclaimed the top spot for business concerns in the survey. Domestic political leadership, which has ranged from No. 4 to No. 7 on the list over the past three quarters, disappeared from the top 10 altogether.
The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor’s November employment report, scheduled for release tomorrow, looks back on the previous month’s hiring trends.
Other key findings of the survey:
- Revenue and profit expectations for the next 12 months both rose substantially. Revenue growth is now expected to be 3.3%, more than double the 1.5% projection last quarter. Profit projections are now 2.2%, up from 0.2% last quarter.
- Business executives who said they were optimistic about their own organization’s outlook over the next 12 months rose from 41% to 53%, quarter over quarter.
- A majority (57%) of survey respondents expect their businesses to expand over the next 12 months, up from 44% last quarter.
- Those who said they had too few employees rose from 29% to 38%. One-in-five said they were ready to hire immediately, up from 14% last quarter.
AICPA Releases Statement on BOI Injunction, FinCEN Appeal
Following the recent Texas Top Cop Shot, Inc., et al., v. Merrick Garland, Attorney General of the United States court case and subsequent appeal, the American Institute of CPAs (AICPA) released the following statement, attributable to Melanie Lauridsen, Vice President of Tax Policy & Advocacy for the AICPA:
“The AICPA has closely monitored recent developments in the courts regarding the Beneficial Ownership of Information (BOI) reporting requirements that are due on January 1, 2025. Last night the Department of Justice (DOJ) filed a formal notice of appeal to the Fifth Circuit court, seeking a stay and challenging the recent injunction, noting that it prevents the Financial Crimes Enforcement Network (FinCEN) from enforcing BOI reporting nationwide.
“While we do not know how the Fifth Circuit court will respond, the AICPA continues to advise members that, at a minimum, those assisting clients with BOI report filings continue to gather the required information from their clients and are prepared to file the BOI report if the injunction is lifted.
“The AICPA realizes that there is a lot of confusion and anxiety that business owners have struggled with regarding the BOI reporting requirement and we, together with our partners at the State CPA Societies, have continued to advocate for a delay in the implementation of this requirement. The AICPA will continue an open dialogue with FinCEN in the hopes that our questions and concerns will be addressed. In the meantime, we advise those filing to be prepared in the event there is a stay or reversal of the injunction.”
Business Experimentation with Gen AI Grows but Full Implementation Remains Rare, AICPA & CIMA Survey Finds
Business executives are more engaged in investigating potential uses of generative artificial intelligence (Gen AI) tools for their organizations than they were a year ago, according to a recent survey by the AICPA & CIMA. But actual implementation of the transformative technology in key operations remains rare.
At the end of last year, a majority (56%) of business executives said they weren’t yet considering the integration of Gen AI tools within their businesses, according to the quarterly AICPA & CIMA Economic Outlook Survey. (Topline results of the survey were released last week), This quarter, the percentage of business executives not yet contemplating the use of Gen AI dropped to 38%.
Still, while 30% said they were experimenting with Gen AI in business applications, up from only 23% last year, the percentage of companies that are fully using Gen AI in key operations hasn’t budged much. Last year, it stood at 4%. This year, it’s 6%. Leading categories for usage are core business operations, finance and strategy, and sales and marketing.
Some 92% of survey respondents said they had at least a slight concern about the potential for privacy, ethical and accuracy risks associated with the use of Gen AI tools, with a little more than a third (34%) saying they had significant concerns. The latter figure is down from 40% last year, however.
More information on Gen AI and its impact on accounting and finance can be found in a series of reports by CPA Canada and the AICPA. CPA.com, the business and technology arm of the AICPA, also has a generative AI toolkit for accounting professionals.
Final Version of New AICPA Peer Review Standards Update Now Available
A new American Institute of CPAs standards update that aligns the peer review process with quality management requirements is now live on the AICPA’s website.
The AICPA Peer Review Board voted in November to approve Peer Review Standards Update (PRSU) No. 2, which aligns peer review standards with new quality management standards that go into effect late next year. The update also clarifies and improves existing technical guidance.
Accounting firms have until Dec. 15, 2025, to adopt a quality management system in accordance with AICPA standards. For firms subject to peer review, the quality management related provisions of PRSU No. 2 are effective for peer review years ending on or after Dec 31, 2025.
Some of the changes in PRSU No. 2 include:
- Peer review terminology and phrasing revisions as necessary to conform with the new QM standards.
- Requirements and related application and other explanatory material paragraphs were adapted, where appropriate, to address risk-based considerations resulting from the requirements of the quality management standards.
- Technical changes intended to meet the current needs of the program by clarifying or expanding the existing requirements and application and other explanatory material were made to continue the Peer Review Boards’s effort to maintain standards that are easy to read, understand, and apply.
AICPA Urges SEC to Reject PCAOB’s Proposed Rules on Audit Firm Metrics and Operational Reporting
The American Institute of CPAs (AICPA) has submitted a comment letter urging the U.S. Securities and Exchange Commission (SEC) to reject the Public Company Accounting Oversight Board’s recently adopted rules on certain audit firm and audit engagement performance metrics and the resulting disclosure of that data.
The AICPA has grave concerns about the added burdens these rules would place on audit firms, particularly small and midsized ones, and believes they would unintentionally hurt U.S. capital markets and the investing public
The PCAOB rules would mandate the disclosure of performance metrics for audits of accelerated and large accelerated filers and expand operational and financial reporting by registered public accounting firms. Accelerated filers are companies that have a public float of between $75 million and $700 million, annual revenues of $100 million or more, and have filed periodic reports and an annual report within the past year. Larger accelerated filers have a public float of $700 million or more. The PCAOB rules would require an affirmative vote by the SEC to go into effect.
A final area of concern is the use of the performance metrics within the PCAOB’s inspection and enforcement program, increasing the risk of enforcement for minor, unintentional reporting errors. The PCAOB rejected calls for a threshold based on the severity of reporting errors, the comment letter said.
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