CPAs are normally a staid bunch, but members of the largest accounting group are over the edge about the nation’s fiscal cliff.
A survey of CPAs released Wednesday by the American Institute of Certified Public Accountants indicates that CPAs as a group regard the federal budget deficit as the nation’s top economic problem. The AICPA’s online survey of members was conducted Dec. 4-24, 2012, when questions about the fiscal cliff dominated the public debate about the nation’s finances.
The proportion of green-eyeshade wearers citing deficit reduction as the key priority was 54%, more than twice as many as those citing job creation (23%), tax reform (18%) or the stability of Social Security and Medicare (5%).
Asked how failure to address this budget imbalance would affect clients, survey respondents selected hiring freezes (55%), reduced capital spending (53%), reduced benefits (52%) and job layoffs (54%) as the four (out of seven) likeliest options.
Of the 1,700 CPAs responding to AICPA’s survey, 73% made it clear they thought that the victims of fiscal irresponsibility will be individuals and families, with just 14% saying small businesses will bear the brunt of the fiscal cliff’s economic strains.
“CPAs in communities large and small and from coast to coast are increasingly troubled by the government’s inability to come to grips with this economic calamity-in-the-making,” said AICPA President and CEO Barry Melancon, in a news release.
Wednesday’s survey is not the first time the 386,000-member organization skirted over the fiscal cliff’s edge. Last year, AICPA produced a video titled What’s at Stake? A CPA’s Insights into the Federal Government’s Finances.
Intended as a nonpartisan analysis on the country’s fiscal condition from an accountant’s perspective, the 10-minute video used the financial statement, with its focus on revenue, expenses, assets and liabilities, as a tool more useful than congressional budget resolutions. The former is an accrual-based record of actual revenue, expenses, assets and liabilities, whereas the former is cash-based and reflects only what is bought and paid for in a given year – without regard for longer-term commitments.
The video’s starkest claim concerned Social Security and Medicare, programs it described as mere “footnote disclosures” not reflected as liabilities on the federal balance sheet. Were these off-balance sheet obligations added to America’s already substantial debt load, U.S. obligations would total $61 trillion, more than the $58.5 trillion net worth of all U.S. citizens combined.
Asked about America’s current financial condition, Steven M. Frankiel, a Los Angeles-based CPA and AICPA member, took a sober view.
“I would have to hope there is tremendous growth in the future to service the debt and the obligations that it has.
“It isn’t that we’re so in debt, we’ll never be able to work our way out of it,” Frankiel told AdvisorOne. “It’s just that, unless there’s growth, many other programs will be squeezed by interest on the debt and entitlements.”