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Interviewing as an Auditing Tool
By Linda M. Leinicke, Joyce A. Ostrosky, W. Max Rexroad, James R. Baker, and Sarah Beckman
FEBRUARY
20
05 In response to the increased emphasis on fraud prevention, deterrence, and
detection connected with recent corporate failures, the AICPA issued Statement on Auditing Standards
(SAS)
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9, Consideration of Fraud in a Financial Statement Audit. SAS 99 is effective for periods
beginning on or after December 15, 2002, and it significantly changes how CPAs must consider fraud in
their audits of financial statements. In light of this increased emphasis on uncovering fraud, auditors
may want to consider the benefits of interviews as an audit tool.
Interviews are a useful audit tool to gather information about internal controls and fraud risks for several
reasons. First, employees involved in the daytoday operations of a functional area possess the best
knowledge of that area. They are in an excellent position to identify weak internal controls and fraud
risks. Second, although most employees are not directly involved in fraud, they may have knowledge of
suspected, or actual, frauds that interviews can bring to light. Third, employees may be reluctant to tell
management about needed internal controls and suspected or actual fraud, even when a company has an
ethics hotline, a compliance officer, or other reporting mechanisms. When interviewed, however,
employees are often willing, even relieved, to talk about these issues.
Obtaining the Information Needed
A primary difference between SAS 82 and SAS 99, which superseded it, is that the latter includes
expanded requirements for inquiries of management. Making inquiries of management is important
because senior management is often in the best position to perpetrate and conceal fraud. In obtaining
information necessary to identify the risk of fraud in a financial statement audit, SAS 99 requires
auditors to ask the following questions:
Does management communicate its views on ethical business behavior to its employees?
Does management have programs and internal controls designed to prevent, deter, and detect
fraud?
Does management discuss with the audit committee of the board of directors how its internal
control system serves to prevent, detect, and deter fraud?
Does management understand the fraud risks specific to its business?
Does management monitor fraud risks relevant to specific components or divisions within the
entity?
Does management have any knowledge or suspicion of fraud?
Is management aware of any allegations of fraud?
In addition to management inquiries, SAS 99 also requires an auditor to inquire of the audit committee
and of internal audit personnel about their views on the company’s fraud risks. Significantly, SAS 99
mandates that other individuals within the company also be questioned about the risk of fraud.
Paragraph 24 of SAS 99 states:
The auditor should use professional judgment to determine those others within the entity to
whom inquiries should be directed and the extent of such inquiries. In making this
determination, the auditor should consider whether others within the entity may be able to
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provide information that will be helpful to the auditor in identifying risk of material
misstatement due to fraud.
SAS 99 suggests that auditors inquire of operating personnel with varying levels of authority, of in
house legal counsel, and of others knowledgeable of fraud risk. Because employees are often aware of
where specific fraud risks lie, auditors should understand employees’ views on the risk of fraud.
Additionally, auditors should look for discrepancies in information received from various interviewees.
Unusual situations or conditions identified through interviews with management and others can be
revealing.
The Mechanics of a Good Interview
Inquiries of management and others in the form of factfinding interviews can be highly effective in
obtaining “the information needed to identify the risks of material misstatement due to fraud” (SAS 99).
For these interviews to be useful, effective, and efficient, the following techniques are recommended.
Training. Audit staff must be trained in how to conduct an effective factfinding interview. Conducting
professional interviews is a learned skill; only through training and practice does one become proficient
at it. Generally, a threetofiveday training course will be necessary to get an auditor started. Then, the
more interviews auditors conduct, or observe along with a skilled interviewer, the better they will
become at interviewing. A combination of both classroom training and onthejob training is another
excellent approach. CPAs that already possess good interpersonal and verbal communication skills are
ideal candidates.
The AICPA’s CPA2Biz (www.cpa2biz.com) offers interviewing courses such as “Finding the Truth:
Effective Techniques for Interview and Communication.” Additional interview training resources
include the Association of Certified Fraud Examiners (www.cfenet.com) and the Institute of Internal
Auditors (www.theiia.org).
Interviewing versus interrogation. Understanding the difference between an interview and an
interrogation is important. The typical audit interview is a questionandanswerformatted discussion
normally conducted at the interviewee’s workstation. The purpose of the interview is to learn new facts
or to confirm previously obtained information. An interrogation, or “truthseeking interview,” is in
many ways the opposite. The primary difference is the state of mind of the interviewee. In an interview,
the interviewee is generally a willing participant assisting the interviewer in the process of determining
the facts. An interrogation occurs only when a suspected fraudster has been identified. The interviewer’s
task is to persuade the individual to admit to an act or omission that he has no intention of divulging.
Interviewing requires the ability to organize thoughts and discussion along a logical path. Interrogation
requires those skills coupled with the ability to persuade an individual to say something that runs
contrary to his survival instincts.
Conducting the interview. The interview should have a tone that is formal, friendly, and nonthreatening;
should follow a predetermined structure; and should result in meaningful factfinding. An interviewer
should prepare a set of questions and an introductory statement that explains the purpose of the
interview. This preparation will set the tone for a serious, purposeful, and effective interview.
The interviewer should be matched to the interviewee. Building a rapport with an interviewee is
partially a function of who interviews whom. For example, it is more difficult for a staff auditor to build
rapport and connect with an intimidating CEO or CFO than for the engagement partner to do so. But for
the engagement partner to conduct every interview is simply not costeffective, so partners or
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http://www.cfenet.com/
http://www.cpa2biz.com/
http://www.theiia.org/
experienced audit managers might interview most senior management. Managers, seniors, and staff
accountants can be matched to other interviewees, as appropriate.
The interview should always be conducted in private. If the interviewee’s workstation is not sufficient,
then the interviewer should use a meeting room. An interview is most successful when the subject is
comfortable and at ease. Most people are more comfortable in their own work environment and when
they can answer questions without concern that a coworker might be eavesdropping.
It is essential in the early part of the interview for the auditor to build a rapport with the interviewee in
order to encourage an open discussion. Structuring questions to progress from the general to the specific
allows the interviewer to first build a rapport, and then observe changes in an interviewee’s behavior
that may signal a suspicious or sensitive topic as the questions become more focused. Skilled
interviewers are always cognizant of indicators of deception that may be displayed by any individual
attempting to mislead the interviewer. False statements, however, are not always indicators of fraud;
they may be covering up an individual’s perceived personal or professional deficiencies.
Making a false statement during an audit interview is stressful for most people. When a false statement
is made, the interviewee releases the stress verbally, nonverbally, or in both ways. Indicators of
deception vary from individual to individual. They can be as subtle as a change in voice tone or as
obvious as a sudden change in complexion. A skilled interviewer must be trained to identify these
indicators and have a thorough understanding of their potential significance.
Because the main purpose of the factfinding interview is to seek information, openended questions
should be emphasized. Questions should be structured to encourage the interviewee to volunteer
information. For example, “What internal control problems do you have in your department with respect
to cash receipts?” will likely provide more information than the closedended question, “Are all daily
cash receipts deposited intact?” Interviewers should be good listeners and never interrupt an openended
response. One of the last questions asked in each interview should be very openended; for example, “Is
there anything else you would like to tell me regarding the operations of your department?” or “Have I
failed to discuss an important topic with you?” Joseph Wells, chairman and founder of the Association
of Certified Fraud Examiners, advises that the last question should be whether the interviewee has
participated in any fraudulent activities against the company. Asking this question provides
documentation that may prove invaluable if a lawsuit involving financial statement fraud or asset
misappropriation occurs later.
To minimize legal risk, auditors should gear the discussion solely toward factfinding questions or
statements and away from accusatory questions or statements. For example, asking, “Have you stolen
any inventory from the company?” is acceptable, but asking, “You have stolen inventory in the past
from the company, haven’t you?” is not, due to the embedded accusation.
Interview Subjects
SAS 99, paragraph 6, identifies the two types of fraud that auditors should be aware of as
“misstatements arising from fraudulent financial reporting and misstatements arising from
misappropriation of assets.” As a result, inquiries should be directed toward individuals concerned with
financial reporting as well as those with direct or indirect access to the company’s assets.
The CEO and the CFO should be carefully interviewed by a partner or experienced audit manager about
their knowledge or suspicion of fraud. These executives have the power to override internal controls,
and therefore are in a position to perpetrate and conceal fraud. Their administrative assistants may be
privy to sensitive information and may suspect or be aware of fraudulent activity, and should also be
11
interviewed. Individuals may be aware of fraudulent activities but not disclose them unless specifically
asked.
Fraudulent financial reporting. To obtain information about misstatements arising from fraudulent
financial reporting, the following people could be interviewed: the controller; all employees involved in
“initiating, recording, or processing complex or unusual transactions”; and the vice president of sales
and selected subordinates.
Financial statement fraud is usually due to the overstatement of sales revenues. The vice president of
sales and the sales staff could be under direct pressure to misrepresent sales transactions for individual
or companyrelated purposes. According to SAS 99, paragraph 41, “the auditor should ordinarily
presume that there is a risk of material misstatement due to fraud relating to revenue recognition.”
Misappropriation of assets. When inquiring about the possibility of financialstatement fraud due to
misappropriation of assets, interviews should be conducted with employees that handle cash, which is
frequently misappropriated. Employees involved in inventory management are knowledgeable about
proper inventory control procedures, and they could be aware of any inappropriate handling of
inventory. Employees involved in purchasing may be aware of kickbacks, fictitious vendors, and similar
schemes. Employees involved in similar areas with direct or indirect access to significant corporate
assets should be interviewed as well.
Interview the CEO first. Although senior management may be in the best position to perpetrate fraud,
employees in lower positions are often aware of such fraud. Auditors should interview senior
management first, and then follow the corporate ladder downward. The audit committee must be aware
of, and approve of, the use of interviews as an audit technique. In addition, if the CEO is informed of
and endorses the use of factfinding interviews, his approval can be conveyed to subordinates, who
would then be more likely to cooperate. Auditors do not want the CEO to be blindsided about interviews
being used to obtain information about the risk of fraud. The engagement letter should indicate that the
audit team will use factfinding interviews to help identify the risk of material misstatement due to
fraud.
Documenting the Interview
During an interview, note taking is a function of the style and memory of the interviewer. A consistent
pattern of note taking—either taking many notes or taking very few notes—should be maintained
throughout the interview. The goal is not to distract the interviewee and not to disrupt the flow of the
interview. A sudden change in notetaking style might affect the interviewee’s answers. Once the
interview has been completed, however, the interviewer should immediately write a memo documenting
the proceedings. This memo satisfies the requirement in SAS 99, paragraph 83, that an auditor should
document the “procedures performed to obtain information necessary to identify and assess the risks of
material misstatement due to fraud.” Interviewers should keep their handwritten notes, which will
corroborate the formal memo in case of subsequent litigation.
Using the Interview in the Audit
Once all interviews have been completed, the audit manager should read all of the interview
documentation memos, looking for themes and patterns. If the interview results indicate a lack of
internal controls, overrides of internal controls, potential fraudulent activities, or other specific risks of
material misstatement due to fraud, the auditor should expand procedures in the identified areas. In
addition, according to SAS 99, paragraph 83, “specific risks of material misstatement due to fraud that
were identified … and a description of the auditor’s response to those risks” should be documented.
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Click here to see the accompanying Sidebar.
Linda M. Leinicke, PhD, CPA, and Joyce A. Ostrosky, PhD, CMA, CPA, are professors of accounting,
and W. Max Rexroad, PhD, CPA, is an emeritus professor of accounting, all at Illinois State
University, Normal, Ill.
James R. Baker, CFE, is investigator for the Royce City Police Department, Royce City, Texas.
Sarah Beckman is a master’s of science in accountancy student at Illinois State University, Normal, Ill.
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T
here was a time, seemingly not all that long ago, when the
array of professional credentials that seasoned accounting
professionals could pursue was relatively narrow; many chose
to work toward the CPA certification. Although this certifi-
cation provides its holder with the only licensed accounting des-
ignation in the United States, financial professionals can now
choose from among a wide variety of additional certification
opportunities and career paths in order to differentiate them-
selves within the marketplace.
Expertise in specific areas—such as business valuation, foren-
sic accounting, information systems, financial services, internal
auditing, and management accounting, among others—has become
an option for all and a necessity for many. Certification creden-
tials evidencing such types of expertise have proliferated, creat-
ing an ever-broadening array of certification possibilities.
Researching the key attributes of the myriad of professional orga-
nizations and the benefits of their respective certifications and cre-
dentials is a significant undertaking, for which most accounting
professionals lack the necessary time; thus, this discussion pro-
vides professionals with a guide to the more prominent U.S.-based
professional organizations (i.e., those with memberships of more
than 10,000) and the certifications they offer.
Navigating the Maze of Today’s
Professional Credentials
R E S P O N S I B I L I T I E S & L E A D E R S H I P
p r o f e s s i o n a l d e v e l o p m e n t
JUNE 2013 / THE CPA JOURNAL62
By Douglas M. Boyle, Robyn Lawrence, and Daniel P. Mahoney
14
Such organizations include the AICPA,
the Institute of Internal Auditors (IIA), the
Certified Financial Planner (CFP) Board of
Standards Inc. and the Financial Planning
Standards Board (FSPB), the ISACA, the
Association of Certified Fraud Examiners
(ACFE), the Institute of Management
Accountants (IMA), and the Accreditation
Council for Accountancy and Taxation
(ACAT). A streamlined discussion of these
organizations (in descending order of mem-
bership size) and their respective certifica-
tions is followed by a discussion of essen-
tial implications and questions for profes-
sionals to consider, including potential ben-
efits and costs. (The Exhibit provides an
overview of the organizations discussed
below.)
AICPA
Founded in
18
87 and consisting of near-
ly 400,000 members, the AICPA is the
longest established and arguably most
recognized among the U.S.-based account-
ing organizations. It publishes the Journal
of Accountancy; The Tax Adviser; CPA
Letter Daily; AICPA Weekly Update; CPA
Client Bulletin; six e-newsletters; and
numerous online guides, alerts, and spe-
cialty-area articles. Although the AICPA
is often associated specifically with the
Uniform CPA Examination, it actually
serves the accounting profession in a rather
broad capacity, as stated on its website:
The AICPA is the world’s largest asso-
ciation representing the accounting pro-
fession, with nearly 386,000 members
in 128 countries and a 125-year heritage
of serving the public interest. AICPA
members represent many areas of prac-
tice, including business and industry,
public practice, government, education
and consulting. The AICPA sets ethical
standards for the profession and U.S.
auditing standards for audits of private
companies, nonprofit organizations and
federal, state and local governments. It
develops and grades the Uniform CPA
Examination. (http://www.aicpa.org)
The AICPA offers five different spe-
cialty credentials to those who already hold
the CPA designation: Personal Financial
Specialist (PFS); Accredited in Business
Valuation (ABV); Certified Information
Technology Professional (CITP); Certified
in Financial Forensics (CFF); and, most
recently, Chartered Global Management
Accountant (CGMA). These credentials
offer qualified CPAs the opportunity to fur-
ther distinguish themselves and thus
advance their careers and enhance the value
of their practices.
PFS. This credential, established in
19
87
for CPAs who have or seek expertise in
personal tax and financial planning, is pro-
vided to qualified CPAs who meet certain
experience requirements, earn 80 hours of
personal financial planning continuing pro-
fessional education (CPE) within the five-
year period preceding the PFS application
date, pass the six-and-one-half–hour PFS
Exam (or have passed either the Certified
Financial Planner [CFP] Exam or the
Chartered Financial Consultant [ChFC]
Exam), complete the PFS application, and
pay a $400 fee. The content of the PFS
exam includes professional responsibilities,
the personal financial planning process,
fundamentals of financial planning and
income tax planning, insurance planning,
financial independence (retirement plan-
ning), employee benefits, estate planning,
charitable planning, and other personal
financial planning issues.
ABV. Established in 1998 for CPAs
who have or seek expertise in the area of
valuation services, the ABV credential is
available to qualified CPAs who meet cer-
tain experience requirements, pass the six-
hour ABV Exam (or hold a current
Accredited Senior Appraiser [ASA] or
Accredited Member [AM] credential pro-
vided by the American Society of
Appraisers), complete the credential appli-
cation, and pay a $350 fee. The ABV
Exam includes content in the areas of qual-
itative and quantitative analysis, valuation
analysis, and related topics.
CITP. This credential was established in
2000 for CPAs who have or seek exper-
tise in the areas of business systems report-
ing, IT audit and attest services, internal
controls, fraud considerations, and risk
assessment. The credential is offered to
qualified CPAs who meet experience
requirements, complete the CITP applica-
tion, and pay a $400 application fee. In
addition, since July 25, 2012, applicants
are required to pass the four-hour CITP
Exam that covers risk assessment; fraud
considerations; internal control and IT gen-
eral controls; evaluation, testing, and report-
ing; and information management and busi-
ness intelligence.
CFF. This credential, established in
2008 for CPAs who have or seek exper-
tise in forensic accounting, is provided to
qualified CPAs who meet certain experi-
ence requirements, earn 75 hours of foren-
sic accounting–related CPE within a 10-
year period (with a minimum of 50% with-
in a five-year period) preceding the date of
CFF application, pass a four-hour exam,
complete the CFF application, and pay a
$400 fee (for AICPA members). The
CFF Exam includes content related to pro-
fessional responsibilities and practice man-
agement, fundamental forensic knowledge,
and specialized forensic knowledge.
CGMA. This designation was established
in 2011 through a joint venture between the
AICPA and the London-based Chartered
Institute of Management Accountants
(CIMA). The CIMA, founded in 1919,
describes itself as “the world’s leading and
largest professional body of management
accountants, with 183,000 members an stu-
dents operating in
16
8 countries, working
at the heart of business” (http://www.
cimaglobal.com/About-us/Press-office/Press-
releases/2011/March-2011/cima-aicpa-jv/).
The CGMA designation is designed for
CPAs specializing in the area of manage-
ment accounting and members of the CIMA.
As described on the CGMA website:
The AICPA and CIMA have joined
together to form a joint venture which
powers a new designation for manage-
ment accountants, the Chartered Global
Management Accountant (CGMA). The
CGMA is designed to elevate manage-
ment accounting and further emphasise
its importance for businesses worldwide.
The CGMA recognises the unique role
played by management accountants in
businesses around the world who are
guiding critical business decisions and
driving strong business performance. It
sets a new standard for global recogni-
tion of management accounting by
building on the longstanding foundations
and thought leadership of the AICPA
and CIMA. United by global quality
standards for ethics and performance, the
CGMA maintains distinct credibility and
positioning among worldwide business
designations. Through a wide range of
resources and learning opportunities, the
designation further elevates CGMAs’
management accounting expertise, skills,
ethical standards, commitment and
63JUNE 2013 / THE CPA JOURNAL
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JUNE 2013 / THE CPA JOURNAL64
dedication. (http://www.cgma.org/
AboutUs/Pages/default.aspx)
Current CIMA members are automati-
cally accepted as CGMAs. CPAs who are
not CIMA members are required to meet
certain financial and management account-
ing experience requirements, complete an
application, and pay a $150 designation fee.
No exam is currently required as part of
the acceptance process; however, begin-
ning in January 2015, successful comple-
tion of an exam will be required.
IIA
Established in 1941, the IIA has approx-
imately
17
6,000 members in 165 countries.
It publishes Internal Auditor, an online ver-
sion of the magazine (http://www.theiia.org/
intauditor/), and IIA Today. The IIA provides
five certification opportunities in various spe-
cialty areas of auditing. As described on its
website, the IIA is the considered
the premier organization for internal audit
professions:
The Institute of Internal Auditors (IIA) is
an international professional association
with global headquarters in Altamonte
Springs, Florida, USA. The IIA is the
internal audit profession’s global voice,
recognized authority, acknowledged lead-
er, chief advocate, and principal educa-
tor. Generally, members work in internal
auditing, risk management, governance,
internal control, information technology
audit, education, and security.
Globally, The IIA has more than 170,000
members. The IIA in North America com-
prises 159 chapters serving more than
70,000 members in the United States,
Canada, the Caribbean (Aruba, Bahamas,
Barbados, Cayman Islands, Curacao,
Jamaica, Puerto Rico, and Turks &
Caicos), Bermuda, Guyana, and Trinidad
& Tobago. Members enjoy benefits
offered by the North American Service
Center including local, national, and glob-
al professional networking; world-class
training; certification; standards and
guidance; research; executive develop-
ment; career opportunities; and more.
(https://na.theiia.org/about-us/Pages/About-
The-Institute-of-Internal-Auditors.aspx)
The certifications offered by the IIA
include the Certified Internal Auditor (CIA),
Certified Government Auditing Professional
(CGAP), Certified Financial Services Auditor
(CFSA), Certification in Control Self-
Assessment (CCSA), and Certification in
Risk Management Assurance (CRMA).
Although all of these certifications can add
value to a professional’s career, the CIA des-
ignation is the one for which the IIA is best
known. Few would argue with the IIA’s
assertion that the CIA is “the only globally
accepted certification for internal auditors and
remains the standard by which individuals
demonstrate their competency and profes-
sionalism in the internal auditing field”
(https://na.theiia.org/certification/CIA-
Certification/Pages/CIA-Certification.aspx)
CIA. In order to obtain the CIA certifi-
cation, a candidate must be a member of
the IIA, hold a four-year postsecondary
degree (or higher) from an accredited uni-
versity or its equivalent, exhibit high moral
and professional character as evidenced by
a character reference form, have at least 24
months of internal auditing experience
(holding a master’s degree can substitute
for 12 of these months), and pass an
exam consisting of four two-hour-and-
twenty-five–minute sections (internal audit
activity’s role in governance, risk, and con-
trol; conducting the internal audit engage-
ment; business analysis and information
technology; and business management
skills). The application fee for an IIA mem-
ber is $100 and the exam part fee is $150.
Other IIA certifications. The CGAP,
CFSA, and CCSA specialty certifications
provide opportunities for accounting pro-
fessionals to demonstrate their knowledge
and expertise in specific content areas. These
certifications require that the candidate be a
member of the IIA and have a four-year
postsecondary degree (or its equivalent) or
a two-year degree and defined experience
(depending upon the designation). In addi-
tion, the candidate must complete a charac ter
reference form and pass a three-hour-and-
fifteen–minute specialty exam for each cer-
tification. The CGAP Exam includes four
“domains” (i.e., topic areas): standards, gov-
ernance, and risk/control frameworks; gov-
ernment auditing practice; government
auditing skills and techniques; and govern-
ment auditing environment. The CSFA exam
likewise includes four domains—financial
services auditing, auditing financial services
products, auditing financial service process-
es, and the regulatory environment—and
allows the candidate to select from one of
three disciplines (banking, insurance, secu-
rities). The CCSA Exam includes six
domains: CSA fundamentals, CSA program
integration, elements of the CSA process,
business objectives and organizational per-
formance, risk identification and assessment,
and control theory and application.
The CRMA certification is the most recent
addition to The IIA’s specialty offerings and
will have requirements similar to the other
certifications discussed. The administering
of CRMA is planned to commence in mid-
2013. The IIA previously allowed candidates
to apply for the CRMA based upon a point
system, whereby candidates could obtain cer-
tification depending upon the professional
experience and credentials that they pos-
sessed. This opportunity expired on
September 30, 2012, and new candidates are
subject to the exam procedures. The appli-
cation fee for all specialty certifications is
$100 for IIA members and the specialty
exam fee for the CGAP, CFSA, and CCSA
is $325, and it is $350 for the CRMA.
FPSB
The FPSB, formed in 2004, consists of
approximately 140,000 members in 24 ter-
ritories worldwide, approximately 64,000
of whom are located in the United States.
The FPSB’s publications include FPSB’s
Update and It’s Your Turn. As noted on
its website, the FPSB works to promote
competency, ethics, and standards for
financial planners across the globe:
Financial Planning Standards Board Ltd.
(FPSB) is a nonprofit association that
manages, develops and operates certifi-
cation, education and related programs
for financial planning organizations so
that they may benefit the global com-
munity by establishing, upholding and
promoting worldwide professional
standards in financial planning. …
FPSB works in conjunction with its
members to develop and promote rig-
orous international competency, ethics
and practice standards for CFP profes-
sionals in member territories to ensure
that consumers looking for qualified
financial planners understand and value
CFP certification. (http://www.fpsb.org/
fpsbincreasesrepresentation.html)
The FPSB offers the CFP credential
through agreements with nonprofit (or
equivalent) organizations that become
FPSB members. Following FPSB stan-
dards, these members administer the CFP
certification standards and can adapt the
16
JUNE 2013 / THE CPA JOURNAL 65
certification process to address the regula-
tions, laws, and products of local areas. The
CFP Board established the eight major
domains of the CFP Exam: establishing
and defining the client-planner relationship,
gathering information necessary to fulfill
the engagement, analyzing and evaluating
the client’s current financial status, devel-
oping recommendations, communicating
the recommendations, implementing the
recommendations, monitoring the recom-
mendations, and practicing within profes-
sional and regulatory standards.
The exam, which costs $595, may include
one comprehensive exam or a series of
exams; formats for the exam may vary
depending upon location and the preferences
of each FPSB member. In order to be qual-
ified to sit for the CFP Exam, a candidate
must be an FPSB member and demonstrate
completion of courses at the upper division
undergraduate or graduate (master’s
degree) level (or its equivalent) in financial
planning. In addition, a condition of obtain-
ing initial certification is that the candidate
holds at least a bachelor’s degree from an
accredited institution. The CFP Board has
an experience requirement, defined as “the
supervision, direct support, teaching or per-
sonal delivery of all or part of the personal
financial planning process to a client”
(http://www.cfp.net/docs/default-document-
library/purpose_of_cfp_board ?sfvrsn=2).
ISACA
Formed in 1969 and previously known
as the Information Systems Audit Control
Association, ISACA has a global member-
ship of more than 100,000, representing
more than 180 countries. Its publications
include ISACA Journal and JournalOnline,
which features online-only articles available
to ISACA members in the months that the
bimonthly ISACA Journal does not appear
in print. The ISACA’s website describes the
organization as follows:
A nonprofit, independent membership
association, ISACA is a leading global
provider of knowledge, certifications,
community, advocacy and education on
information systems assurance, control
and security, enterprise governance of
IT, and IT-related risk and compliance.
Founded in 1969 as the EDP Auditors
Association, ISACA helps its members
and their employers ensure trust in, and
value from, information systems.
ISACA … has more than 100,000 con-
stituents in more than 180 countries in
Asia, Latin America, Europe, Africa,
North America and Oceania. Its members
include internal and external auditors,
CEOs, CFOs, CIOs [chief information
officer], educators, information security
and control professionals, business man-
agers, students, and IT consultants.
(http://www.isaca.org/About-ISACA/
P r e s s – r o o m / P a g e s / I S A C A – F a c t –
Sheet.aspx)
The certifications offered by ISACA focus
on various systems-related specialties:
Certified Information Systems Auditor
(CISA), Certified Information Security
Manager (CISM), Certified in the
Governance of Enterprise IT (CGEIT), and
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JUNE 2013 / THE CPA JOURNAL66
Key Information Certifications Offered
American Institute of Certified Public Accountants (AICPA) n Accredited in Business Valuation (ABV)
Website: http://www.aicpa.org n Certified in Financial Forensics (CFF)
Offices: New York, N.Y.; Durham, N.C.; Ewing, N.J.; and Washington, D.C. n Certified Information Technology Professional (CITP)
Established in: 1887 n Chartered Global Management Accountant (CGMA)
Membership: 377,000 members in 128 countries n Personal Financial Specialist (PFS)
Publications: Journal of Accountancy (printed monthly), The Tax Adviser (printed monthly), CPA Letter
Daily (free daily e-newsletter), AICPA Weekly Update (e-newsletter), CPA Client Bulletin (printed 10
times yearly), six Insider e-newsletters (CPA, career, corporate finance, corporate taxation, tax, and
wealth management). Monthly online guides: IFRS Report; InfoTech Update; Forensic & Valuation Reporter;
Financial Planning Digest; BusIndNews; and numerous other specialty-area publications, alerts, and guides.
Institute of Internal Auditors (IIA) n Certified Internal Auditor (CIA)
Website: http://www.theiia.org n Certified Government Auditing Professional (CGAP)
Office: Altamonte Springs, Fla. n Certified Financial Services Auditor (CFSA)
Established in: 1941 n Certification in Control Self-Assessment (CCSA)
Membership: 176,000 members in more than 165 countries n Certification in Risk Management Assurance (CRMA)
Publications: Internal Auditor, an online version of Internal Auditor, IIA Today (bimonthly)
Certified Financial Planner Board of Standards Inc. (CFP Board) n Certified Financial Planner (CFP)
[Financial Planning Standards Board (FPSB)]
Website: www.cfpb.net [www.fpsb.org]
Office: Washington, D.C. [Denver, Colo.]
Established in: 1985 [2004]
Membership: FPSB has 140,000 members in nonprofit organizations from 24 territories worldwide
Publications: FPSB’s Update (bimonthly e-newsletter), CFP Board’s It’s Your Turn (monthly e-newsletter)
ISACA n Certified Information System Auditor (CISA)
Website: www.isaca.org n Certified Information Security Manager (CISM)
Office: Rolling Meadows, Ill. n Certified in the Governance of Enterprise IT (CGEIT)
Established in: 1969 (EDP Auditors Association) n Certified in Risk and Information Systems Control
Membership: More than 100,000 members in 180 countries (CRISC)
Publications: ISACA Journal (printed bimonthly), JournalOnline, (online-only articles bimonthly, alternating
with ISACA Journal)
Association of Certified Fraud Examiners (ACFE) n Certified Management Accountant (CMA)
Website: www.acfe.com
Office: Austin, Tex. (headquarters); Singapore; London; Tokyo
Established in: 1988
Membership: More than 60,000 members
Publications: Fraud Magazine (bimonthly), Fraud-Magazine.com (e-newsletter), The Fraud Examiner
(e-newsletter), Blogs: ACFE Insights and FraudInfo
Institute of Management Accountants (IMA) n Certified Fraud Examiner (CFE)
Website: www.imanet.org
Office: Montvale, N.J.
Established in: 1919 (National Association of Cost Accountants)
Membership: 60,000 members internationally
Publications: Strategic Finance (monthly), Management Accounting Quarterly (online); IMA Educational
Case Journal (quarterly, online); IMA Online News (weekly, e-newsletter; specialized e-newsletters on
technology, careers, CMA certification, and students’ interests.
Accreditation Council for Accountancy and Taxation (ACAT) n Accredited Business Accountant (ABA)
Website: www.acatcredentials.org n Accredited Tax Advisor (ATA)
Office: Alexandria, Va. n Accredited Tax Preparer (ATP)
Established in: 1973 by the National Society of Public Accountants (now the NSA, which was established n Accredited Retirement Advisors (ARA)
in 1945)
NSA Membership: 10,240
Publications: Action News (ACAT’s e-newsletter), Main Street Practitioner, formerly NPA Magazine (digital
six times per year, printed quarterly by NSA); NSA Practice Advisor, formerly NSA Technology Advisor
(published eight times per year by NSA); NSAlert (biweekly e-newsletter by NSA); MemberLink (biweekly
e-mail newsletter by NSA)
EXHIBIT
U.S.-Based Accounting Organizations with More Than 10,000 Members
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JUNE 2013 / THE CPA JOURNAL 67
Certified in Risk and Information Systems
Control (CRISC). All of these certifications
require ISACA membership and three to five
years of related specialty experience (depend-
ing upon the certification), with certain allow-
able waivers that depend upon the candi-
date’s educational credentials. Although a
candidate’s education might be used
toward a waiver of certain experience
requirements, ISACA does not state any edu-
cational requirements needed to obtain cer-
tification. In addition to having experience,
candidates must pass the related specialty
exam and adhere to ISACA’s Code of
Professional Ethics in order to obtain a cer-
tification. The early exam registration fee for
ISACA members is $410 per certification.
The specialty exams cover various
domains. The CISA includes five topic
areas: the process of auditing information
systems; governance and management of
IT; information systems acquisition, devel-
opment, and implementation; information
systems operations, maintenance, and sup-
port; and protection of information assets.
The CISM exam covers four domains: infor-
mation security governance, information risk
management and compliance, information
security program development and man-
agement, and information security incident
management. The CGEIT exam consists
of five domains: strategic alignment, value
delivery, risk management, resource man-
agement, and performance measurement.
Finally, the CRISC exam covers five
domains: risk identification, assessment and
evaluation, risk response, risk monitoring,
information systems control design and
implementation, and information systems
control monitoring and maintenance.
ACFE
The ACFE was established in 1988
and has an international membership of
more than 60,000. The ACFE publishes
Fraud Magazine, Fraud-Magazine.com,
and The Fraud Examiner. The ACFE iden-
tifies itself as follows:
The ACFE is the world’s largest anti-
fraud organization and premier provider
of anti-fraud training and education.
Together with nearly 65,000 members,
the ACFE is reducing business fraud
worldwide and inspiring public confi-
dence in the integrity and objectivity
within the profession. (http://www.
acfe.com/about-the-acfe.aspx)
The ACFE offers the Certified Fraud
Examiner (CFE) designation. In order to
obtain this credential, a candidate must be
a member of the ACFE, agree to comply
with the CFE’s bylaws and Code of
Professional Ethics, meet professional
and educational standards, and complete
the 10-hour CFE exam. The professional
minimum experience requirement is at least
two years of related experience in the field
of fraud examination; generally, applicants
must have at least a bachelor’s degree or
its equivalent. Ultimately, the profession-
al and educational requirements are
determined based upon a point system,
whereby the candidate is awarded credit
according to certain education, profes-
sional affiliations, and experience criteria.
The editors invite readers to continue their interaction
with The CPA Journal online by joining our LinkedIn
group, at www.linkedin.com/groups/CPA-Journal-
1866117. Connect with top accounting and auditing
professionals and discuss hot topics confronting the
profession—from forthcoming accounting standards
and recent tax legislation to financial planning issues,
educational and regulatory requirements, and much
more. Join the conversation with other readers and
NYSSCPA members now.
The CPA Journal Online
19
JUNE 2013 / THE CPA JOURNAL68
The CFE Exam, which costs $300,
includes the topics of fraud prevention and
deterrence, financial transactions, fraud
investigation, and legal elements of fraud.
IMA
The IMA was founded in Buffalo, New
York, in 1919; it was originally known as
the National Association of Cost Accountants
and later as the National Association of
Accountants, but it adopted its current
name in 1991 in order to signify its “broad-
er role as the association for accountants and
financial professionals working inside orga-
nizations” (http://www.imanet.org/
about_ima/our_history.aspx). The IMA has
a global membership of more than 60,000
members. Its publications include Strategic
Finance; Management Accounting
Quarterly; IMA Education Case Journal,
IMA Online News; and various specialized
e-newsletters pertaining to technology,
careers, CMA certification, and students’
interests. The IMA’s website clearly states
its mission “to provide a forum for
research, practice development, education,
knowledge sharing, and the advocacy of
the highest ethical and best business prac-
tices in management accounting and finance”
(http://www.imanet.org/about_ima/our_
mission.aspx).
In 1972, the IMA established the
Certified Management Accountant (CMA)
credential. CMA candidates are required to
join the IMA, hold at least a bachelor’s
degree from an accredited institution, have
a minimum of two years of professional
management accounting or financial man-
agement experience, and successfully com-
plete the two-part, eight-hour CMA
exam. The exam content for the first part
includes planning, budgeting, and fore-
casting; performance measurement; cost
management; internal controls; and pro-
fessional ethics. Content for the second part
includes financial statement analysis, cor-
porate finance, decision analysis and risk
management, investment decisions, and
professional ethics. There is a $225 certi-
fication entrance fee and a $350 fee for
each exam part.
ACAT
Established in 1973 as a nonprofit inde-
pendent testing, accrediting, and monitoring
organization, the ACAT has a membership
of more than 10,000. It publishes Action
News, Main Street Practitioner, NSA
Practice Advisor, NSAlet, and MemberLink.
As noted on its website, the ACAT targets
accounting professionals servicing small to
mid-sized businesses:
The Council seeks to identify profes-
sionals in independent practice who spe-
cialize in providing financial, account-
ing and taxation services to individuals
and small to mid-size businesses.
Professionals receive accreditation
through examination and/or course-
work and maintain their accreditation
through commitment to a significant pro-
gram of continuing professional educa-
tion and adherence to the Council’s Code
of Ethics and Rules of Professional
Conduct. ACAT programs are governed
by a Board of Directors that includes
practitioners, educators and a public
member. (http://connect.nsacct.org/
ACAT/About1/AboutACAT/)
ACAT certifications include Accredited
Business Accountant (ABA), Accredited
Tax Advisor (ATA), Accredited Tax
Preparer (ATP), and Accredited Retirement
Advisor (ARA). None of these certifica-
tions has educational requirements.
The ACAT identifies the ABA as its trade-
marked designation that meets state regula-
tory requirements to practice public
accounting in the states of Delaware, Iowa,
and Minnesota. For this certification, a can-
didate must have at least three years of
related professional experience. The ABA
exam consists of two parts, each lasting three-
and-one-half hours. The content of the first
part of the exam includes financial account-
ing and financial statement preparation, pre-
sentation, and reporting. The content of the
second part includes taxation, managerial
accounting, business law, and ethics.
The ATA and ATP designations require
a candidate to have at least five years of tax
experience and three years of tax experience,
respectively, whereas the ARA credential
does not have a stated experience require-
ment. All three of these designations
require candidates to pass an exam consist-
ing of 100 multiple-choice questions. The
topical areas for the questions on the ATA
exam include tax preparation, planning, client
services, and ethics. The ATP exam covers
tax preparation and ethics. The ARA exam
includes content in the areas of retirement
plans, benefits, and distribution; insurance,
healthcare, and senior and long-term care
options; estates, trusts, estate planning and
taxation; personal residence issues; and
ethics. The cost to take both parts of the
ABA exam includes a $285 exam fee and
a $50 registration fee. If the parts are taken
separately, the cost is $200 for the exam and
$50 for registration. The ATA, ATP, and
ARA exams cost $200 each, along with a
$50 registration fee.
Implications for Professionals
Accounting professionals have long had
the opportunity to pursue one or more pro-
fessional designations, each designed to
reflect an individual’s competence and inter-
ests and to help with career advancement.
Of course, the CPA designation commands
significant respect. But today there are many
other additional certifications that one
might choose to pursue. Indeed, in an era
that demands new levels of specialized
knowledge, it seems intuitive that both
novice and veteran members of the profes-
sion would be well served by securing the
kinds of credentials that reflect such knowl-
edge. The obvious question for profession-
als to consider is whether the benefits of
obtaining the certification exceed the relat-
ed costs. Although all of the organizations
discussed above readily cite in their mar-
keting material a vast array of benefits in
obtaining their certifications, formal research
on this topic has found mixed results.
In “Costs and Benefits of APFS
Accreditation,” a survey of approximately
320 accredited personal financial specialists
(AFPS) found that the majority of partici-
pants believed that benefits of certification
were equal to or exceeded the related costs
(John E. Elsea, The CPA Journal, 1992).
Key benefits included improved profes-
sional image, skills, expertise, and com-
petiveness. Although preparing for and tak-
ing the examination were cited as the top
two costs, they were not viewed as major
obstacles. Yet, respondents noted that their
certifications did not have a significant
impact on billings and that certain state
restrictions on promotion of specialty ser-
vices likewise limited the incremental rev-
enues that one might logically expect from
having such certifications.
In contrast, another study, “Costs and
Benefits of Personal Financial Planning
Accreditation,” pointed to an increase in
billings and hourly rates; however, on the
downside, it also highlighted a potential addi-
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JUNE 2013 / THE CPA JOURNAL 69
tional cost of increased legal liability and
related insurance premiums (Joseph G.
Donelan, Journal of Accountancy, vol. 176,
no. 3, 1993). This cost may have been an
overstated perception, because only 6% of
participants had indicated that they had actu-
ally experienced an increase in premiums.
Interestingly, studies that surveyed hold-
ers of a particular certification have iden-
tified a wider array of perceived benefits
than those that focused on executives
who did not hold such certifications and
worked outside of the specific functional
area. In other words, those who are certi-
fied in a specific functional area and
work in that area seem to perceive greater
benefit to their respective certifications than
those who work outside of that specific
functional area. In “Practitioners’ and
Users’ Perception of the Benefits of
Certification of Internal Auditors,” survey
participants included directors of internal
audit and executives outside of internal
audit, such as CFOs and members of the
board of directors (Audrey A. Gramling,
Accounting Horizons, March 1997, pp.
39–53). This study found that although the
CIA designation is perceived to represent
a high level of competence and support for
advancement within the internal audit
profession, it is not generally perceived to
be important to management’s acceptance
of internal audit’s recommendations, nor
does it provide career advancement advan-
tages outside of the internal audit function.
This study further noted the fact that prior
research found that other non-CPA desig-
nations in accounting might not be per-
ceived by business executives as being par-
ticularly beneficial to the organization. The
article thus indicates that the primary ben-
efits from obtaining a non-CPA designa-
tion might be a personal sense of accom-
plishment, a perceived competence within
the specialty area, and greater potential
for advancement within a particular func-
tion; however, with respect to matters
external to the holder’s specific function-
al area, the benefits of such certification
are quite limited.
Accordingly, those considering the pur-
suit of certifications in specific function-
al areas should consider whether such
certifications are congruent with their spe-
cific career goals. For example, an inter-
nal auditor whose goal is to become
director of the internal audit function
would very likely benefit from the CIA
certification; in contrast, an internal audi-
tor whose goal is to become a CFO might
find that obtaining the CIA certification
has limited value.
One key benefit that warrants further dis-
cussion is the potential effect a non-CPA cer-
tification might have on compensation. A
broad survey of IMA members, “IMA
2011 Salary Survey: What Does This
Recovery Feel Like?,” found that the aver-
age total compensation for participants who
held neither the CMA nor CPA designation
was $103,960, as compared with $131,093
for participants who held the CMA designa-
tion and $145,712 for participants who held
the CPA designation (Lee Schiffel, David
L. Schroeder, and Kenneth A. Smith,
Strategic Finance, vol. 93, no. 12, 2012).
Participants who held both the CMA and
CPA designations reported an average total
compensation of $149,484. In the ACFE’s
Compensation Guide for Anti-Fraud
Professionals, 2010/2011 Global Salary
Study, antifraud professionals indicated that
the average total compensation for partici-
pants who held the CFE designation was
$90,500, as compared to $74,500 for partic-
ipants not holding the designation. The study
did not provide information comparing par-
ticipants who held the CPA designation.
The results of these various studies
indicate that holders of non-CPA certifi-
cations typically find value in such des-
ignations and often receive personal sat-
isfaction, peer recognition, and career
advancement within the specialized area
of the certification; however, these hold-
ers might not enjoy such benefits out-
side of their particular specialty areas.
In addition, non-CPAs can benefit from
increased compensation if they acquire
a non-CPA designation (e.g., CMA,
CFE), but the compensation increase for
those holding a CPA license is marginal,
and thus should not serve as a significant
factor in considering the pursuit of addi-
tional professional credentials.
The available professional certification
areas provide accounting professionals with
a host of potential choices. Depending
upon a professional’s particular career goals
and objectives, one or more such certifi-
cations could prove beneficial. But one
should not pursue a particular certifica-
tion without considering all of the poten-
tial costs and benefits. The accounting pro-
fession is hardly “one size fits all”; what
well serves one particular individual might
offer little or no benefit to a colleague.
Accounting professionals should ask them-
selves the following questions:
n Do the benefits identified above out-
weigh the costs? In particular, will the cer-
tification serve long-term career goals?
n Which specific areas of specialization
do I truly find interesting?
n Which areas of specialization could
help me and my firm better serve current
and potential clients?
n Which certifications flow most logi-
cally from my answers to the first and sec-
ond questions?
n Do I possess the education and expe-
rience requirements for the certifications
identified in the third question? If not, are
the steps to meet the requirements feasible?
n What kind of testing (or other) pro-
cess is necessary in order to obtain such
certification?
n How can I allot time from my schedule
to prepare for this process in such a way
that maximizes my likelihood of success?
n Does my employer typically support
this kind of endeavor via financial support,
study time, or change in the nature of the
work experience, or might it be to my
advantage to develop a formal request?
n Once I obtain the new credentials, what
are the continuing education requirements
and maintenance costs? Will my employ-
er be supportive in this respect?
Once these questions are answered,
accounting professionals are ready to begin
the application process via the organiza-
tions discussed above.
Taking time to consider the pursuit of
new credentials can be one of the most
important career moves that an accounting
professional makes. Of course, identify-
ing areas of specialization that are of gen-
uine interest—rather than just financially
lucrative—is an essential part of this pro-
cess. It is most certainly time well invest-
ed, because the result can be a career path
that is rewarding in a variety of ways. q
Douglas M. Boyle, DBA, CPA, CMA, is an
assistant professor of accounting, Robyn
Lawrence, PhD, CPA, is an associate pro-
fessor of accounting, and Daniel P. Mahoney,
PhD, CPA, is a professor of accounting, all
in the Arthur J. Kania School of Management,
University of Scranton, Scranton, Pa.
21