Why CPAs Make Good Expert Witnesses

March 18, 2014

CPAs bring instant credibility to the witness stand.

Unlike many expert witnesses, it is generally assumed that the CPA will testify honestly and offer the court a carefully-reasoned and supported opinion. The well-recognized credential speaks for itself, initially setting the bar a little higher for opposing counsel.

But why? What is unique about the CPA credential?

High Honesty and Ethics Ratings

A recent Gallup poll ranked nurses and police officers at the top of professions for honesty and ethics. Among business professionals, accountants consistently rank at or near the top, slightly behind the clergy.

Perhaps this high ranking is due, in part, to the heavy emphasis the profession places on professional skepticism, due diligence and independence.

The CPA License

Every CPA is an accountant, but not all accountants are CPAs. Only CPAs are licensed and qualified as independent auditors.

In their undergraduate studies, accounting students learn in Auditing 101 the concepts of professional independence and professional skepticism.

For the CPA, those concepts have been drilled through additional college study and cemented during preparation and study for the uniform CPA examination. Both concepts have been reduced to professional auditing standards.

The Mind-set

Professional skepticism is, according to the American Institute of Certified Public Accountants (AICPA), “an attitude that includes a questioning mind and a critical assessment of audit evidence. The auditor uses the knowledge, skill and ability called for by the profession of public accounting to diligently perform, in good faith and with integrity, the gathering and objective evaluation of evidence.”

The professional standard specifically requires that a CPA’s perception of management’s honesty is not to be a basis for reducing the quality or quantity of hard evidence to be studied.

Once ingrained in the professional mind, those concepts of independence are fiercely protected and tend to carry over into every aspect of the CPA’s professional work. Even in non-audit engagements, the CPA must be careful to conduct the engagement with integrity.

The preamble to the AICPA professional ethics standards says, in part, “In discharging their professional responsibilities, members may encounter conflicting pressures from among each of those groups. In resolving those conflicts, members should act with integrity, guided by the precept that when members fulfill their responsibility to the public, clients’ and employers’ interests are best served.”

Most states have professional standard regulations forbidding activities discreditable to the profession and incorporating the independence and objectivity standards into all professional services, not just auditing.

Minimum Certification Requirements

The qualifications to be licensed as a CPA vary from state to state, but at a minimum the candidate must:

• Earn a B.A. or B.S. degree, plus at least 30 more hours ofundergraduate study (five years total) or a master’s degree, including 30 hours of advanced accounting study.
• Pass a rigorous, uniform, nationally-administered comprehensive exam on auditing, taxation, financial reporting and accounting, business entities, regulations, ethics, business law and professional responsibilities.
• In many states, an apprenticeship of one or two years under the supervision of an experienced CPA is required.
• Professional ethics are studied throughout the undergraduate process, into the professional licensing examination and continuously thereafter.

Continuous Training

To maintain a CPA license, the practitioner must earn at least 40 hours of continuing professional education per year, including a minimum of core credit hours and four hours of professional ethics every second year.

Among many other topics, the current AICPA continuing education catalog lists conferences on expert witness skills and business valuations, a forensic accounting certificate program, and business and divorce valuation classes.

Business and Industry Understanding

The nature of their business demands that many CPAs be involved in professional engagements over a cross-section of businesses and industries. They are trained to analyze business performance over specific time periods within a business, and by comparison to other businesses or industry-wide statistics. They are trained to interpret the numbers so management and other users can find profitable meanings in them.

Not all CPAs regularly engage in tax work, but all CPAs must study and be tested on individual and corporate tax law as part of the licensing process. This training brings to every engagement an intuitive consideration of whether and how tax issues might affect the project.

The hallmark of the CPA profession is its professional integrity and objectivity. CPAs are trusted business advisers with extensive training and education whose profession seeks first to serve the public interest. Users have high expectations of CPAs for honesty and ethical dealings, and those expectations – historically realized – attend the CPA on the witness stand.