2002 wasn't exactly a fantastic year for accounting. Arthur Andersen had just been convicted of obstruction of justice in the wake of Enron's collapse. That whole Sarbanes-Oxley thing happened. And, of course, the PCAOB was born as a result.
In "The Man With Nine Lives" published by Forbes in November of 2002 we meet then 44-year-old Barry Melancon, a troubled figure clinging to his position at the AICPA:
For Barry Melancon, the 44-year-old chief executive of the accounting industry’s self-regulatory body, it’s been a terrible year. A wave of accounting scandals has damaged the AICPA’s image. On his watch, the AICPA has been accused of giving short shrift to the auditing rules it sets, which are supposed to protect investors. And under Melancon, the AICPA has set up a Web site that ignited a barrage of conflicts-of-interest charges against him.
That "Web site" as we know was CPA2Biz, which has since been rebranded to CPA.com. A "dot com startup" in the age of Pets.com and Webvan, Barry's 1% stake in CPA2Biz — which cost him $100,000 — quickly grew to over $5 million.
Although the AICPA's governing council approved this state, certain folks in the profession thought it was a little weird or — dare we say, wrong — for the head of a non-profit trade group to profit on a for-profit Internet venture.
Some 160 member accountants have signed a petition asking him to resign. BDO Seidman, the fifth-largest accounting firm, has sued the AICPA over the site, alleging Melancon is trying to enrich himself and that the AICPA is wrongfully competing with accounting firms. An AICPA member has filed an ethics violation accusing him of self-dealing. (None of the AICPA’s chiefs, including Melancon, has ever had a finding against them.) Now, Congress has yanked the AICPA’s auditing oversight duties away from it and given them to a new federal board. Some wonder how Melancon can hold on to his job.
The CPA2Biz scandal forced Barry to donate his questionably-gotten gains to charity so as not to distract from the important PR work the profession had to do post-Enron:
''This was a distraction to communication,'' Mr. Melancon said. ''It just was causing us to not be focusing on the issues on Enron, the issues of change to be made.''
Back to Forbes, the poor guy was getting it from all sides back then:
“I think the AICPA under Melancon’s leadership has been the least effective, most backward, most obstructionist group that I encountered in my eight years running the SEC,” says Arthur Levitt, former Securities & Exchange Commission chairman. Lynn Turner, former SEC chief accountant, agrees. “If Melancon were a CEO of a company, he’d be fired by now,” says Turner, who recently received a big round of applause in a speech before 700 accountants when he called for Melancon to step down.
As we all know, the AICPA did not fire Melancon. 13 years later, he's bragging about how the AICPA has surpassed 400,000 members and more students than ever are graduating from accounting programs. As for CPA2Biz? Well it never did IPO.