The United States is suffering from a decline in the level of financial literacy among its citizens, according to a recent Roper Poll commissioned by the American Institute for Certified Public Accountants (AICPA).
The survey results* reveal that many Americans lack a basic understanding of how to prepare for their short- and long-term financial needs. For example:
- Nearly two-thirds of Americans 65 and older do not feel fully confident they have the knowledge they need for adequate retirement planning;
- Nearly half of all Americans are unfamiliar with the impact a 401K plan can have;
- Income replacement (retirement funds or other money needed to replace a current salary) is an unknown concept for 61 percent of Americans;
- A quarter of Americans said they would file for bankruptcy if faced with an unmanageable financial emergency.
Alarmed by these statistics, the accounting profession today pledged the support of the country’s CPAs to help Americans become more financially astute. In a press conference held at the National Press Club, S. Scott Voynich, Chairman of the AICPA, and Barry Melancon, President and CEO, announced the inception of 360 Degrees of Financial Literacy (www.aicpa.org/financialliteracy), a multi-faceted education program designed for everyone from school-age children to retirees.
A keynote speaker at the briefing, Comptroller General of the U.S. and Head of the General Accounting Office David Walker, himself a CPA, called on his professional colleagues to take a leadership role in educating Americans about the need to take control of their financial destiny.
“By virtue of their experience and knowledge, CPAs are the right individuals for this task,” Walker said. “Every time CPAs improve a client’s financial condition, they are by extension contributing to the economic well-being of our nation.”
“Too many Americans lack a basic understanding of how to attain financial well-being,” Voynich said. “The degree of financial literacy has a direct correlation to the economic strength of our society.”
Melancon described financial literacy as a lifelong process. “Beginning with pennies in a piggy bank and continuing to estate planning, Americans need specific financial knowledge depending on where they are in their lives,” he said.
As a first step in 360 Degrees of Financial Literacy, the AICPA has established the National CPA Financial Literacy Commission, headed by Carl George, Chief Executive Officer of Clifton Gunderson LLP, a regional firm based in Illinois. Under his stewardship, the commission will offer thought leadership and build liaisons with key influential groups.
Moreover, to reach the AICPA’s membership, a Grassroots Mobilization Team will work with the state CPA societies to create local programs.
360 Degrees of Financial Literacy will also build on previous AICPA financial-education efforts. For example, in 2003, the Institute and the National Endowment for Financial Education produced a “Disaster Recovery Guide” to help victims of disasters regain financial security. In 2002 and 2003, the AICPA and Money Magazine co-sponsored Women’s Financial Health Week, a public-education campaign that reached an estimated 80 million consumers through print, electronic and on-line media coverage.
The American Institute of Certified Public Accountants (www.aicpa.org) is the national, professional organization of CPAs, with more than 340,000 members in business and industry, public practice, government, and education. It sets ethical standards for the profession and U.S. private auditing standards. It also develops and grades the Uniform CPA Examination.
Full survey results are available upon request.