Magazine article The CPA Journal

Non-CPA Ownership, Holding out as a CPA, the Corporatization of CPA Firms-All Here This Month

Magazine article The CPA Journal

Non-CPA Ownership, Holding out as a CPA, the Corporatization of CPA Firms-All Here This Month

Article excerpt

What do CPAs practicing in local firms fear the most? Is it W the Big Six becoming the Big Four? Is it not being able to issue plain paper financial statements? Or is it Congress passing legislation delaying the implementation date on the new derivatives accounting standard? No, it is none of these.

What seems to bother them the most is the idea of giant financial institutwns and similar entities acquiring CPA firms and ,creating one-stop shopping malls for everything the CPA plus giving the opportunity for the CPAs to make tons of money through commissions on financial product referrals.

It all started with a court case in Florida-the Florida State Board of Accountancy sued Silvia Ibanez for using her CPA designation in a Yellow Pages ad for her law practice. The Supreme Court ruled she had a first amendment right to use the CPA identification.

Along came American Express Tax and Business Services (TBS), acquiring nonattest practices from CPA firms and hiring the firm's professional staff (including partners) to continue to conduct the practices. TBS, while serving the former clients of the CPA firms, advertises and holds out that the work is being done by CPAs. The Florida Board of Accoun

tancy came forward again and challenged the right of TBS employes to hold themselves out as CPAs. A Federal court of appeals has upheld a ruling against Florida on the basis of First Amendment rights of free speech. Florida has stated its intention to appeal the decision to the U.S. Supreme Court.

The AICPA and NASBA joined in the plot by agreeing that firms who hold themselves out as CPA firms and perform the full scope of servces, including attest engagements, need only be owned a majority of licensed CPAs. The agreement would permit CPAs that do not perform attest services to use the CPA credential even if employed by a firm or entity with no CPA ownership.

In 1997, TBS stated its intention to acquire and operate accounting practices in all of the 50 major markets, including New York. News accounts have reported discussions between TBS and the leading New York firm of Goldstein Golub Kessler & Company (GGK). A December news brief in Accounting Today, gives the indication that there may be obstacles in TBS's plans. …

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