Magazine article The CPA Journal

CPA Firm Ownership: Next Steps

Magazine article The CPA Journal

CPA Firm Ownership: Next Steps

Article excerpt

For the past three decades, the concept of non-CPA firm ownership has been hotly debated across the country and in New York State. In this journal alone, dozens of articles have been written on the topic. As far back as 20 years ago, one author observed that, "The subject [of nonCPA ownership] has led to numerous committee and task force activities, both at the AICPA and state society levels." That was in 1993. Today, 47 states allow nonCPAs to own a minority stake in CPA firms. But in New York, non-CPA firm ownership is still only a topic of discusión - although that might soon change.

A Critical Conversation

As the call for needed changes to firm ownership intensifies, the issue will wind its way through Albany, given that any such change requires legislative approval. ft is critical that the NYSSCPA positions itself as part of that discussion. To that end, the Society's Board of Directors, at its December 4, 2012, meeting, voted to support non-CPA firm ownership in New York State. After thoughtful and reasoned discussion on many aspects of the issue, the board decided it was important to take part in the dialogue about how lawmakers approach this type of firm structure, what percentage of ownership non-CPAs should have in a firm, and whether a minority stake in a firm should be based on the number of non-CPA owners or the amount of equity an individual has in the firm.

Most states have approached the concept of non-CPA firm ownership using model legislation known as the Uniform Accountancy Act (UAA) as a starting point Developed jointly by the AICPA and the National Association of the State Boards of Accountancy (NASBA), the UAA requires CPAs to retain a majority stake of at least 51% in a firm. There are other provisions of the UAA: Licensed CPAs must hold a simple majority of the ownership; a licensed CPA or a CPA with practice privileges must be responsible for registration of the firm; passive ownership is not permitted; the partner or owner in charge of attest services must be a licensed CPA or a CPA with practice privileges; and all non-CPA owners must be actively engaged in working for the firm or for an affiliated entity.

The board's discussion touched upon these issues, but the conversation pivoted on the business case for non-CPA firm ownership. Those in favor of the initiative argued that although the attest function must be the cornerstone of the services that a firm provides, retaining non-CPAs with specialized knowledge becomes more important as firms become more specialized and offer more diverse financial services. …

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