Magazine article The CPA Journal

Alternative Practice Structures

Magazine article The CPA Journal

Alternative Practice Structures

Article excerpt

he traditional CPA firm, performing the full range of services that CPAs offer to the public, is being tested. Is it the best form to use when offering personal financial planning, tax or business consulting, and even tax return preparation services? Should only the services for which CPAs and CPA firms are regulated be performed by those working in CPA firms? These are the questions being raised by the emergence of alternative practice structures (APS) as employed by American Express Tax & Business Services (TBS) and HR Business Services (part of H&R Block).

Under an APS, an acquired CPA firm is split into two pieces. Regulated services-audits, reviews, compilations, attestation services, WebTrustM, and the like-are performed by the CPA firm from which the practice was acquired (or a successor partnership). Nonregulated services-tax return preparation and all the consulting services-are performed by the acquiring entity or a subsidiary of the acquiring entity.

There are other structures that combine CPA firms and other professional entities to form one-stop shopping malls for individuals and businesses. These structures are testing the necessary safeguards to ensure independence between the clients of the CPA firm and the other entities that are providing services to the clients.

The Independence Issues Committee has been looking into the matter at the request of the SEC. At its November meeting, it failed to reach the necessary five votes to move the issue to the agenda of the Independence Standards Board. …

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