BDO Seidman Sues AICPA over Web Portal

The American Institute of CPAs used its nationwide control of the accounting profession, access to state society databases and money from its membership dues to create a monopoly of services through its web portal, CPA2Biz, according to a lawsuit filed in U.S. District Court in New York earlier this month.

The suit—filed by accounting firm BDO Seidman on Oct. 5—seeks a jury trial, accusing the AICPA of breach of contract, restraint of trade, and unfair competition, among other charges, in establishing a for-profit business that competes directly with BDO Seidman’s business operations.

“The AICPA has used dues paid by BDO and other members to…secure unfair competitive advantages for it, thus achieving an estimated valuation in excess of $500 million…based on reduced competition and anticipated monopoly profits,” the suit states. “As a competitor and as a member of AICPA, BDO brings this action…to ensure integrity and free competition in the profession.”

State and local societies last year agreed to back the web portal, which sells continuing professional education (CPE) courses, publications and other resources and is designed to eventually serve as a mechanism for CPAs to provide e-business capabilities to businesses and clients. The venture finally launched in June, spun from the AICPA’s CPAweb.org website, with additional funding from such heavy hitters as Microsoft Corp., Aon Corp., and information provider, Thomson Corp. In June 2001, the New York State Society of CPAs’ Board of Directors voted not to participate in an expanded agreement with Shared Services, LLC—a consortium of state societies involved in this and other programs— because of insufficient information available to make a sound business judgment. The Society also hesitated to turn over its membership lists that would then be passed on to the commercial venture. (See the July 2001 issue of The Trusted Professional.)

The AICPA has vowed to vigorously fight the lawsuit—which also names CPA2Biz, Inc. and Shared Services, LLC as defendants—saying the suit has no merit.

“The essence of the complaint seems to be that the AICPA has somehow restrained competition through the creation of…CPA2Biz, which was developed by CPAs for CPAs,” an AICPA press release stated, according to Business Wire. “(It is) a comprehensive provider of tools, resources, value-added services and solutions that strengthen and add value to the relationships between CPAs and the organizations they serve. The concept and substance of CPA2Biz were presented to and reviewed by our 263-member governing council more than a year ago. We respect the fact that BDO Seidman is a member and that they may have differences of opinion about our strategic direction.”

“The facts do speak for themselves,” said Scott Univer, general counsel for BDO Seidman. “Our concern is that the AICPA has set up a profit-making entity to compete against us. We filed the suit on our own grounds…but all I can say at this point is there has been interest expressed by others in joining in the lawsuit.”

The AICPA has 30 days from the filing of the suit to respond.

Following the suit, Chicago-based accounting firm Grant Thornton issued a statement lambasting BDO’s suit, saying the AICPA is working for the best interest of the profession. Thornton is CPA2Biz’s auditor and is also involved in selling services to small, independent CPAs in a manner similar to BDO, according to Electronic Accountant’s Newswire.

The portal received support from 52 CPA societies that formed the State Societies Network, Inc. (SSNI) in 1999 as a vehicle through which state societies could share costs in printing, technology and dues collection. The SSNI with the AICPA formed Shared Services, LLC to help launch the portal, with each state society paying $3 per member to join. (State societies received $5 per member after Microsoft and Thomson Corp. invested $50 million.) The Society participated during this first phase of the project but pulled out in June 2001.

The portal was supposed to launch in two phases, the first involving the creation of a database of state society members and the second involving the actual launch of the portal. A delay in the launch forced the State Societies Network to seek an extension of the first phase of the launch with state societies, which the NYSSCPA rejected in June because of new and unclear requirements. The NYSSCPA also rejected the second phase because, among other reasons, it would have forced the Society into a 110-year agreement.