According to Journal of Accountancy, the AICPA’s Professional Ethics Executive Committee (PEEC) is inviting public feedback on potential revisions to independence rules regarding private equity investment in accounting firms.
A discussion memorandum, released by the Alternative Practice Structures (APS) Task Force, outlines preliminary conclusions aimed at enhancing clarity in the AICPA Code of Professional Conduct. Comments are due by June 15.
As private equity investment in accounting firms grows, the task force seeks to ensure firms remain compliant with independence rules while adapting to evolving business structures.
Accounting firms have been turning to private equity as they seek increased funds for technology and talent. While this might be an advantage to U.S. midsized accounting and consulting firms, resulting ownership shake-ups have increased concerns among accountants and regulators. An example of this trend would be Blackstone acquiring a significant stake in tax firm Citrin Cooperman.
The proposed updates focus on defining network firms, identifying covered members subject to independent rules and assessing relationships that could pose independence threats.
The AICPA emphasizes that maintaining the integrity of the attest function is crucial. Task force co-chair Lisa Snyder highlighted that the discussion memorandum is not official guidance but rather a starting point to refine the framework before an official exposure draft is issued.
The Journal reported that during a recent webcast prior to the release of the discussion memorandum, Snyder said, "Firms that we have talked to have told us that they want to ensure that they are doing the right thing and complying with the AICPA Code, as well as state laws. So, we believe that by issuing this discussion memorandum with the task force's preliminary conclusions, it will allow firms out there to understand at least where we are heading and also allow the task force to identify any issues or any unintended consequences that maybe we haven't considered."