The American Institute of CPAs (AICPA) is looking to gather public opinions on potential updates to its independence rules, particularly concerning private equity investments in accounting firms.
The Professional Ethics Executive Committee’s (PEEC) Alternative Practice Structures Task Force will soon invite stakeholders to review its preliminary conclusions and two proposed interpretation options.
These interpretations aim to refine the existing code, which has governed outside investment in CPA firms for more than two decades, ensuring that only licensed CPA firms can deliver attest services.
The increasing involvement of private equity firms in non-attest entities has prompted the PEEC to seek additional clarity on auditor independence, especially regarding portfolio companies and other related entities.
AICPA public accounting CEO Susan Coffey said: “Private equity investment in accounting is a great validation of the strength and stability of the profession, and it’s one way for firms to fund technology upgrades and growth acquisitions.
“It’s crucial, however, to make sure [that] integrity of the attest function is not compromised and that the public interest is protected.”
The task force, established two years ago, has devised a three-step process to address these concerns.
The first step involves identifying which entities within the alternative practice structure qualify as network firms, which are then subject to independence requirements for financial statement audits and reviews.
The second step determines which individuals are covered members and thus must adhere to independence requirements.
The third step is to pinpoint additional relationships and circumstances that may pose threats to independence, and to identify situations where independence would be compromised.
In certain cases, a portfolio company might be classified as a network firm for reasons that will be detailed in the task force’s discussion memorandum, the association notes.
Stakeholders have until 15 June 2025 to submit their comments on the task force’s preliminary conclusions and their preferred draft interpretation of independence rules.
The PEEC intends to use this feedback to enhance its research and finalise the preferred option, which will be followed by a formal exposure draft.
In January 2025, AICPA, along with the Chartered Institute of Management Accountants (CIMA), discussed the UK Government’s efforts to boost productivity through investment plans.
