I was writing about balance sheet reconciliations (stay tuned), but had to pivot and put my thoughts into words about this topic about private equity-back companies and the attraction of CPA firms.
Private equity companies invest in entities they believe in. The increased interest in CPA firms reinforces both the demand and value of our beloved accounting profession - far exceeding the robots, AI, and emeging technologies that some thought could adamantly replace us.
Can we call this a Millennial invention? Anytime something evolves, whether good or bad, they blame the Millennials - with a capital M.
Private equity interest in nonattest CPA firms is a great thing - but we must not commingle church and state. PE-backed firms are invested in several entities, creating a complex web of relationships that could easily blur the lines of independence if not structured properly.
This isn’t a hypothetical concern. It’s already happening. Firms are securing private equity funding to expand: investing in technology to optimize processes, opening the checkbook to attract and retain top talent (not warm bodies), and competing at scale - while regulators and state boards are working through how this impacts independence rules.
The AICPA’s Professional Ethics Executive Committee (PEEC) has put this under the microscope, releasing a discussion memorandum that outlines their early thoughts on how firms operating under Alternative Practice Structures (APS) should assess independence. They’re weighing two approaches - one that specifically addresses private equity structures and another that takes a broader approach. Both focus on three key questions:
Which firms within an APS model must comply with independence rules?
Which individuals within those firms must maintain independence?
What relationships create conflicts that compromise independence?
The issue isn’t whether private equity should be involved in accounting - that ship has sailed. The real question is how firms protect the integrity of the attest function while adapting to new business models.
Where does the profession draw the line? That’s what’s on the table.
Private equity is reshaping the accounting profession, and the stakes couldn’t be higher. I’ve pulled up a chair at the table where these decisions happen:as an accounting executive who’s navigated firm structures, financial strategy, and the tension between growth and governance.
Firms are scaling, regulators are tightening guardrails, and the profession is being reshaped in real-time. The question isn’t whether change is coming, it’s how firms will adapt while protecting the integrity of the work.
What are your thoughts and feels after reading this post? Comment below.
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