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What do CPAs practicing in local firms fear the most? Is it the Big Six becoming the Big Four? Is it not being able to issue plain paper financial statements? Or is it Congress passing legislation delaying the implementation date on the new derivatives accounting standard? No, it is none of these.

What seems to bother them the most is the idea of giant financial institutions and similar entities acquiring CPA firms and creating one-stop shopping malls for everything the CPA practitioner does, plus giving the opportunity for the CPAs to make tons of money through commissions on financial product referrals.

It all started with a court case in Florida--the Florida State Board of Accountancy sued Silvia Ibanez for using her CPA designation in a Yellow Pages ad for her law practice. The Supreme Court ruled she had a first amendment right to use the CPA identification.

Along came American Express Tax and Business Services (TBS), acquiring nonattest practices from CPA firms and hiring the firm's professional staff (including partners) to continue to conduct the practices. TBS, while serving the former clients of the CPA firms, advertises and holds out that the work is being done by CPAs. The Florida Board of Accountancy came forward again and challenged the right of TBS employees to hold themselves out as CPAs. A Federal court of appeals has upheld a ruling against Florida on the basis of First Amendment rights of free speech. Florida has stated its intention to appeal the decision to the U.S. Supreme Court.

The AICPA and NASBA joined in the plot by agreeing that firms who hold themselves out as CPA firms and perform the full scope of services, including attest engagements, need only be owned by a majority of licensed CPAs. The agreement would permit CPAs that do not perform attest services to use the CPA credential even if employed by a firm or entity with no CPA ownership.

In 1997, TBS stated its intention to acquire and operate accounting practices in all of the 50 major markets, including New York. News accounts have reported discussions between TBS and the leading New York firm of Goldstein Golub Kessler & Company (GGK). A December news brief in Accounting Today, gives the indication that there may be obstacles in TBS's plans. The news item reported that a letter from New York accountancy regulators "says that any CPA joining AmEx from GGK would be violating state law if he or she continued to hold out as a CPA and that a sale of the firm would be considered illegal."

Where is all this taking the profession? The February
issue of The CPA Journal devotes three feature articles on these related subjects to help CPAs in local firms and observers of the profession get a better understanding of these developments.

First, "What Hath Ibanez Wrought?" gives the details of the court decision that allowed Silvia Ibanez to use her CPA credential. It also reports on a survey of what state regulators are doing in response to the decision. The authors conclude that holding out will still be a contentious and problematic issue in many jurisdictions for some time to come.

In "The Future of Non-CPA Ownership," Ronald J. Huefner thoughtfully addresses the many issues and forces at work having to do with non-CPAs having ownership control over entities that provide CPA services to the public. He tells it like it is and offers a potential solution to protect the public. While all may not agree with his answer to the problems identified, there can be little dispute of his understanding of the situation as it stands today.

In "The Real American Express Tax and Business Services," managing editor James Craig interviews the senior managing director of a TBS office. The purpose of the interview is for CPAs in local practices to fully understand how TBS operates. If CPAs are to successfully compete, and certainly they can do so at many different levels, they must understand the nature of the competition.

A late breaking wrinkle is that Bob Basten, who led TBS on its shopping spree of CPA firms, is stepping down as its president. Word has it that American Express feels TBS is ready for a new kind of leadership that will focus more on profitability rather than growth issues. That new leadership could involve having a CPA as one of its top executives.

Armed with a good understanding of the issues, CPAs are in a better position to plan a course of action that will lead them to success. *

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

©2009 The New York State Society of CPAs. Legal Notices

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