SSNI, SSLLC Unable to Reach Contract With CPA2Biz

Negotiations Break Down Over Difference in Value

By Jay Dismukes

NEW YORK—After more than 18 months of planning and talks, negotiations involving the State Societies Network Inc. (SSNI), Shared Services Limited Liability Corporation (SSLLC) and CPA2Biz failed to yield a contract that is acceptable to all parties.

Having foreseen eventual problems with the contract, the New York State Society of CPAs abandoned the negotiations as well as its participation in SSNI last year.

Despite the inability to reach a contract, which was formally announced in March, the other state societies continue to move forward with the development of a shared national database; while the shared services model between the state societies and the American Institute of CPAs remains firmly in tact.

“We were all disappointed. As we report (the news) to the states, you get a number of reactions,” said Clarke Price, president and CEO of the Ohio Society of CPAs and chair of both SSNI and SSLLC. “Some states were looking for the revenue stream from CPA2Biz and so were very disappointed. Other states were not satisfied with aspects of CPA2Biz, so they were not that disappointed.”

Originally launched in1999 by the CPA Societies Executive Association as a vehicle through which state societies could share costs in areas such as printing, accounting, technology and dues collection, SSNI is the legal entity that formed a joint venture with the AICPA, known as SSLLC, to provide shared services to both state societies and the AICPA. The venture’s initial objective was to develop a national membership database that would have been licensed to the CPA2Biz portal, a for-profit division of the AICPA that is funded by investors including Bank of America and the Microsoft, AON and Thomson corporations. According to the AICPA, CPA2Biz would have served as the marketing arm of SSLLC, distributing AICPA- and state society-branded products and services.

Though the NYSSCPA originally joined SSNI in June 2000 and signed on to the first phase of the SSLLC CPA2Biz project, the Society, along with the Vermont Society of CPAs, voted last year not to sign a continuance agreement that contained items not included in the original phase one agreement.

When asked why SSNI, SSLLC and CPA2Biz were unable to negotiate a contract, Price said the issue primarily boiled down to the perceived differences in the value of the collective relationship.

“The states collectively in licensing their databases represented an additional 20 percent (on top of the AICPA’s own database) and is that 20 percent factor worth the cost of the contract?” said Price, who noted that CPA2Biz did not believe it was worth the cost. “Our position was what we were getting financially was not worth the value that we felt we were providing. It was that difference in what is the value that caused the breakdown.”

According to Price, all financial matters involving the parties have been resolved. And as reported during an April 10 conference call with executive directors from other state societies and in which Price participated, obligations pertaining to website links between CPA2Biz and the state societies, the licensing of the state societies’ databases to an outside party, and any prior restrictions pertaining to continuing professional education (CPE) programs, affinity programs or other related business transactions would cease to exist as of June 1.

Despite the contractual impasse, Price said the door has been left open for future negotiations between SSNI, SSLLC and CPA2Biz should there be a proposal that all sides find worthy of exploring.

Meanwhile, the AICPA already has created a separate stand-alone agreement with CPA2Biz for the Institute’s membership to be licensed to the portal, the conference call revealed. And, according to Price, SSNI is pushing forward with the creation of its own national database and its commitment to providing shared services.

When asked to explain the continued need for the SSLLC after negotiations had broken down, Price said the fundamental premise to pool resources and collective strengths of the state societies and the AICPA to provide shared services and products is still sound and of value. While SSNI could do this individually, the organization enjoys greater leverage through continuing to work with the Institute, he said.

“A bigger base results in lower prices,” Price said of the SSLLC arrangement.

According to Price, the state societies’ national database is considered an SSLLC project and the AICPA has allocated $9 million to its development. The Institute’s commitment to the database “goes back to the original value proposition for shared services” and stems from both a logic-based need as well as a relations-based need, in which the Institute derives value through supporting the state societies, he said.

The AICPA will have access to the national database and can obtain common information about a state society member. However, information that is unique to that individual as far as his state society membership in concerned, such as accounting products or CPE courses he or she purchases through the society, would be off limits to the Institute, Price said.

Though both the state societies and the AICPA should benefit from the national database, Price noted that there could be instances when it competes with CPA2Biz, which, as stated earlier, is licensing the Institute’s own membership database.