The AICPA is preparing to update its independence rules in response to the growing influence of private equity in accounting firms, according to a report by Accounting Today. As investment from these firms continues to rise, many accounting firms have adopted alternative practice structures (APS) to separate their attest and non-attest services.

While these structures aim to comply with state regulations that require attest services to remain CPA-owned, the AICPA believes further clarification is needed to ensure independent standards remain intact, Accounting Today reported. 

Susan Coffey, AICPA’s CEO of Public Accounting, emphasized the importance of balancing investment opportunities with professional integrity. “Private equity investment in accounting is a great validation of strength and stability of the profession, and it’s one way for firms to fund technology upgrades and growth acquisitions,” she stated. “It’s crucial, however, to make sure the integrity of the attest function is not compromised and that the public interest is protected.”

The AICPA’s Professional Ethics Executive Committee (PEEC) has formed the Alternative Practice Structures Task Force to asses how existing independence rules apply in the evolving landscape. The task force has reached preliminary conclusions and is inviting public feedback on two proposed interpretations of the roles. A discussion memorandum outlining these options is expected to be published later this month on the AICPA’s website, with a comment period open through June 15. 

The AICPA Code of Professional Conduct has long required safeguards when outside investors take ownership stakes in non-attest services, ensuring that audit integrity remains uncompromised. However, with private equity investment in non-attest firms becoming more common, the PEEC sees a need to refine guidance, particularly concerning network firms, portfolio companies and investor relationships.

The proposed interpretations would introduce a three-step framework to assess independence risks in APS settings. The framework would define which entities qualify as network firms, determine which individuals are covered members subject to independence rules, and identify potential independence threats under the Conceptual Framework for Independence.