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Board reviews NASBA white paper on private equity, peer review and independence concerns
Summary
The board discussed NASBA’s white paper and an AICPA exposure draft on independence related to alternative practice structures (APS). Members flagged questions about maintaining audit quality under private-equity ownership, disclosure clarity for the public, and potential adjustments to peer review oversight.
The chair introduced NASBA’s white paper on alternative practice structures (APS), which examines private-equity involvement in CPA firms and poses questions for state boards about independence, disclosure and regulatory oversight. The paper frames three areas of concern: preserving audit quality and immunity from undue influence in PE-owned entities; ensuring public disclosure so consumers understand who is providing attest services; and adapting peer-review and enforcement approaches to firms operating across jurisdictions.
Board members discussed the AICPA exposure draft from its Professional Ethics Executive Committee that focuses on independence and how current standards might adapt to new ownership models. One board member reported that AICPA plans to take APS firms out of state peer-review programs and route them to a national peer-review committee for greater expertise. The board noted Connecticut currently lacks CPS firms in private-equity structures but acknowledged that is not universally true across states.
The board did not take regulatory action but agreed members and national bodies (NASBA, AICPA) are actively soliciting input; comments on the AICPA exposure draft were noted as due in April.
Why it matters: Changes in ownership structures and oversight models could require state boards to reevaluate independence guidance, disclosure expectations, and peer-review arrangements to ensure audit quality and public transparency.
