Board backs NASBA white paper on private equity and asks for APS disclosure guidance; declines AICPA technical comment for now
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Summary
After an extended discussion of alternative practice structures (APS) and private-equity investment, the board instructed staff to draft a letter to NASBA supporting the white paper, urging required disclosure of APS to the public and recommending peer-review consideration; the board opted not to prepare a detailed response to the AICPA exposure draft at this time.
The Tennessee State Board of Accountancy spent a large portion of its Feb. 3 meeting discussing NASBA’s white paper on private equity investment and alternative practice structures (APS) and an AICPA exposure draft on independence and network definitions.
Executive Director Jen summarized the three NASBA focal points — independence and professional standards, disclosure and public understanding, and regulatory oversight — and explained that the board had added an APS-related question to firm-permit renewal forms to start identifying the population of firms operating in alternative structures. Members and counsel raised practical concerns: ownership formalities can mask economic relationships, administrative-services agreements that would reveal economic interconnections are not typically provided voluntarily, and staff may lack the technical bandwidth to interpret complex APS documents without peer-review or outside assistance.
Board members proposed several near-term steps: collect APS status via renewal and firm-permit forms, ask NASBA for model disclosure language and coordinated oversight guidance, and suggest peer-review or national clearinghouse approaches for multi-jurisdictional firms. After discussion the board voted to instruct the executive director to draft a letter to NASBA that (a) thanks NASBA for the white paper, (b) urges required public disclosure of APS arrangements so consumers understand firm ownership and service boundaries, and (c) recommends peer-review and NASBA support for state oversight. The chair was authorized to review and approve the letter’s final wording. The board declined to devote staff resources to craft a detailed technical response to the AICPA exposure draft and suggested that NASBA’s regulatory response mechanisms or dedicated technical committees would be the more appropriate channels for that commentary.
Board members said they will continue to monitor developments and may pursue rulemaking for disclosure if national guidance changes.
