Board debates private-equity firm-registration concept amid enforcement, consumer-protection concerns

Board members spent a sustained portion of the Dec. 1 meeting discussing a legislative concept that would create a new firm-level registration for entities that have significant private-equity involvement with CPA firms. Staff said the goal is to preserve a level of accountability for firms that deliver public accountancy services even if majority ownership is not at the CPA level.

"Regardless of what we do, you have one guarantee. The legislature will ask no matter what we propose or don't propose, saying, 'hey. What did you do about it and why?,'" said Mark Petioni, the board's executive director, summarizing the political reality that lawmakers will seek a response to private-equity activity in the profession.

Members described two buckets of external feedback: (1) confusion from jurisdictions that historically do not regulate non-attest firms about Oregon's broad firm-regulation approach; and (2) substantive worry from regulators that creating a license type that allows non–CPA-majority ownership could open regulatory risks, including difficulties in enforcement, evidence preservation for complaints, and the perception the board has 'blessed' firm practices.

Several members argued that regulating firms that exert significant influence over CPA practice would protect consumers and state agencies as payers. Others warned the approach could create new complications in enforcement and require carefully drafted statutory and rule language. The board agreed to have counsel develop draft legislative language and to continue the discussion at the Jan. 29 board meeting and the Jan. 9 Laws & Rules Committee session, with additional coordination on data from NASBA and AICPA peer-review developments.