The American Institute of CPAs told a congressional subcommittee that it should urge the U.S. Small Business Administration to increase its small business size standards for small business accounting firms to $25.5 million from the current $8.5 million.

The SBA has proposed increasing the size standard to $14 million. Odysseus Lanier, testifying on behalf of the AICPA, testified before a House Small Business subcommittee on Thursday about the need to raise the limit.

“To fully capture the small business accounting firms that have the resources to invest in the necessary infrastructure and properly perform services as required by Federal government contracts reserved for just small business contractors, …the size limit standard would need to be raised to $25.5 million,” he said.

The SBA’s size standards define whether a business is small and thus eligible for government programs and preferences reserved for small business concerns. To determine eligibility for federal government small business programs, the SBA establishes small business size definitions (referred to as size standards) for most private sector industries in the United States. The SBA’s existing size standards use two primary measures of business size – receipts and number of employees. 

Lanier said the AICPA has recalculated the SBA’s proposed $14 million size standard using data compiled from surveys of CPA firms conducted by Accounting Today and its own leading benchmarking survey for CPA firms (the PCPS/TSCPA National Management of an Accounting Practice Survey).

The recalculation confirmed that, at a minimum, the proposed size standards would increase to the intermediate level of $19 million, he said. Furthermore, he said the AICPA believes the standard should be increased to $25.5 million to compensate for several other secondary factors that inhibit the ability of accounting firms classified as small to compete for larger contacts in the federal marketplace.

“Accounting firms contract with the federal government to provide accounting and attest services as well as a wide array of consulting services such as strategic planning and financial management,” Lanier explained to the House Subcommittee on Economic Growth, Tax and Capital Access. “The services small accounting firms provide to the federal government have a strong public interest component. These services include, among others, implementation and maintenance of financial and accounting systems ensuring that taxpayer resources are effectively and efficiently utilized, and independent audits of government organizations and programs to provide reasonable assurance of compliance with appropriate laws and regulations. As such, AICPA believes that SBA should focus on the experience and qualifications of the accounting firms performing the services and ensure the small business size standard for accounting firms is closely aligned and appropriate.”

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