In a decade-plus of helming this publication, I often marvel at how many of the issues and trends impacting the profession the day I took office in September 2000 have returned front and center.
Remember application service providers, or ASPs? Ten years ago, the early vendors of hosted environments were derailed by 9-11 and the inevitable security concerns that followed. Today, can you name five people who haven't heard of the cloud or Software-as-a-Service?
What about non-CPA ownership of a firm? The concept of moving ahead with what was then termed "multi-disciplinary" firms, an overarching practice owned and operated by professionals with different credentials - i.e., accountants, lawyers, physicians - was kicked around for several years. There were numerous white papers (many of which appeared within these pages) and one-day conferences devoted to the subject, and then, much like my retirement account, the momentum gradually disappeared, overshadowed both in scope and importance by, among other things, the spate of accounting debacles such as Enron and WorldCom.
Along those lines, I was recently asked to moderate a panel by the New York State Society of CPAs that focused on non-CPA ownership of firms, with the panelists divided into pro and con factions.
While the discussion centered around New York and whether the time had come to relax its non-CPA ownership rules (New York is currently one of six jurisdictions that do not allow for non-CPA ownership; for those keeping score at home, the others are Connecticut, Delaware, Hawaii, the Northern Mariana Islands and the Virgin Islands), 48 other states, under the Uniform Accountancy Act, require that a "simple majority" of a CPA firm's owners be CPAs. South Carolina requires that two thirds of a firm be held by CPAs.
As with most debates, there's ammunition on both sides to break or retain the six-territory prohibition. Proponents will quickly point out that the accounting firm of today is far different than 30 years ago, offering a variety of client services that were non-existent then. Many firms now have in-house business development managers and marketers, the majority of whom probably are not CPAs. Why should those folks not be allowed to rise through the ranks to shareholder level?
One could also argue that typical CPA services, such as audits, have evolved with the 21st century firm and may require input from multi-disciplinary channels. If you recruit and hope to retain those professionals, would someone remain with a firm for very long knowing they had no opportunity to rise to ownership status?
How about ownership succession? In New York and the five other states/territories, what if the current owners wanted to leave a minority interest in the firm to a family member who is not a CPA?
Conversely, opponents of the measure proclaim that non-CPA ownership presents an inherent conflict of interest as it pertains to the revered CPA mantle of "trusted advisor." For example, if a business development manager was also a shareholder/owner, would their mission of generating higher revenues undermine the firm's commitment to establishing client trust or the public interest?
I'll let far brighter minds than mine sort this issue out, as this nostalgic wave of revisiting past trends continues.
Just as long as we don't try and resurrect Cognitor.
