The accounting profession is in the middle of a significant shift.
Private equity (PE) investment and alternative practice structures (APS) are no longer emerging concepts—they are actively reshaping how firms operate, grow and compete. As more firms explore these models, important questions are being raised about independence, governance and how professional standards should evolve to keep pace.
To address these issues, the AICPA Professional Ethics Executive Committee (PEEC) released proposed updates to the Code of Professional Conduct focused on APS and PE structures. In response, CalCPA submitted formal comments to help inform how these standards are shaped moving forward.
Why This Matters
Private equity-backed models are accelerating change across the profession. Firms are using these structures to invest in technology, expand services and address succession challenges. At the same time, these models introduce new complexities—particularly around maintaining independence in attest services.
As CalCPA noted in its comments, this moment represents an inflection point. The question is not whether APS and PE will play a role in the profession—they already do. The focus now is ensuring that standards and oversight frameworks evolve in a way that protects audit quality and public trust while remaining practical for firms to implement.
How CalCPA Framed Its Comments
To support a thoughtful and balanced response, CalCPA convened its Alternative Practice Advisory Group (APAG) and brought together leaders from firms of different sizes and structures—including both PE-backed and independent firms.
This work was grounded in a few key principles:
The profession is evolving and standards must keep up: APS and PE structures are now a permanent part of the landscape. Standards should reflect how firms operate today, not just traditional models.
Independence remains non-negotiable: Independence in both fact and appearance continues to be the foundation of public trust. Any updates to standards must reinforce that principle, particularly in more complex ownership and governance environments.
Balance matters: Standards must strike the right balance between flexibility and clarity. Too rigid, and they become unworkable. Too vague, and they lead to inconsistent application. Finding that balance is critical to maintaining both audit quality and regulatory confidence.
Standards don’t work in isolation: Technical rules alone are not enough. Effective implementation requires alignment across regulators, firms, peer review programs, and the broader profession.
Guidance is essential: As standards become more complex, clear and practical implementation resources—examples, FAQs and training—are critical to ensuring consistent application across firms and jurisdictions.
Key Themes from CalCPA’s Comments
Clarity and Enforceability: Standards must be written in a way that regulators can consistently apply and enforce. Without clarity, there is a real risk of fragmented, state-by-state approaches that increase complexity for firms.
Governance and Independence: In APS and PE-backed models, independence risks often stem from governance structures, economic relationships and decision-making authority. Clear separation and control over attest decisions are essential safeguards.
Consistency Across the System: Standards, regulation, and oversight must work together. Misalignment between them creates confusion for firms and undermines confidence in the system.
Education and Shared Understanding: Standards are only effective if stakeholders understand how to apply them. CalCPA emphasized the need for ongoing education and dialogue across the profession.
A Broader Perspective
One of CalCPA’s central messages is that this does not need to become a dividing line within the profession. Some firms will pursue APS and PE models. Others will not. Both approaches can serve the public interest when supported by strong governance, clear standards, and effective oversight.
The focus should remain on what matters most: independence, transparency, accountability, and audit quality.
Join the Conversation: Upcoming Town Hall
To continue this important discussion, CalCPA is hosting a special Town Hall focused on APS, private equity and the future of the profession. The webinar, free to CalCPA members, will be held Monday, April 27, 1-2 p.m. Grab your spot now!
This session will bring together firm leaders, industry experts and regulators to share perspectives on why firms are pursuing (or not pursuing) APS/PE models, key risks and opportunities, how standards and oversight are evolving, and what it all means for the future of the profession.
Featured speakers include Thomas Bennett, managing principal, Baker Tilly; Tom Barry, managing partner, GHJ; Suzanne Holl, executive VP, CAMICO; Rich Simitian, director, CalCPA Peer Review; Dan Hood, editor in chief, Accounting Today; and Denise Froemming, CalCPA president and CEO.
The profession is navigating real change. The decisions made now on standards, governance and oversight will shape how CPAs continue to serve the public in an increasingly complex environment.
