4 days ago
Is private equity's pushback on the CPA credential a regulatory issue?
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Amid the growing influence of private equity across business — particularly in public accounting — a quiet but consequential trend is beginning to ripple through the profession. Licensed CPAs who don't work in audit or attest roles are being told to remove CPA from their email signatures, business cards and LinkedIn profiles.
In some cases, the directive is not coming from private equity owners, but from state boards of accountancy. It's the regulators who are pressing firms to limit the use of the CPA title among licensed professionals in non-attest roles. State boards have expressed concern that CPAs in advisory or consulting positions may inadvertently mislead clients by signaling regulatory oversight where none applies.
Regulators worry the public may assume anyone using the CPA title is providing services under the oversight and standards of a licensed audit practice, even when that's not the case. These interventions are often prompting firms, particularly those with private equity structures, to adopt dual-entity models that separate audit and non-audit functions, thus stripping CPA titles from certain professionals accordingly.
Firm leaders often cite regulatory caution and legal risk as justification, concerned that clients may assume all services are being performed by professionals working under the CPA license. But the move is sparking backlash among some accounting leaders and raising broader questions about the long-term value of the CPA designation itself.
Many CFOs already feel the CPA has been devalued, whether due to burdensome licensure requirements, changes to the exam structure or the limited appeal of public accounting careers for young talent. Now, the rise of private equity ownership and intensifying regulatory scrutiny is introducing a new layer of complexity for CPAs inside firms and for the finance leaders who rely on them.
The practice of splitting CPA firms into the dual entity model — one that performs audit work and another that handles advisory or consulting services — is not new, especially among firms with private equity backing. This structure allows firms to navigate ownership rules that prohibit non-CPAs from owning audit practices.
However, according to commentary shared on an Accounting Podcast episode from early last month, at least one state board of accountancy has begun pressuring firms to prevent licensed CPAs on the non-attest side from using the 'CPA' title publicly. Blake Oliver, co-host of the podcast, said a listener of the podcast who works at a private equity-backed firm confirmed the decision to restrict CPA usage came in response to this regulatory scrutiny.
State boards, the listener told Oliver, are concerned the public could be misled if credentialed staff appear to be offering services under the CPA umbrella when they are technically working outside the regulated audit entity. Oliver also included a statement from AICPA CEO Mark Koziel, who defended the value of the credential and expressed concern over firms limiting its use.
'We support the use of CPA to everyone who has gone through the process of becoming licensed. As I've heard in my listening tour, the passion behind CPA is evident,' said Koziel. 'The CPA and what goes with it — integrity, accountability, objectivity, competence — is the value that we bring to the market, to our clients and to communities. It's what creates trust in firms of all business models, including alternative practice structures.' Oliver said the decision to have non-audit CPAs drop the title may be a countermove from firms against regulation. 'Private equity is calling [the regulators'] bluff,' he said on the episode. 'Private equity is saying, 'well fine, you give us a hassle, we're just not going to call ourselves CPAs period'.'
The implications of this challenge have the potential to go beyond firm branding or regulatory semantics. In a recent op-ed in the Journal of Accountancy, AICPA public accounting CEO Susan Coffey warned that the move could undercut recruiting efforts and damage the pipeline. She delivered a message to private equity-backed accounting firms who are limiting the use of "CPA" saying it sends the wrong message to the next generation of accountants.
'This isn't just an issue for current CPAs,' wrote Coffey. 'There could be unintended consequences for our future talent.'
Coffey cited a 2023 study by the Center for Audit Quality that found 82% of accounting majors view the CPA license as extremely or very valuable to their career goals. 'Why would a young professional work hard to acquire the CPA, only to have their employer tell them they can't use it?' she wrote.
That disconnect between what firms expect of their staff and how they represent them risks weakening one of the profession's fundamentally vital recruitment and skill-building tools. Not only do many CFOs credit their time in public accounting to learning the intangibles of the job, but for many students and early-career accountants, the license is more than a regulatory hurdle. It can be a symbol of credibility, achievement and long-term opportunity. If firms appear to undervalue the credential, some, like Coffey, worry that fewer students will choose accounting in the first place.
And while private equity backers may be focused on risk mitigation and compliance, the oversight leaders say the shift could inadvertently damage the profession's public standing. 'We work with market permission,' Coffey wrote. 'CPA licensure helped build that market permission. And that permission equates to tremendous value for us as individuals, for the businesses we work in and serve clients in and for the CPA profession.'
This story is ongoing, and we will publish additional findings as we continue to reach out to CPA society leaders for their input.
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