The Case for Non-CPA Ownership: A Roundup of Practitioners' Opinions on Why Change Is Needed
How can CPAs keep pace in a rapidly changing business environment? For many, the answer lies in expanding the array of services that firms offer. "If you look at the Jenkins and Elliott committees and the thrusts they're taking (see THE JENKINS AND ELLIOTT COMMITTEES), at what's happening technologically, at the reengineering that's taking place in corporations; if you believe what you read about traditional, historical financial information losing its relevancy; if you look at what clients are demanding from us in the marketplace, it's clear that a lot of what we'll be doing in the future really is tangential to our attest services," says Ronald Cohen, partner in charge of Crowe, Chizek & Co.'s South Bend, Indiana, office and vice-chair of the board of the American Institute of CPAs. For Cohen, branching out into other fields is "not so much an economic issue in terms of the viability of firms but a matter of listening to clients and giving them what they really want. If we can serve clients better, we're serving the public better. And what clients really want--in addition to the attest services--are a lot of other services that can be provided by people other than CPAs." In numerous cases, to offer better service CPA firms have employed professionals from other disciplines. But how can the profession attract and keep these skilled outsiders if they are not allowed to be full owners of CPA firms? How can it ensure their services will meet the same standards of quality that CPAs do? After lengthy study and debate, the AICPA governing council last May overwhelmingly approved a measure permitting those who are not CPAs to be equity owners of CPA firms in some cases (see highlights of the resolution in the THE RESOLUTION: KEY POINTS). In this article, members of the profession speak out on why they favor non-CPA ownership. CHANGING TIMES "There has been a change away from the traditional approach for CPAs firms," says Jerry Sestak, immediate past president of the Nebraska Society of CPAs. Nebraska earlier this year became the first state to allow partial non-CPA ownership of accounting firms. "The profession is going to have to move into the 21st century," says Sestak, who is a partner of Seim, Johnson, Sestak & Quist, an 8-partner Omaha-based firm. "We're going away from a pure product environment and more into management services. I think allowing non-CPA ownership will help facilitate that." Sestak reports no radical changes in his state so far. "I don't think there's been a big rush to hire non-CPAs, but I think it will become more and more prevalent in the tax, computer and actuarial science areas." Sestak has non-CPAs on his own staff, including a nurse who's part of the firm's health care practice. "We'd certainly like the opportunity and flexibility to offer ownership to a non-CPA in the future." Keeping options open also was on the mind of Crowe, Chizek's Cohen, who led an AICPA task force charged with resolving the issue of non-CPA ownership. "Years ago, before computers, CPAs did all kinds of systems work," he says. "Now, as computers become more and more sophisticated, we're still working on accounting systems, but data processing work doesn't require a CPA. Do we give up that area or do we go out and find the resources to offer the same kinds of services in a more sophisticated environment?" Finding those resources sometimes means looking outside of the profession. "In much of the business we do outside the attest function, the person needs expertise that requires education and experience, but he or she doesn't necessarily need audit experience," says Marilyn Pendergast, shareholder and chief operating officer of Urbach Kahn & Werlin, Albany, New York, and president of the New York State Society of CPAs. "For example, tax, computers and employee benefits are highly specialized and have their own body of knowledge. I don't think specialists in those areas have to become CPAs and know about the attest function to qualify to become owners. …