Private-equity ownership of accounting firms poses challenges for state boards
Private equity (PE) ownership of accounting firms across the U.S. has surged, with nearly half of the top 30 firms now at least partially owned by such investors—prompting significant concern among state accounting regulators. These PE-backed firms often deploy a dual-entity structure: a legacy CPA firm provides audit and assurance services, while a separate entity—partially owned by private equity—handles advisory, tax, and administrative functions. This approach sidesteps state requirements that mandate a majority ownership by credentialed CPAs, limiting regulators' ability to enforce licensing and ethical standards. Oregon and Virginia boards are already exploring rule changes and licensing adjustments, with Oregon targeting updates in time for the 2026 legislative session. Meanwhile, an ethics task force and guidance from the AICPA are in the works, though state boards believe they may not sufficiently counteract the structural threats to auditor independence and public trust.