Audit Firm Ownership and Private Equity Influence

Added: 2026-05-28

[00:00:00]historically to the extent that you were an audit firm, then it was a requirement that all of the individuals that owned the audit firm were CPAs. So, that was one of the requirements. And so, then you were able to maintain your auditor independence because we were subject to the AICPA code of professional conduct and and so forth.

[00:00:22]And what you're indicating is that, you know, private equity firms, as you as you said, is infiltrated so many industries. Even the the dental office that I go to, I found out is owned by a private equity group, right? And so, they're kind of doing these roll-ups where they're they're trying to infiltrate businesses that historically have been able to survive on their own, but now they're getting additional equity infusions. And the accounting firms are one of those.

[00:00:54]What the accounting firms have done is they've they've structured it in such a way so that they've maintained the requirement that the audit component is still owned 100% by CPAs. There was a cash infusion from a private equity group for all of the non-audit services.

[00:01:15]But it raises some other issues from the standpoint of, "Okay, when we go to a client and we want to provide audit services, you know, that's oftentimes the first step in the process, right? We we put our we get our our foot in the door. So, now we're going to provide audit services, but hey, as soon as we got the the door open, then we can provide tax services and we can provide other consulting services and so on and so forth. But those other non-audit services now are going to be funded the actual business line non-audit business line is being owned by a private equity.

[00:01:55]And the overall focus from private equity firms is profits, right? Generating additional revenues and overall profits. And so it brings up a a question. I'm not saying that this happening, but it should should be bringing up the question in people's minds is when I've got a an audit firm that is somehow through their structure PE backed, are they really looking out for my best interest?