Private equity is no longer a fringe topic in the accounting profession. Firms of all sizes are increasingly exploring private equity (PE) partnerships and alternative practice structures (APS) to modernize operations, invest in technology, expand services, and address succession challenges. While APS models themselves have existed for many years, the scale and pace of PE investment have accelerated their adoption—reshaping the profession faster than many existing regulatory frameworks were designed to accommodate.

In response to this shift, CalCPA recently submitted comments to the National Association of State Boards of Accountancy (NASBA) Private Equity Task Force on its white paper, Alternative Practice Structures & Private Equity: Considerations and Questions for Boards of Accountancy. CalCPA’s comments are intended to ensure regulatory discussions are informed by practical insights from the profession as stakeholders evaluate this important and evolving issue.

A Call for a Coordinated Effort

This moment represents an inflection point for the profession, but it does not need to become a dividing line. If firms, regulators, and professional organizations move forward in isolation or at cross purposes, the profession risks weakening its cohesion and undermining public confidence.

CalCPA’s comments emphasize the importance of collaboration and alignment across the profession. This is an opportunity for regulators, standard-setters, and firms to work together to modernize guardrails—not to pick winners or losers among business models.

Protecting Attest Quality Comes First

At the center of CalCPA’s response is a clear priority: protecting the quality and integrity of the attest function. As firm structures become more complex, audit quality cannot rest on any single safeguard. It requires a coordinated approach that brings together professional standards, regulatory requirements, firm governance, and organizational culture.

In APS and PE–backed environments, this means clear separation between attest and non-attest entities and independent governance for attest firms. Attest practices must retain exclusive authority over client acceptance, engagement performance and conclusions, partner evaluation and compensation related to attest work, and quality control and risk management. Protections against non-attest influence are essential to preserving independence, audit quality, and public trust.

Not All Challenges Are About Private Equity

Importantly, many of the challenges highlighted in the NASBA white paper—such as confusion around the use of the CPA designation—are not caused by APS or PE alone. Instead, they reflect regulatory frameworks that have not kept pace with modern firm practices, multi-state operations, and evolving consumer expectations. As firms continue to modernize how they deliver services, these gaps are becoming more visible, creating uncertainty for licensees and firms and confusion for consumers.

CalCPA believes this is a signal that broader regulatory updates may be warranted to reflect today’s practice realities, improve consumer understanding, support the profession’s talent pipeline, and preserve the CPA designation as a trusted and relevant signal in the marketplace.

Avoiding a Binary View of Private Equity

CalCPA’s comments also caution against framing PE as an all-or-nothing proposition. Many firms pursue PE thoughtfully and responsibly, while others intentionally remain independent for sound strategic and cultural reasons. Both approaches have a role in the marketplace and can serve the public interest. Risk profiles are not uniform across firms—regardless of ownership model—and effective oversight should focus on governance, independence, transparency, and accountability rather than ownership structure alone.

Additionally, not all PE investors present the same risks. Sophisticated investors often recognize that protecting independence and audit quality supports long-term value. At the same time, there is a risk that some investors may not fully appreciate the public-interest obligations tied to attest services, reinforcing the need for clear standards and consistent enforcement.

CalCPA’s Role

To support informed engagement on these issues, CalCPA established the Alternative Practice Advisory Group (APAG), bringing together members from across the profession, including both PE-backed APS firms and firms that remain independent. The group helps CalCPA evaluate proposed regulatory changes, assess impacts on licensees and consumers, and contribute thoughtfully to national discussions like NASBA’s white paper.

As the profession continues to evolve, CalCPA remains committed to helping members—and regulators—make sense of what comes next, while safeguarding the trust that defines the CPA profession.

Looking ahead, CalCPA will also be reviewing and assessing the AICPA’s Professional Ethics Executive Committee (PEEC) exposure draft proposing updates to the AICPA Code of Professional Conduct related to APS and PE. We anticipate providing input as part of that process to help ensure any updates to professional standards are clear, workable, and aligned with protecting the public interest while reflecting how firms operate today.