The idea that CPA firms would allow non-CPAs to own a minority stake in a CPA firm and then refer to these non-licensees as “partners” was once a hotly debated topic within the profession. Now, nearly 25 years after Nebraska became the first state to do so, allowing non-CPAs to become equity partners in a firm is seen as less of a risk and more of a necessity for an adaptable profession that is facing the automation of all its tax preparation jobs and entry- and mid-level auditing positions.
A recent Center for an Urban Future study found that “bookkeeping, accounting, and auditing clerks are the largest group whose tasks are highly vulnerable to automation.” The study predicts that 86% of these positions—of which there are 55,040 in New York City alone—have the potential to be automated. Tax preparation services face a similar fate, with technology futurists estimating between 50% to 99% automation potential. As has been the case in the past, however, researchers note that while “certain occupations may shed jobs as machines gain ground” technology is still anticipated to create more jobs than it displaces and automation will require humans to work more closely with machines rather than be replaced by them.
How this will all shake out remains to be seen; meanwhile, CPA firms are preparing for this future, developing new lines of business and recruiting experts in business intelligence, data modeling, business valuation, actuarial work, the legal field, and others, not only to support their audit practice, but also to support the entire firm’s future. But now they’re hitting a roadblock, not from the profession itself, but from New York’s own laws.
While New York CPA firms may hire non-CPAs as firm employees, these professionals, who are so critical to a firm’s success in a 21st century global economy, cannot reap the benefits of their firms’ growth by becoming part owners of the firm. That wouldn’t be so much of an issue if neighboring states’ firms were structured the same way, but that’s no longer true. New Jersey, Pennsylvania, Connecticut, Massachusetts—every state in the Union except for New York and Hawaii—allow non-CPAs to hold a minority ownership stake in a CPA firm. The sky hasn’t fallen. CPA firms are still CPA firms, even with non-CPAs contributing to their growth. With the looming specter of the new federal tax law, New York needs every competitive edge it can get.
The NYSSCPA has supported non-CPA ownership since 2012. While the bill is consistently approved in the Senate, the Assembly continues to hold it up. This year, non-CPA firm ownership is included in Governor Cuomo’s proposed budget; we’d like it to stay there, and that’s why we need your help. Reach out to your district’s Assemblyperson and tell them to modernize New York’s laws so that CPA firms can remain competitive now and in the years to come.
Joanne S. Barry, CAE. Publisher, The CPA Journal, Executive Director & CEO, NYSSCPA.