One of the manifestations of regulations separating external accounting from internal auditing is that accounting firms some times find themselves shedding a division in order to grow.
Such is the case for Beard Miller Company, LLP. The Pennsylvania-based CPA firm, which goes by bmc, announced the sale of its internal auditing and compliance division to McKonly & Asbury, LLP, also of central Pennsylvania. The division, which bmc calls its Financial Outsourcing Solutions group, or FOS, was limited due to the growing number of SEC-governed clients for which bmc provides accounting services.
“Current independence regulations restrict many companies from using the same accounting firm to provide both external audit and internal audit services,” a joint statement from the companies says. “Growth of the FOS group was limited by these restrictions, given the growing number of financial institution audit clients in bmc’s portfolio.”
The terms of the sale were not disclosed. The transaction takes effect January 1. “Any services currently provided by bmc FOS will be transferred with the sale to McKonly & Asbury. In addition, FOS staff, including Partner Tom Strause, will be retained by McKonly & Asbury,” the joint statement says.
The group provides internal auditing and compliance services primarily to financial institutions. bmc is a CPA firm of about 400 employees, including 61 partners in 10 offices in the Tri-State area. While the regional firm is only in the top 50 among CPA firms in the U.S., it is in the Top 15 in number of SEC clients served, which is where the conflicts with internal/external functions come into play.
On the other hand, internal auditing for the financial service sector is where McKonly & Asbury’s could grow.
“This is an exciting step forward for McKonly & Asbury and a great example of cooperation between two of the strongest professional firms in our region,” said Terry Harris, managing partner of McKonly & Asbury. “Providing internal audit services, especially to the financial services industry, is one of our core practice areas. It is an area we have focused on growing in a strategic fashion.”