State Societies Break Off Contract Talks with CPA2Biz

Contract talks have broken off between the state societies of CPAs and CPA2Biz, the official marketing and distribution arm of the American Institute of CPAs (AICPA). The state societies were trying to negotiate a contract through Shared Services LLC (SSLLC), a joint venture between AICPA and the State Society Network to design, develop and deploy a national membership database and provide other administrative support.

Several members of state societies serve on an advisory board for CPA2Biz. One of the board members, J. Clarke Price, chairman of SSLLC and president/CEO of the Ohio Society of CPAs, also serves as liaison with the CEOs of all the state societies. In a March 19, 2002 report to the CEOs of the state societies, Mr. Price wrote, "The economic environment and the terms of the proposed deal have changed significantly... We simply haven't been able to come to terms that represent a win for all parties, especially the state societies."

Mr. Price went on to say that AICPA and CPA2Biz are exploring the possibility of allowing the states to exercise a "call" under which they can enter into a database sharing arrangement with CPA2Biz in return for a 1.75% royalty payment.

When the portal was first authorized by the AICPA Council in April 2000, the intent was to provide equity interests to AICPA, its members and the state societies. As recently as a year ago, the expectation was that the portal would raise capital through an initial pubic offering (IPO). At the time, the AICPA said it was holding a 60% stake in CPA2Biz, half of which was expected to be transferred to the state societies when the portal went public. The remaining 40% was held by AICPA management and external partners, including Microsoft and Thomson Corporation.

According to an article in the April 2001 issue of AICPA's magazine, Journal of Accountancy, Brett Prager, CEO of CPA2Biz, said he expected that AICPA and the state societies would each take a 20% share in the CPA2Biz offering. However, Mr. Price said this was never confirmed in an agreement.

-Rosemary Schlank

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