Today, the SEC is beginning its hearings related to independence within an accounting and consulting firm, and are set to hear testimony from representatives of government and the Big 5.
How does a CPA firm maintain independence when delivering both audit and consulting services? The two are considered very separate services, says Rosanne Schwartz, ABV/CPA, AM, CVA, manager of Valuation and Litigation Services for Eldredge, Fox & Porretti, LLP, a regional firm based in Rochester, NY that serves the Western part of the state.
âWe set up a dedicated team of valuation experts who are accredited and who do no audit and attest work,' she says. 'We keep our independence through an introduction by another partner. At that point, that partner steps out of the situation, and the valuation team does the work independently.'
Accreditations and standards related to practicing as qualified specialists are very important, says Schwartz, whose firm is a member of the Financial Consulting Group, an organization of CPA firms delivering valuations and litigation services across the United States.
Schwartz is candid in saying the business has changed over the years thanks to the wave of accreditations, like the CPA/ABV designation.
'Historically, a lot of accountants have done valuation and other kinds of consulting work on a sporadic basis as clients needed it, particularly in gifting and estate work,' says Schwartz. 'As a firm, we make it clear up front that we have to work independently because the standards we hold are directly related to the credentials in, for example, business valuation. If the process does get challenged by the IRS, we want to ensure that we maintain independence throughout the process.'