Accounting firms can issue securities within their companies to be traded through a public market. When an accounting firm gets publicly traded, it must follow strict guidelines to remain in compliance with the rules set forth by the United States Securities and Exchange Commission. Unethical practices within public accounting firms caused new laws to be put in place for consumer protection.
To meet guidelines to become a publicly traded accounting firm, you typically must only provide external audit services. If you want to go public, it can create a conflict of interest if you attempt to provide nonaudit services. It is required by law that public accounting firms must submit audits of their financial records. An independent auditor must be used and paid for by the public accounting firm. The accounting firm cannot provide the audit, since it affects the integrity of the data submitted.
Under the Sarbanes-Oxley Act of 2002, the United States Public Company Accounting Oversight Board was created to oversee publicly traded accounting firms. The goal of the board is to ensure that the interests of the investors and public are protected. The board registers publicly traded accounting firms and mandates regular inspections to ensure that the business is meeting quality control and ethical standards.
If your accounting firm offers nonaudit services, you may still be able to allow public trading for your company. If consulting and auditing services are shielded from each other and auditors do not provide the other services, you may be considered in compliance of the Sarbanes-Oxley Act of 2002. The United States Public Company Accounting Oversight Board advises on compliancy issues.
Accounting firms that are defined as a publicly traded partnership must follow the tax guidelines set forth by the Internal Revenue Service. To be considered a publicly traded partnership, your accounting firm is publicly traded with two or more partners. A publicly traded accounting firm must withhold taxes from its foreign partners at a rate of 35 percent.
Heather Topham Wood is a seasoned writer whose work has appeared in numerous publications, including USA Today, Gadgetell, Feel Rich and Step in Style. Heather is a published novelist with six Amazon bestsellers and a contract through Crescent Moon Press. She holds a bachelor's degree in English from TCNJ.