You may become aware of the AICPA recently joining together with the American Bankers Association, America's Community Bankers, Financial Services Roundtable, Independent Community Bankers of America, Independent Insurance Agents & Brokers of America, and the Mortgage Bankers Association in opposition to proposed changes to the charter of the Farm Credit System that would allow a wide expansion of its charter to offer loans and other financial services to businesses that weren’t included before. By becoming eligible borrowers in the Farm Credit System, these additional businesses could become recipients of services that could compete directly with small firm practice units.
The response to the Farm Credit System proposals was prepared in my position with the AICPA as Vice President – Small Firm Interests which was established specifically for advocacy for the small firm constituency of the AICPA. You may know that there are over 33,000 single owner CPA firms represented by the AICPA and that small firms represent 97% of the 47,000 total practice units represented by members of the AICPA.
Our concerns center on the Farm Credit System institutions potential of providing tax, accounting, and other financially related services to a much larger base of non-farm businesses. Examples of these would include hardware stores, truck and farm equipment dealers, transportation companies, small manufacturers, and the like who sell their goods and services to farmers. Given the government tax and funding advantages that the Farm Credit System institutions enjoy, private sector accounting firms would find it difficult to compete with Farm Credit System institutions in this broad sector of business clients. We felt that smaller accounting firms that serve rural communities would be particularly disadvantaged.
Another concern raised was that with the expansion of businesses that could be served by the Farm Credit System, in the public’s eye, the lines could become blurred between what services a licensed CPA firm can provide and what the services of a Farm Credit System institution could provide. As you know, our members’ firms are bound by State Boards of Accountancy rules and regulations, professional standards, and a Code of Conduct enforced by disciplinary measures, and must undergo peer review. The Farm Credit System is not subject to the same laws and regulations with which our members comply.
I did raise these issues with the membership through the Private Companies Practice Section (PCPS) Executive Committee in May 2007. This is a volunteer AICPA committee that represents the voice of over 6,000 small firms at the AICPA. Their vote was to support this advocacy effort.
James C. Metzler CPA
AICPA Vice President – Small Firm Interests
jmetzler@aicpa.org