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Carr, Riggs & Ingram and PKF O’Connor Davies receive outside investment

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Two Top 50 Firms, Carr, Riggs & Ingram and PKF O’Connor Davies, separately announced Monday they scored funding from investment firms, marking the latest examples of accounting firms attracting outside financing from venture capital and other sources.

CRI, based in Enterprise, Alabama, received funding from Centerbridge Partners, a private investment management firm, and Bessemer Venture Partners, a VC firm. PKFOD, based in New York, received funding from Investcorp, a global alternative investment firm, and the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers. (Investcorp formerly owned Accounting Today’s parent company.)

The amount of investment was not disclosed in either case. In both cases, the firms will be splitting their attest and non-attest sides in an alternative practice structure, as is common practice when private equity firms invest in CPA firms. 

Carr Riggs & Ingram wall logo

Carr, Riggs & Ingram, L.L.C., as an independent licensed CPA firm, will provide assurance, attest and audit services. CRI Advisors, LLC (including its subsidiary entities) will operate as a separate legal entity, providing clients with tax and business consulting services. 

PKF O’Connor Davies LLP, as a licensed CPA firm, will provide attest services, while PKF O’Connor Davies Advisory LLC and its subsidiary entities will continue to provide tax and advisory services.

CRI ranked No, 24 on Accounting Today’s 2024 list of the Top 100 Firms, with $455.36 million in annual revenue. PKFOD ranked No. 26 with $380 million.

CRI plans to use the extra funding for M&A, technology-driven service delivery, and client-centered innovation. 

“Centerbridge and Bessemer recognize the value that CRI has already built and see the potential for where the company can go,” said CRI chairman Bill Carr in a statement Monday. “We are thrilled to gain partners whose vision aligns with ours. We believe this strategic investment will greatly benefit our talented team members and certainly our valued clients as well. We’ll be able to invest more into our staff, create new opportunities, and continue doing what we’ve always done, which is delivering exceptional results to our clients.”

Centerbridge has approximately $40 billion in assets under management as of Sept. 30, 2024, while Bessemer has more than $18 billion in assets under management. Centerbridge and Bessemer are taking a combined 51% voting interest in the firm.

“This combination is truly groundbreaking—CRI is the accounting profession’s ‘feel good’ story of the century,” stated Koltin Consulting Group CEO Allan Koltin, who consulted with CRI during the investment research and transaction process. “CRI is the only top 25 firm in the country to grow from a start-up to $500 million in a little over 25 years, making it the country’s fastest-growing first-generation firm. From its humble beginnings in Enterprise, Alabama, and Destin, Florida, CRI has become the youngest top 100 firm ever to receive a private equity investment as a foundation firm. Many private equity firms courted them during this process, but they chose Centerbridge and Bessemer for their similar values and shared vision of what CRI can become at the national level. There is no question in my mind that CRI will grow substantially over the next years while maintaining the ‘family feel’ culture they have had since day one.”

CRI engaged William Blair & Company, L.L.C. as its financial advisor and McGuireWoods LLP as its legal counsel for this transaction. Simpson Thacher & Bartlett LLP and Vedder Price served as legal advisors, and Citizens M&A Advisory served as financial advisor to Centerbridge and Bessemer. 

PKF O'Connor Davies offices in Cranford, New Jersey
PKF O’Connor Davies offices in Cranford, New Jersey

Courtesy of PKF O’Connor Davies

PKFOD plans to use the outside investment to improve its competitiveness and long-term sustainability, strengthening its balance sheet to provide flexibility for increased M&A activity as well as invest in new technology and service lines. PKFOD did not disclose whether Investcorp and PSP will be taking a majority interest in the firm.

“Since inception, our identity as an organization has been our enduring commitment to service. This investment from Investcorp and PSP further validates that we have an attractive business with a great brand, great talent and great customers,” said Kevin Keane, PKF O’Connor Davies’ Executive Chairman. “Investcorp and PSP Investments have a long history of backing profitable, industry-leading companies with demonstratable growth avenues and were impressed by PKFOD and the culture that we have built.”

Capstone Partners served as sole financial advisor while Levenfeld Pearlstein served as legal advisor to PKF O’Connor Davies. Gibson Dunn served as legal advisor to Investcorp. Weil, Gotshal & Manges served as legal advisor while McDermott Will & Emery served as regulatory counsel to PSP Investments.

“In recent years, Investcorp has established itself as a partner of choice for ambitious professional services organizations seeking to grow,” said Steve Miller, co-head of North America Private Equity at Investcorp, in a statement. “Together with PSP Investments, with whom we have a strong investment track record in the professional services sector, and more than 200 PKFOD partners, we are excited to build upon the organization’s decades of success.” 

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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