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Keeping your accounting firm independent in the age of private equity

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9 months ago

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Bob Lewis, Jeff Barbacci, David Bundy and Jim Meade

The “Staying Independent” panel at the 2025 PE Summit: (l to r) Bob Lewis, Jeff Barbacci, David Bundy and Jim Meade

With every day seemingly bringing word of a new private equity investment in the accounting profession, many accountants are declaring their determination to remain independent — but that’s not as simple as not signing a deal.

“There’s plenty of room for staying independent, but accounting firms that want to stay independent have to change how they play the game — and we’re not seeing firms have the discipline to do that,” said Bob Lewis, the president of The Visionary Group, during a panel on the subject at Accounting Today’s PE Summit, held this week in Chicago.

“If we’re going to be independent, then we’re going to have to be more intentional about how we grow, and how we hold ourselves accountable,” agreed Jeff Barbacci, the managing shareholder of Thomas Howell Ferguson.

With PE-backed accounting firms flush with cash and supported by extra resources and guidance in technology, recruiting, M&A and more, firms that want to remain independent must have strategies in place to be able to compete. Among other things, that will likely mean greater accountability for partners and firm leaders; more thoughtful, data-driven growth strategies; a stronger push into more-profitable advisory services; stricter adherence to goals of all kinds; and more intentionality in every aspect of firm performance.

“PE has raised the bar for all of us, and that’s a very good thing,” Jim Meade, CEO and managing shareholder of Top 100 Firm LBMC, told attendees. “Professional services businesses had been largely unchanged until the arrival of PE. They’re professional investors, and they’ve raised the bar. It has changed our strategy in everything we do.”

“We’re having more direct conversation with our group about enterprise value and how you create it,” added Barbacci. “That’s a difficult conversation with our shareholders — what drives value and how you create it, and what we’re buying from them when they retire.”

Staying independent may also mean finding other sources of capital, whether it’s lines of credit from a bank, another form outside investment — or the partners’ pockets.

“One of the challenges is getting shareholders to understand that if we’re going to invest, that means you’re going to take less home in your draw,” Barbacci explained. “Shareholders need to want to invest and to have a commitment to the long-term sustainability of the firm.”

Meade, however, was not entirely convinced that firms need to access so much capital that they need to go to PE for it.

“We have access to significant credit lines,” he said. “We’re accountants; we don’t like to borrow money. The cheapest capital is your own. We put a third to our bottom line; the money’s there, it’s just a question of if you’re willing to use it. And banks are happy to lend money to accounting firms.”

In particular, he questioned whether firms need to invest as much money in technology as some, including many of the PE firms that LBMC has met with, seem to think.

“I can’t come up with a use case where we need a significant amount of capital where we don’t have it internally or can’t borrow it from a bank,” he said.

Why stay independent?

Simply not needing outside capital, however, does not explain the seriousness with which all three of the firm leaders on the panel are maintaining their independence.

“We don’t use the word ‘independent’ internally; we say control,” explained David Bundy, the president and CEO of Top 100 Firm Dean Dorton. “We’re a second-generation firm, we’ve been successful, and we want to maintain that control. We want to make the decisions we want to make, we want to make the investments we want to make. So it’s control for us.”

Controlling their own destinies is important for all three firms – and not just for the current generation of leaders.

“We’re a third-generation firm,” said LBMC’s Meade. “As we talk with our young owners, they passionately want to remain independent, so it’s important for us to do that — as long as we see a sustainable path forward, we’re going to do that.”

Finally, all the panelists agreed that — with the facts within their firms and in the broader landscape changing so frequently — the decision to remain independent is one they need to revisit on a regular basis.

“It’s a constant for us,” Bundy said. “When PE first came, we decided it wasn’t for us, and we just parked it, but two years ago we realized we couldn’t just leave it. We have conversations regularly – and we know that when the time comes that we need capital, we know where to find it.”

“I think about it daily. As a group we talk about it at least annually and make sure we are making the decisions for the right reasons,” said Barbacci, adding, “If the shareholder group can’t sustain itself and drive the growth we need … and if we’re not moving the needle, I’d consider a change, but I still think, for us, it’s going to come down to the ability to grow – if we can’t do that, we’ll end up having to merge, but even there I think we’d prefer an upward merger with a firm that feels the same way.”

Added Meade, “We probably don’t revisit it frequently enough. It’s about making sure that you have the right strategy and the right resources to be successful.”

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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5 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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Accounting

Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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