Ruling would make sure advice pays off for CPAs.

AuthorGray, Tim
PositionNorth Carolina State Board of Certified Public Accountant Examiners to allow accountants to accept commissions and referral fees

Pam Morine has wanted to brag about being a certified public accountant ever since she moved to Wilmington from New Jersey in 1991. After all, she graduated with honors from Duke as an accounting major in 1975 and worked in the New York headquarters of Coopers & Lybrand in the late '70s. But she can't. At least not in her professional life as a financial planner, which is where it matters.

She keeps her CPA license current, taking 40 hours of courses a year. But the N.C. State Board of Certified Public Accountant Examiners doesn't let accountants who get commissions hold themselves out as CPAs because of a long-held view that they should be seen as independent. That means she can't put CPA on her letterhead or business card. And she can't tell her clients unless they ask.

That's about to change. In November, the board, a state regulatory body, voted unanimously to let North Carolina's 14,500 CPAs accept commissions and referral fees. If lawmakers and two state review boards don't object, the decision becomes law in April. When that happens, Morine will get new business cards, and business people around the state may see their relationships with their CPAs change substantially.

Before, you could count on your CPA because you were the only one paying for his recommendation. The new rule raises the prospect of conflicts of interest. Not only can CPAs sell securities and insurance if they have the required licenses, they can refer clients to brokers or insurance agents in exchange for fees. "Brokers I know have already approached me about whether I might like to set something up," says Heather Linton, managing partner in Linton & Associates PA in Durham.

Not all CPAs will embrace the change. Linton, for one, is leaning against it. "A CPA might prefer the perception of greater independence and credibility of saying, 'I think you should work with this broker or insurance agent, and I don't benefit financially from that recommendation.'"

The rule does provide some protection for the public. CPAs won't be allowed to earn commissions or referral fees on work for clients for whom they perform attest services such as audits. That protects the audit's role as an independent validation for, say, investors in public markets. CPAs who elect to take commissions and referral fees will have to disclose that, in writing, to clients, and clients will have to sign a form acknowledging the disclosure.

The Raleigh-based North Carolina Association of Certified...

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