AICPA backs SEC proposal for CPAs as accredited investors

• Key Insight: Learn why the AICPA is pushing to expand the definition of accredited investors.
• Expert Quote: “In many cases, a CPA may possess a greater ability to analyze complex financial information” — Susan Coffey, CEO of Public Accounting, AICPA

The American Institute of CPAs is getting behind a proposal from the SEC to expand the definition of accredited investors to include licensed CPAs.

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In a comment letter submitted to the SEC this week on the proposal, the AICPA supported the idea of including licensed CPAs who are in good standing among those qualifying for accredited investor status. 

Accredited investors are allowed to hold and trade unregistered securities in private offerings and facilitate capital formation for startups and small businesses. The SEC aims to ensure sufficient financial sophistication in these transactions, so it has set thresholds around accredited investors’ cumulative wealth and annual income. The Commission also has created exemptions to these thresholds for certain categories of savvy professionals, such as Series 7 license holders. Under the current SEC proposal, licensed CPAs in good standing would join that list of exemptions.

“A licensed CPA has demonstrated a substantial understanding of financial reporting, accounting principles, risk assessment, and business operations,” Susan Coffey, the AICPA’s CEO of public accounting, wrote in the comment letter. “In many cases, a CPA may possess a greater ability to analyze complex financial information than an individual who qualifies solely because of net worth or income. Recognizing CPAs as accredited investors would further align the accredited investor framework with its underlying purpose: identifying individuals capable of making informed investment decisions.”

The AICPA comment letter notes the many categories of financial analysis that characterize a CPA’s work, including financial statement audits, corporate disclosures, internal controls and business valuation considerations. From an investor protection standpoint, it says CPAs are subject to state board oversight, professional ethics requirements and continuing professional education requirements.

The SEC is accepting comments on the accredited investor proposal until Dec. 4.

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