PE-backed CPA firms and APS: which entity can accept a referral reward?

The short answer: separate entities, connected obligations

In an alternative practice structure (APS), a private equity investor owns a services company that delivers tax, advisory and outsourced accounting, while licensed CPAs own the firm that signs audit and review reports. The legal split is real, but ethics and independence rules look through it. Who can accept a referral reward therefore turns on four facts: which entity holds the client relationship, whether anyone on the attest side performs attest work for that client, what the services agreement and holding company policy say, and which individuals are personally bound by the AICPA Code and state rules.

A workable default: the services company is the only entity that accepts referral rewards, under a written policy cleared by the independence team, and only for clients the attest firm does not audit, review or otherwise attest for. The attest firm itself is rarely the right partner, because its client list is, by design, an attest list.

How an alternative practice structure is put together

1. The attest firm. Owned by licensed CPAs to the extent state law requires, it performs audits, reviews and other attest engagements and signs the reports.
2. The services company. Owned by the investor-backed holding company, often with former partners holding equity, it employs most staff and delivers tax, advisory and client accounting services.
3. The services agreement. The attest firm leases people, offices and systems from the services company for a fee, so the same professional may work on both sides in the same week.
4. The holding company and sponsor. They set growth targets, approve add-on acquisitions and write firm-wide policies, including any rule on outside compensation.

Growth pressure explains why referral and alliance income gets attention in these firms. Bain's Global Private Equity Report 2026 notes that a deal that needed 5% EBITDA growth a decade ago now needs about 12% to reach a 2.5x return over five years. Every new revenue line gets examined, and referral income is one of the few that runs straight into the independence rules.

What the rules say

Under 1.520, a member may not take a commission for recommending another party's product or service to a client if the member or the member's firm also audits or reviews that client, performs certain compilations for it or examines its prospective financial information, and commissions or referral fees that are allowed must be disclosed. In some states the Code's text carries state force: Kansas regulation 74-5-103 requires each CPA and firm to comply with the Code's commissions and referral fees provisions, including interpretations.

The contingent fees rule (1.510) draws a similar line. As the NYSSCPA's explainer on contingent fee arrangements sets out, a contingent fee is one whose amount depends on attaining a specific result, and members may not perform services for a contingent fee for a client whose audit or review, certain compilations or prospective financial information examination the firm performs. Independence teams tend to review referral income with both rules in mind.

Independence rules add the structural layer. The AICPA's independence interpretations include guidance written for alternative practice structures and for network firms, and their direction is consistent: legal separation does not by itself separate the people and relationships that can influence an attest engagement. Your firm's independence team applies that guidance; this page does not try to.

If any attest client is an SEC registrant, a further regime applies. SEC auditor-independence rules are separate from the AICPA Code, a point reflected in the SEC Office of the Chief Accountant's 2004 letter to the AICPA's ethics committee on contingent fees.

Which entity can accept a referral reward?

How it applies in common situations

If people on both sides of the structure mention SourceX to the same company, SourceX credits whoever is the first valid referrer behind a verified company application inside the attribution window. Naming one introducing entity in the policy stops two teams racing each other.

Setting up a referral policy across the structure

1. Map the structure. List every entity, its owners and which ones perform attest work.
2. Build one restricted list. Combine attest clients across the attest firm, network firms and affiliates into a single list the services company checks before every introduction.
3. Pick the partner entity. Decide which entity holds the partner relationship and where the income is booked, and say so in the policy.
4. Standardize disclosure. Write one client disclosure template that names SourceX, explains the reward basis and timing, and states that the client's proceeds are not reduced by it.
5. Close the loop each year. Add referral relationships to annual independence confirmations, and rerun the restricted-list check before any reward is paid.

The pre-join ethics checklist for CPAs turns this into a firm-level review, and the list of attest engagements that rule out a commission covers each engagement type in detail.

Questions for your independence team or counsel

1. Which entities in our structure count as part of the firm or network for 1.520 and independence purposes?
2. Can the services company accept referral compensation for clients that receive only tax, advisory or outsourced accounting services?
3. Which compilation engagements put a client on the restricted list?
4. What happens to a pending reward if a client becomes an attest client before the deal closes?
5. Should any share of referral income flow to the attest firm under the services agreement, and would that change the analysis?
6. Do any of our states adopt the AICPA interpretations by reference or impose a rule of their own?

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

How SourceX rewards work for a firm

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. Rewards become payable only after the buyer pays and SourceX receives its fee; a lead, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed.

Because the reward is carved out of SourceX's own fee, the client's proceeds are untouched. The firm's part ends at the introduction: the client works with SourceX directly on qualification, its data inventory, price and terms, and buyer review, and no data changes hands before an agreement is signed. A good candidate is a US client whose payroll included 50+ full-time employees at peak (contractors excluded), plus several years of records across many systems, the rights to them and an owner or executive who can sign. The company fit checker is a quick, non-binding first screen, the referral guide for accountants discusses which clients to approach first, and the explainer on whether a CPA can accept a referral fee covers rule 1.520 for individual practitioners.

Next step

Settle the entity question with your independence team, read the program terms, and have the entity you chose register as a partner.