Texas CPA firms as PEO clients

In a November 20, 2003 informal staff opinion, the Texas State Board of Public Accountancy held that provided that CPAs could enter into PEO arrangements.

Here is the quick summary on what the Board said:

In addition, the Board considers any arrangement that cedes control of a CPA firm to a non-CPA to be a violation of the Act. However, in the arrangement described above, the PEO would not have any control over the work performed by CPAs, nor would the PEO have an ownership interest in the client. The PEO would provide human resource management services to the CPA firm and would not provide public accounting services to the public through the CPA firm. Therefore, a contract as described above would not violate the Act.

In effect, the Texas Board imposed three requirements:

1. The PEO cannot not have an ownership interest in the CPA firm.
2. The PEO may not hold itself out as providing accounting or auditing services.
3. The PEO cannot direct or control the work done by the CPA firm or its employees.