The Federal Trade Commission yesterday announced a nationwide investigation of the accounting industry to determine if consumers are being overcharged for tax help and other accounting services.
The investigation will focus on acts and practices of state accountancy boards and private accounting associations that may "unnecessarily restrict the competitive behaviour of accountants or that may unduly restrain entry into that occupation," Margery Waxman Smith, acting director of the FTC-s Bureau of Consumer Protection, said yesterday.
Preliminary information collected by the FTC staff suggested that state and association restrictions into public professions, along with restrictions on advertising, solicitation and competitive bidding by accountants, and dominations of the industry by eight large firms may significantly increase the costs of accounting services to consumers, an agency fact sheet notes.
The eight largest accounting firms had gross revenues of more than $2 billion in 1975, but no estimates for the total industry were available. Overall, there are about 150,000 certified public accountants in the country, most of whom appear to charge prices an average person can't afford, Smith said. "One of the questions to be explored is why in this day of complicated tax returns, the services of a qualified accountant are beyond the reach of the average consumer."
Every state regulates members of the accounting industry in some way:
All 50 have entry requirements and require applicants to take a test; 32 states require a college degree before an applicant can take the test while 10 require just a high school diploma. Nearly all states require from one to six years work experience before a person can become a certified public accountant.
49 states prohibit accountants from advertising or soliciting customers so an accountant couldn't work for a tax preparation firm and then return to the profession.