TaxOps Partner Lindsay Haskell and Corporate Tax Advisor Dan DeLau discuss what CFOs and Controllers Should Be Asking About Audited Financial Statements

Auditor Independence in the Age of Private Equity Roll-Ups

A CFO sits across from a longtime audit partner. The engagement letter on the table bundles audit, tax provision work, and a 401(k) audit into a single fee. It looks efficient. It feels reasonable. And it quietly hands a piece of management’s own responsibility back to the firm that is supposed to be checking the work. That scenario, increasingly common in private and private-equity-backed companies, is exactly the kind of arrangement Lindsay Haskell and Dan DeLau, partners at TaxOps, want finance leaders to interrogate.

In a recent episode of Tax Intelligence with TaxOps, Haskell and DeLau took on auditor independence: what it means, why it eroded, and why the rise of private equity inside the CPA industry itself is forcing CFOs to ask harder questions than they have in two decades.

A Brief History: Why Sarbanes-Oxley Still Matters

Auditor independence is not an abstraction. It was forged in scandal. Enron, WorldCom, and Tyco produced the Sarbanes-Oxley Act of 2002 and, with it, hard limits on what an audit firm could do for its public-company clients. The central principle was simple: an auditor cannot audit its own work.

Before SOX, the same firm routinely prepared a company’s tax provision and then audited the financial statements that contained it. As DeLau described from personal experience, “the audit team would come in, and from what I saw to a large extent, it was like, well, we already had the professionals that are familiar with this, the tax team, they’ve already prepared it. So we’re just going to incorporate those numbers into the financial statements.”

SOX put a hard stop to that for public companies. For a stretch of years, many private companies voluntarily held themselves to similar standards, particularly those positioning for an IPO. “IPO readiness” became shorthand for adopting public-company discipline regardless of current filing status.

Then the market shifted.

The Private Equity Shift And Why It Changed The Conversation

As private equity has rolled up companies across nearly every sector, the IPO-readiness mindset has faded. Fewer private companies are preparing themselves to live under SEC scrutiny, and the implicit pressure to mirror public-company controls has weakened. Haskell put it plainly: the conversation about auditor independence “doesn’t feel like it’s talked about during the audit process itself, even.”

That drift might be tolerable if the audit industry itself were standing still. It is not.

Private equity has now moved into the CPA profession. Because audit practices must remain CPA-owned, firms have restructured: the audit business stays under licensed ownership, while non-audit lines such as tax, advisory, and consulting absorb the private equity capital. Baker Tilly’s acquisition of Moss Adams, backed in part by private equity, is one widely reported example. DeLau noted that he recently received an email from a partner at a firm taking on private equity funding, and the signature line identified the company as “not a CPA firm.”

The implications deserve attention. Private equity exists to generate returns. When an audit firm’s adjacent service lines are owned by investors whose primary mandate is profit, the question DeLau raised is unavoidable: “Are they really looking out for my best interest in everything that happens?”

The Tax Provision Problem

This is where the conversation gets concrete and where finance leaders most often miss the risk.

The income tax provision is a footnote to the audited financial statements. Preparing it, including the journal entries, the rate reconciliation, and the footnote itself, is management’s responsibility. The audit firm’s job is to audit that work, not perform it.

And yet Haskell described a pattern she is seeing repeatedly: companies switching audit firms to reduce cost, and the new firm bundling tax provision work, tax compliance, and even 401(k) audits into a single engagement. “They bundled all the fees together,” she said, “and basically said, here’s the fee for your audit, which included tax, 401k audit.”

On the surface, it reads as a cost win. Underneath, the company has just agreed to let its auditor prepare a material component of its own financial statements, then audit it. For a public company, that arrangement is prohibited. For a private company, it is permitted but it is still management’s responsibility, and the risk has not gone away.

Haskell described one CFO who saw it instantly. New to his role, he reviewed the proposed engagement letter, struck the tax provision scope, and told the firm he would sign for the audit only. He took the tax work elsewhere. That instinct, Haskell and DeLau argue, should be more common than it is.

ASU 2023-09: Why The Footnote Just Got More Visible

The stakes around the provision are about to rise. FASB’s ASU 2023-09 took effect for public companies in 2025 and applies to private companies in 2026. The standard requires expanded income tax disclosures, including a more granular rate reconciliation in both dollars and percentages, and detail on income taxes paid by jurisdiction.

Critically, it puts public and private companies on roughly the same disclosure footing. Private companies that historically published thinner tax footnotes will now disclose information they may never have surfaced before. The underlying calculations should already exist inside a well-run provision. The footnote simply makes more of that work visible to readers, lenders, investors, and acquirers.

That visibility is one more reason management should own the provision rather than outsource it to the firm auditing it.

What CFOs And Controllers Should Be Asking Now

Haskell and DeLau are not declaring that every bundled engagement is improper. They are arguing that finance leaders should be asking questions that, for the most part, have stopped being asked. Among them:

● Is our audit firm independent in fact, not just in form?

● Who actually prepares our tax provision, and who reviews it?

● If our audit firm is private-equity-backed on the non-audit side, how does that influence the services they recommend?

● Are bundled fee proposals genuinely cost-saving, or are they trading independence for convenience?

● Do we have the internal capability, or an independent third party, to own the provision as management is required to?

As DeLau put it, “What does that relationship look like? What do I want it to look like? And what is in the best interest of the company that I’m serving?”

Those are the questions Sarbanes-Oxley forced into boardrooms a generation ago. They are worth asking again.

Listen to the Full Episode

Hear the full conversation between Lindsay Haskell and Dan DeLau on Tax Intelligence with TaxOps for a deeper look at auditor independence, the private equity shift inside the CPA profession, and what ASU 2023-09 means for your next provision cycle. Visit https://taxops.com/ to listen and to explore how TaxOps supports CFOs, controllers, and tax leaders with independent provision and advisory work.

About the Hosts

Lindsay Haskell — Partner, Corporate Tax. Lindsay Haskell has more than 15 years of experience in both public and private accounting, with a focus on corporate income tax provision and compliance, as well as international and state and local tax. She serves as a primary point of contact for clients,  leading workflows and managing relationships for dynamic companies worldwide. 

Dan DeLau — Corporate Tax Adviser. Daniel DeLau is a co-founder of TaxOps and a boomerang to the business tax advisory mission at TaxOps. Following a promotion to partner at Ernst & Young, Dan co-founded TaxOps to bring all the best of the big firm knowledge to businesses without the bureaucracy. Dan gained significant experience in international and domestic accounting and tax transactions within a U.S. corporate environment working for international accounting firms, and as tax director of multiple public and private companies, each with extensive and complex operations throughout the United States and internationally. 

Listen to the full conversation on Tax Intelligence, available now.

Tax Intelligence with TaxOps

This is the podcast where experienced tax professionals share clear, practical insight on today’s most complex tax issues–from SALT and federal tax strategy to ASC 740, tax minimization, and investment fun considerations. Each month, our experts break down what matters, what’s changing, and how to think strategically about tax–so you can make informed decisions with confidence. Listen today!

About TaxOps

At TaxOps, business tax is all we do. Our teams have the knowledge and focus to solve tax problems with practical tax answers. By hiring our Big Four-veteran leaders and experienced teams, you get tax strategists on your side supporting your strategy wherever business takes you. We deliver the strength, experience, and resources of a national tax brand with the hands-on client engagement of a boutique firm in federal, corporate, state and local and international tax as well as tax minimization strategies for businesses. For an introductory call, visit TaxOps.com/contact.

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