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The Handbook: Law Firm Networks
purpose is to set standards for firms wishing to accept international audits. They agree to promote
International Standards on Auditing (ISA). They must support the convergence of national standards and
adopt the IFAC’s code of ethics.362 The firms also agree to accept the idea that in order to comply with the
requirements and standards, they need more integration. The IFAC Code of Ethics (July 2006) distinguishes
between firms that are members of a network and those that are members of an association.363
Generally a network is an integrated entity with common standards, a logo, and a brand, and the members
share some financial risk. The regulations are ambiguous in that a number of associations are members of the
Forum of Firms.
The regulations further elaborate that a common brand name is likely to demonstrate that
there is a network but that a brand name is not necessary. “Even though a firm does not
belong to a network and does not use a common brand name as part of its firm name, it
may give the appearance that it belongs to a network if it makes reference in its stationery
or promotional materials to being a member of an association of firms. Accordingly, a
firm should carefully consider how it describes any such memberships in order to avoid
the perception that it belongs to a network.”364
According to the Audit Directive, the European Union has its own instructions, which state:
[A] network means the larger structure: which is aimed at cooperation and to which a
statutory auditor or an audit firm belongs; and which is clearly aimed at profit- or cost-
sharing or shares common ownership, control or management, common quality control
policies and procedures, a common business strategy, the use of a common brand-name
or a significant part of professional resources.
IFAC Code of Ethics 290 revised the determination. It should be “made in light of
whether a reasonable and informed third party would be likely to conclude that a network
exists.” A referral network is not a network by this definition. The shared costs must be
significant. Common quality system and business strategies are important
considerations.365
Each country has an accounting association that sets its own standards. In the United States it is the
American Institute of CPAs (AICPA).366 In the United States, each state also has its association. In Europe, it
is the Federation of European Accountants (FEE).367 The overlay of rules reflects the importance of standards
and also the competitive nature of accounting.
The competitive element is reflected in the fact that networks themselves have formed their own “networks
of networks” to pursue their different interests. For example, even though most of the members of the
International, Mazars, Moore Stephens International Limited, PKF International Limited, PricewaterhouseCoopers International, RSM International
Limited, Russell Bedford International, SMS Latinoamérica, Talal Abu Ghazaleh & Co. International, UHY International Limited. Forum of Firms,
INT’L FED. OF ACCOUNTANTS, www.ifac.org/Forum_of_Firms/; www.ifac.org/system/files/uploads/TAC-
FoF/Fact-Sheet-FoF-TAC.pdf.
362 Philip Smith, Top 35 Networks 2015: The Survey, ACCOUNTANCY AGE, July 9, 2012, www.accountancyage.com/aa/analysis/1776670/top-35-
networks-2013-the-survey.
363 A good overview is provided at the MSI Global’s website: MSI Faqs, MSI GLOBAL, www.msiglobal.org/content/core/msi_faqs.aspx
(last visited Feb. 5, 2016).
364 Smith, supra note 341.
365 Id.
366 About the American Institute of CPAs, AICPA, www.aicpa.org/About/Pages/About.aspx (last visited Feb. 5, 2016).
367 FEDERATION OF EUROPEAN ACCOUNTANTS, www.fee.be/ (last visited Feb. 5, 2016).
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purpose is to set standards for firms wishing to accept international audits. They agree to promote
International Standards on Auditing (ISA). They must support the convergence of national standards and
adopt the IFAC’s code of ethics.362 The firms also agree to accept the idea that in order to comply with the
requirements and standards, they need more integration. The IFAC Code of Ethics (July 2006) distinguishes
between firms that are members of a network and those that are members of an association.363
Generally a network is an integrated entity with common standards, a logo, and a brand, and the members
share some financial risk. The regulations are ambiguous in that a number of associations are members of the
Forum of Firms.
The regulations further elaborate that a common brand name is likely to demonstrate that
there is a network but that a brand name is not necessary. “Even though a firm does not
belong to a network and does not use a common brand name as part of its firm name, it
may give the appearance that it belongs to a network if it makes reference in its stationery
or promotional materials to being a member of an association of firms. Accordingly, a
firm should carefully consider how it describes any such memberships in order to avoid
the perception that it belongs to a network.”364
According to the Audit Directive, the European Union has its own instructions, which state:
[A] network means the larger structure: which is aimed at cooperation and to which a
statutory auditor or an audit firm belongs; and which is clearly aimed at profit- or cost-
sharing or shares common ownership, control or management, common quality control
policies and procedures, a common business strategy, the use of a common brand-name
or a significant part of professional resources.
IFAC Code of Ethics 290 revised the determination. It should be “made in light of
whether a reasonable and informed third party would be likely to conclude that a network
exists.” A referral network is not a network by this definition. The shared costs must be
significant. Common quality system and business strategies are important
considerations.365
Each country has an accounting association that sets its own standards. In the United States it is the
American Institute of CPAs (AICPA).366 In the United States, each state also has its association. In Europe, it
is the Federation of European Accountants (FEE).367 The overlay of rules reflects the importance of standards
and also the competitive nature of accounting.
The competitive element is reflected in the fact that networks themselves have formed their own “networks
of networks” to pursue their different interests. For example, even though most of the members of the
International, Mazars, Moore Stephens International Limited, PKF International Limited, PricewaterhouseCoopers International, RSM International
Limited, Russell Bedford International, SMS Latinoamérica, Talal Abu Ghazaleh & Co. International, UHY International Limited. Forum of Firms,
INT’L FED. OF ACCOUNTANTS, www.ifac.org/Forum_of_Firms/; www.ifac.org/system/files/uploads/TAC-
FoF/Fact-Sheet-FoF-TAC.pdf.
362 Philip Smith, Top 35 Networks 2015: The Survey, ACCOUNTANCY AGE, July 9, 2012, www.accountancyage.com/aa/analysis/1776670/top-35-
networks-2013-the-survey.
363 A good overview is provided at the MSI Global’s website: MSI Faqs, MSI GLOBAL, www.msiglobal.org/content/core/msi_faqs.aspx
(last visited Feb. 5, 2016).
364 Smith, supra note 341.
365 Id.
366 About the American Institute of CPAs, AICPA, www.aicpa.org/About/Pages/About.aspx (last visited Feb. 5, 2016).
367 FEDERATION OF EUROPEAN ACCOUNTANTS, www.fee.be/ (last visited Feb. 5, 2016).
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