"Accounting for Growth" accurately recounts the rhetoric that is heard on the street regarding the visible and very sensitive problem in the accounting profession with reference to the "recommending" of Big Eight firms by other members of the financial community.

Perhaps what the article does best is highlight some of the misunderstandings and lack of understanding upon which these "recommendations" are sometimes based.

C. Richard Kramlich parrots the wornout cliche "Big is better." If that is valid, it would hold true that because Dick Butkus is a first-class professional athlete, with strength, size, speed, and coordination, he would be an automatic choice for our Olympic gymnastic team.

And Daniel W. McLaughlin, inadvertently I'm sure, clearly dramatizes a complete lack of understanding of an elementary but fundamental distinction: "Generally Accepted Accounting Principles" relate to financial statements while Generally Accepted Auditing Standards" relate to the conduct of an auditor's work. This distinction is taught to sophomore accounting students -- even those who end up in three-person offices.

On the bottom line, the question of why various members of the financial community step out of their areas of expertise to volunteer their misunderstanding and lack of understanding regarding the selection of certified public accountants seems to have two answers. First, the smaller, obscure, and often insecure underwriter, banker, or venture capitalist suggests "Buy the Big Eight firm" to boost his own prestige and ego through identification with the well-known CPA firm. Second, the well-established, more secure institutions are much more pragmatic: They simply want the big insurance policies and deep pockets the larger firms offer, should problems (theirs or anyone else's) later arise.

The Big Eight CPA firms offer extensive resources and excellent professional services and there is indeed a time when they are the best choice. However, there are times when the smaller CPA firm offers other dimensions of professional service that will best serve the needs of the client. The sweeping generalities are almost always wrong.

Perhaps the most appropriate conclusion that may be drawn would be that the underwriters, venture capitalists, and bankers should stick to their knitting (something they presumably know something about), and leave the selection of the CPA firms to the clients.


INC. replies: "Accounting for Growth" examined the battle between the 'Big Eight and Second Tier accounting firms for the business. We described the lengths to which the national firms go to capture clients, and we took stock of what the firms really have to offer small growth companies. We found, for example, that underwritters do insist on Big Eight accounting firms for public stock offerings. And we discovered that bankers, as a rule, don't care who audits a company's books, so long as they know that the accountant is competent.

We did not discuss small and regional accounting firms at length in the article, although we did point out that the services the large CPA firms provide aren't all that different from those offered by the small firms. We also noted that small firms don't have so-called small-business departments. They don't need them, because their entire practice is at small business's beck and call.

We didn't comment in more detail about the smaller CPA firms, because they were not the subject of the article.