Tax-shelter Ban Likely for Auditors
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Corporate auditors are likely to be barred from providing aggressive tax shelter advice to their audit clients. The Public Company Accounting Oversight Board (PCAOB) is due to vote on Tuesday on a proposal to bar accounting firms from doing so. The PCAOB was set up in the post- Enron and Worldcom world in conjuction with the Sarbanes-Oxley Act of 2002. Legislation already prohibits auditing firms providing consultancy advice to their clients. The big 4, KPMG, Ernst & Young, Deloitte & Touche and PriceWaterhouseCoopers have already left the tax shelter business. KPMG in particular, has been under the spotlight. Last month it said that it was cooperating with a Justice Department criminal investigation. Internal reforms and the cessation of the sales were also flagged by KPMG. The shelters were offered from 1996 to 2002. The PCAOB measure has been watered down recently. It is now restricted to barring an auditor providing tax advice on certain types of potentially abusive tax deals, to audit clients. Tax advice to individual officers of an audit client are also prohibited. Previously, routine tax return preparation and tax compliance, general tax planning and advice would have been barred with the measure.
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