Audit Firms May Lose Out On Tax Work Under New US Law

by Leroy Baker, Tax-News.com, New York

30 October 2002

Writing for specialist publication, The Tax Executive, legal expert Daniel Goelzer suggested that accounting firms could lose out on lucrative tax consultancy work in the United States under the terms of the Sarbanes-Oxley Act, passed this summer, which addresses corporate governance issues.

Mr Goelzer was recently appointed to the five person Public Company Accounting Oversight Board, an independent regulatory body for the audit profession created by the Act.

Speaking to the Financial Times on Monday, he warned that as the Sarbanes-Oxley Act leaves the exact wording of rules outlining what business audit firms can and cannot conduct to the SEC and the newly created PCAO Board, it is possible that conducting high-end tax consultancy work in addition to audits could be perceived as a conflict of interest.

'Many non-audit tax services...now may well be prohibited, including tax services relating to appraisals, valustions, actuarial services, tax controversy representation, legal services and expert witness services,' he observed in the article, co-written by Baker & McKenzie colleague, Mark Oates. 'Uncertainty shrouds still other non-audit tax services.'

However, on a more reassuring note, Mr Goelzer also told the FT that: 'I have an open mind,' adding that: 'I would want to decide in consultation with the other four board members.'

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