Former Fed Chief Calls For Auditors To End Tax Role

by Glen Shapiro, LawAndTax-News.com, New York

18 March 2003

In an interview with the Financial Times at the weekend, former US Federal Reserve chairman, Paul Volcker urged the new public company accounting oversight board to prevent auditors from advising their clients on aggressive tax minimisation strategies.

'You can run into a real conflict if the auditor has to audit the tax planning of the company,' he told the business daily.

In the aftermath of accounting scandals involving companies such as Enron and WorldCom, this is not a new perspective. However, coming from a public figure as influential as Mr Volcker, the sentiment will almost certainly dismay the so-called 'big four' announting firms, which lobbied long and hard for a dilution of the Sarbanes-Oxley corporate accounting legislation.

According to the FT, in addition to calling for a ban on accounting firms advising the same companies as they audit, the former Fed chairman slammed the companies themselves for failing to restore credibility to the profession after numerous high-profile collapses.

The public company accounting oversight board (PCAOB) has run into trouble following the resignation of newly appointed chairman, William Webster, who stepped down recently when it was learned that he chaired the audit committee of a public company being investigated for accounting irregularities.

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