US Accounting Oversight Board Mulls Ban On Tax Shelter Selling

by Leroy Baker, for LawAndTax-News.com, New York

17 September 2003

A member of the US Public Company Accounting Oversight Board has hinted that the organisation is considering reforms that will prevent corporate auditors from offering certain tax planning and sheltering services to their audit clients.

According to Reuters, Mark Goelzer, a member of the board, advised auditors in comments prepared for the mutual fund industry to exhibit caution when offering these services to clients.

"I have no problem with auditors assisting their clients with traditional tax compliance and routine planning," Goelzer explained, but added that: "Tax services that go beyond that - especially the marketing to audit clients of novel, tax-driven, financial products - raise serious issues."

However, Goelzer went on to acknowledge that reforming this controversial area of tax planning was not going to be straightforward, as the boundaries between traditional tax advice and the advocation of tax shelters are often blurred. Nevertheless, given the public and political fury vented following the collapse of firms such as Enron and Worldcom, often at the accounting firms which sold tax shelters to these companies, Goelzer explained that "the board may have to try its hand at solving the problem."

The oversight board has ordered all American firms which audit US listed companies to register with it by October 22 this year, after which inspections and examinations will take place, followed by any disciplinary action deemed appropriate. As of September 9, Goezler confirmed that 440 firms had registered with the board, about half of all the firms involved in the auditing of US public companies last year.

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