• And The IRS Has What Leverage Over The Firms?

    By • Jul 7th, 2008 • Category: BDO, Deloitte, EY, Grant Thornton, KPMG, PricewaterhouseCoopers, SEC

    I laughed out loud when a Google Alert pointed me to the FT article excerpted below. 

    I find this solicitation by the US Internal Revenue Service quite ironic given that four of the six firms mentioned have had serious, and I mean serious, issues with the IRS related to their aiding and abetting the development of illegal tax shelters and a fifth is under an IRS audit related to the sale of its consulting practice, as well as having been sanctioned for their abusive tax shelters in the past.  

    Or is it? Is there something else going on here? 

    Did the Justice Department call the IRS and tell them, 

    “Yeah, those turkeys’ geese are cooked. Go wild. They’ll bend over backward, sideways and every other way imaginable to help you out. Just remind them of the ongoing investigations we have and consent decrees some are still under and the monitors still in place to make sure they don’t mess up. 

    Too few to fail? Let those SEC and Treasury wimps worry about that. You’re the IRS. We’re the Justice League, I mean the Justice Department. We don’t give a flying tomato about the audit industry. They’re just a bunch of cigar chomping, suburban white picket fence, non-passport holding, non-lawyer guys.”

    From the Financial Times on July 4th:

    The US Internal Revenue Service is to solicit the help of the world’s top accounting firms in its widening effort to clamp down on offshore tax evasion.

    The IRS is planning to speak on Tuesday to six accounting firms about how they could help find foreign banks that fail appropriately to identify US customers holding investments or income in offshore accounts, according to people briefed on the plan.

    A conference call has been scheduled between the agency and Deloitte, Ernst & Young, KPMG, PwC, Grant Thornton, and BDO Seidman, they say…

    is
    Email this author | All posts by

    8 Responses »

    1. Hmm. This reminds me of some Canadian rules I read about recently that place some sort of obligation on accountants to do just that.

    2. Francine:
      This is Alice in Wonderland stuff.

    3. @Independent Accountant Yes, I’m incredulous. That’s what makes it so much fun to write about.

    4. It’s called Circular 230. The leverage is their ability to even practice before the IRS.

    5. For future reference, auditing is a profession, not an industry. Referring to it as an industry discredits and underestimates the importance of our work.

    6. @Anonymous It’s refreshing to see an auditor that takes his professional status so seriously. Oh that all of you did… Internal Audit considers itself a profession (IIA Standards) and external auditors are CPAs which has professional standards and licensing requirements.

      But maybe you missed the point of my blog – I am writing about the audit firms as businesses, profit making businesses, organized around the partnership model, purporting to be global firms, and members of an industry that has its own unique business model and characteristics, professional associations, lobbyists, and universe of companies that serve it specifically. The audit firms are members of the auditing/accounting industry group, one that I don’t think gets enough coverage from that perspective by the media or the general business community. My hunch that there was a desire for more information about this unique, under-scrutinized industry has been correct. The traffic and attention to the blog prove it.

    7. Auditing is a profession? Hahahahahahhaha.

    8. Umm…yeah it is. I won’t bother with the details, you can educate yourself on that topic. I tell you what, we can have a real debate when you post a comment worthy of anyone’s time and consideration.

    Leave a Reply