The Confidentiality of the Auditor-Client Relationship

by Philip Reckers, Homer Bates



In response to recent domestic and foreign bribery scandals, several governmental agencies have launched a campaign to identify corporations guilty of improper payments to private and public officials. The U.S. Internal Revenue Service (IRS) and the U.S. Justice Department investigations have focused on the improper tax reduction of such payments. These investigations have sought information through a probing questionnaire directed at corporate managements and the service of subpoenas on a corporation's independent accountant directing production of audit work papers. Included in the management questionnaire is a series of eleven questions concerning political contributions or bribery. Under current IRS guidelines, a corporation's independent auditor is responsible for verifying management's responses. Although the IRS originally intended for the independent public accountant to respond to the eleven questions, it later determined that the partner in charge of the audit would only have to attest to management's statements.

California Management Review

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