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February 19, 2002
Could Enron Collapse Lead To Big Five Losing Tax Work?
In the wake of Enron's collapse, the Big 5 accounting firms may have to fight for the right to do tax work for their audit clients.

The spectacular collapse of Enron is renewing an old debate over the scope of services being provided by big accounting firms. To those familiar with the multidisciplinary practice movement, it comes as no surprise. The American Bar Association's defeat of a proposal to permit lawyers to enter into partnerships with other professionals was viewed by many as merely a domestic speed bump for the Big 5 professional services providers who are among the largest marketers of legal services worldwide.

Now, far from being able to enter the practice of law in the United States, the Big 5 may have to fight for the right to do tax work for their audit clients.

Legislation introduced February 13 by House Financial Services Committee Chair Michael G. Oxley, R-Ohio, would limit certain accounting consulting activities by auditing firms, but would not restrict firms from conducting tax services. But there is talk that other members of Congress are considering introducing legislation that would require the Securities and Exchange Commission to review whether audit firms should be prohibited from doing tax work.

For Sheryl Stratton's complete Tax Notes report, please contact Tax Analysts.

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Media Release 2002-1

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