Abstract
This article discusses the impact on tax practice of the U.S. Securities and Exchange Commission (SEC) rules to implement Sarbanes-Oxley. It covers the guidelines for nonaudit services, including some questions that remain unanswered. It also addresses nonservice issues, such as partner rotation, and concludes with some observations about the next steps certified public accountant (CPA) tax practitioners should consider taking. In implementing the rules, public companies will incur substantial costs of separate corporate governance/monitoring systems, audit committees with independent members, as well as higher fees for acquiring nonaudit services from accounting firms other than their auditors. With only a few exceptions, the rules do not specifically mention tax services in the list of prohibited nonaudit services. CPAs can do transfer pricing, cost segregation studies and tax-only valuations, as long as the results are not subject to audit procedures as part of the financial statement audit. Apparently, CPAs can offer comments on the qualifications of candidates for senior executive positions when asked by the company to do so without specifying a preference and provide tax advice on compensation packages. But there still are many open issues related to tax services the rules might consider prohibited nonaudit services.