Arthur Young & Co., a firm of certified public accountants, was the independent auditor for Amerada Hess
Question:
Arthur Young & Co., a firm of certified public accountants, was the independent auditor for Amerada Hess Corporation. During its review of Amerada’s financial statements as required by Federal securities laws, Young confirmed Amerada’s statement of its contingent tax liabilities and prepared tax accrual work papers.
These work papers, which pertained to Young’s evaluation of Amerada’s reserves for contingent tax liabilities, included discussions of questionable positions Amerada might have taken on its tax returns. The Internal Revenue Service (IRS) initiated a criminal investigation of Amerada’s tax returns when, during a routine audit, it discovered questionable payments made by Amerada from a ‘‘special disbursement account.’’ The IRS summoned Young to make available all its information relating to Amerada, including the tax accrual work papers. Amerada instructed Young not to obey the summons. The IRS then brought an action against Young to enforce the administrative summons. Is Arthur Young entitled to any type of protection? Explain.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts