Pete Campbell, senior manager in the tax group in the Boston office of Bean Counters LLP, an
Question:
Pete Campbell, senior manager in the tax group in the Boston office of Bean Counters LLP, an international professional services firm, was reviewing the work papers related to the uncertain tax positions prepared by his biggest client, Pro Vision Inc. Pete noticed that the client took the position that it did not need to record an uncertain tax benefit for a significant transaction because it had a "should" level opinion from its law firm. (A "should" level tax opinion means that the law firm believes there is a 70% to 90% probability that the tax benefit from the transaction will be allowed if litigated). When Pete asked to see the tax opinion, he was told by the firm's tax director that the company did not want to disclose the item for fear the IRS would also ask to see the opinion. Pete has always had a good working relationship with the tax staff at Pro Vision and trusts their integrity. Should Pete take the tax director's word when auditing the company's reserve for uncertain tax positions. What would you do if you were in Pete's position?
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston