Friday, June 10, 2022
HomeAccountingLawmakers seek details on accounting firms after a New York Times report.

Lawmakers seek details on accounting firms after a New York Times report.

Two Democratic lawmakers are seeking information from the country’s biggest accounting firms about the revolving door between the firm’s tax departments and top positions at the Treasury Department.

Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington made the request after The New York Times detailed how multinational accounting firms effectively draft tax rules from inside the government that benefit their clients.

The Times found at least 35 examples in which employees of big accounting firms left to join the Treasury’s tax policy office or other government positions and then returned to the same firm. In nearly half of those cases, the officials were promoted to partner when they rejoined their old employer, which often means a doubling of their pay.

In letters sent Tuesday to five accounting firms — PwC, EY, Deloitte, RSM and KPMG — the two lawmakers asserted that the firms were “abusing the public trust and taking advantage of the revolving door between public service and private profit.”

They cited an example revealed in The Times article of a Deloitte tax lawyer who sought to water down proposed Treasury Department rules intended to end a tax shelter that was created by his firm and used by other accounting firms for their clients, including Bristol Myers Squibb. A few weeks later, he joined the Treasury and his office issued new regulations incorporating the changes he had sought at Deloitte. He soon returned to his old firm and was immediately promoted to partner.

The letters asked for detail about this unofficial embedding of accounting firm officials in the government, including how many lawyers from the firms have taken jobs in the government and then returned; names of clients before and after their time in government; details of compensation at the firms both before and after their government service; and whether firm employees are permitted to retain clients if they worked on matters affecting them while in the government.

The lawmakers cited a bill they have introduced twice that would toughen several government ethics provisions, including by requiring more extensive disclosure on lobbying and tightening restrictions on post-government employment.

“Our legislation would close the revolving door between massive accounting firms like yours and the federal government, ensuring that our government officials work for the people and not the wealthiest corporations and their clients,” they wrote.



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