By Brian P. Ketcham
The CPA Journal
July 2019 Edition
Recently, a midsize accounting firm that had prepared financial statements and reports for President Donald Trump and various entities associated with him for many years received a subpoena from the House of Representatives Committee on Oversight and Reform seeking a broad array of documents and communications regarding the firm’s work in that capacity. The subpoena, which seeks six years of personal and corporate financial records, may lead to troubling precedent and a sharp increase in broad subpoenas to accounting firms in all manner of cases. Indeed, although the subpoena itself is not yet publically available, a letter from Elijah Cummings (D-Md.), the chairman of the Oversight Committee, to the chairman and CEO of the accounting firm can be found online, and excerpts from the subpoena are quoted in publically filed court documents. The subpoena, if ultimately enforced, will have a chilling effect on the relationship between taxpayers and their accountants.
The Oversight Committee’s requests appear to seek nearly every aspect of the accounting firm’s work for the President and numerous entities associated with him, including “all statements of financial condition, annual statements, periodic financial reports, and independent auditors’ reports prepared, complied, reviewed, or audited by” the accounting firm. The requests go on to include “all underlying, supporting, or source documents” related to the statements and reports, and—perhaps most troubling—“all memoranda, notes, and communications related” to the statements and reports, including “all communications between” the lead CPA on the matter and the President or any employee or representative of the President’s company. In other words, the Oversight Committee does not want to just review financial and source documents (commonly the only items requested from accountants in federal subpoenas); it wants to know about any discussions between the CPA and the client about those documents.
In some cases, the scope of a subpoena (Congressional or otherwise) can be negotiated to limit the disclosure of information. This should always be the first step. If an agreement cannot be reached, however, the subpoena itself—or its scope—can be challenged in federal court. This article explores possible ways by which a similar subpoena might be quashed or, at a minimum, modified so as not to effectively become a “fishing expedition.”