Non-Standard Requests in Auditors' Requests for Information

[Guest jhall]

This 5500 season, our law firm has received auditors' request for information that include "non-standard requests" falling outside the scope of the ABA's Statement of Policy Regarding Lawyers' Responses to Auditors' Requests. In particular, we have received requests to "confirm all information brought to [the law firm's] attention indicating the occurence of a possible illegal act committed by the Company, the Plan, or any of their agents or employees." Our malpractice carrier has generally advised that we should not respond to such non-standard requests and tell the auditors that it would be inappropriate to respond under the terms of the treaty.

I am curious whether others have received similar requests and, if so, how are you responding.

[QDROphile]

We identify those requests in our response and say that that we are not responding to requests outside the scope of the convention.

[david rigby]

Please help this non-attorney understand. Why would that request not be rejected merely under lawyer-client privilege?

[Guest jhall]

Pax, you hit on one of the big concerns with these requests. As a technical matter, the requests come from the Plan Sponsor and ask the lawyers to respond directly to the auditors. As a result, I think you could argue that the Plan Sponsor, by virtue of the request, has expressly agreed to waive any privilege that would apply. (Of course, the auditors provide the plan sponsor the text of the letter and, I understand, often help mail the letters for the company but it is not clear to me that the auditors point up the privilege issues.) I am not an expert in this area and rely heavily on my firm's risk management committee for advice on these issues but understand there are cases which address the loss of attorney-client and work-product privileges by virtue of responses to auditors and that the issues can get pretty complicated depending on the facts of the specific case.

I am just disappointed that any auditor, especiallly Big 4 firms, would include requests along these lines to see whether they can get law firms to respond. Perhaps the ABA Statement of Policy will be revised or changed to reflect some of the growing pressures on audit firms as a result of Sarbanes-Oxley and other developments but until that time I hope other firms will refuse to respond to non-standard requests that clearly fall outside the scope of the Statement of Policy.