How might the implementation of FIN 48 result in disagreements between company management and external auditors?
Because the implementation of FIN 48 requires that judgment be applied in areas subject to varying interpretations, it is reasonable to expect that disagreements may arise between management and auditors. Public companies are often sensitive to items impacting their reported earnings, and therefore, may resist acknowledging an uncertain tax position that might give rise to a higher than anticipated tax expense. Private company shareholders may be more focused on tax savings than public company shareholders and may take more aggressive tax positions, leading to disagreement with auditors. Does FIN 48 heighten the risk of being audited by the IRS or by a state or international tax authority? It is too soon to know for sure what the impact of FIN 48 will be on the audit process, but certainly the disclosure requirements will provide a road map for tax authorities to follow in requesting information about tax issues. On the bright side, FIN 48 will require companies to take a fresh look at
