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Clients, prospects, friends, or family members may sometimes engage in "opinion shopping." CPAs should be wary when it becomes clear that a second opinion is being sought regarding a tax matter.
For example, holding all else equal, audit firm dismissals during the fieldwork stage of the audit are more likely to reflect client opinion shopping than are dismissals during other stages of the financial reporting process.
A 2002 study estimated that "opinion shopping" was behind 17% of auditor switches in the late 1990s, with most of these tending to occur later in the fiscal year.
Fritz expects a great deal of scrutiny from investigators on Lehman's opinion shopping and says it could raise problems for the defunct company's former in-house lawyers.
He specifically suggested that they set a threshold confidence level for taking a tax position and discourage or eliminate "opinion shopping" by tax departments by allowing an independent tax firm to have direct dialogue with the board of directors and review major tax positions.
* Discouraging or eliminating opinion shopping by tax departments by having an independent tax firm, which has some direct dialogue with the board of directors, review major tax positions.
When first addressed by the Securities and Exchange Commission (SEC) as a means to curtail opinion shopping, Form 8-K filings were required only when there was a disagreement between a company and its auditors.
Investor protection is reason for SEC's 'opinion shopping' proposals.
Previous research suggests that opinion shopping is generally unsuccessful (e.g., Chow and Rice 1982; Smith 1986; Krishnan and Stephens 1995; Geiger et al.
Its opponents fear the move may lead to Russian companies engaging in "opinion shopping" or threatening to change auditors to ensure a more favourable treatment in the preparation of their 2000 audited accounts).
Further, it may be easier for lenders to go opinion shopping for another appraiser if the desired value change is small, as conservative assumptions are more easily justifiable than a large value change.
He emphasized that audit committees' responsibility goes beyond ensuring they're not opinion shopping, which is illegal.
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