UNITED STATES OF AMERICA, PETITIONER v. ARTHUR YOUNG & COMPANY, ET AL. /1/ No. 82-687 In the Supreme Court of the United States October Term, 1982 The Solicitor General, on behalf of the United States of America, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Second Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Second Circuit TABLE OF CONTENTS Opinions below Jurisdiction Statutes involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E OPINIONS BELOW The order of the district court (App. A, infra, 1a-15a) is reported at 496 F.Supp. 1152. The opinion of the court of appeals (App. B, infra, 16a-39a) is reported at 677 F.2d 211. JURISDICTION The judgment of the court of appeals was entered on April 13, 1982 (App. C, infra, 40a). The order denying the government's petition for rehearing was entered on June 22, 1982 (App. D, infra, 41a). By order dated September 13, 1982, Justice Marshall extended the time within which the United States may file a petition for a writ of certiorari to and including October 20, 1982. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTES INVOLVED The pertinent provisions of Sections 7601, 7602 and 7604 of the Internal Revenue Code of 1954 (26 U.S.C.) are set forth in App. E, infra, 42a-43a. QUESTION PRESENTED Whether tax accrual workpapers, prepared by a corporation's independent certified public accountant in the course of regular financial audits, are privileged from disclosure in response to an internal revenue summons issued under 26 U.S.C. 7602. STATEMENT 1. Respondent Arthur Young & Co., a firm of certified public accountants, has served as Amerada Hess Corporation's independent auditor since November 1971. In that capacity, respondent conducted financial audits of, and certified, Amerada's financial statements for 1972 through 1974 (App. B, infra, 19a). Federal securities laws require publicly-owned companies such as Amerada to file such certified financial statements annually. See 15 U.S.C. 78c and 17 C.F.R. Part 210 et seq. The certification process requires the independent auditor to evaluate the adequacy of the corporation's reserve for potential future tax liabilities. As part of its certification of Amerada's financial statements, respondent prepared tax accrual workpapers, which are documents and memoranda relating to respondent's evaluation of Amerada's tax liability reserves as they appeared in its financial statements. The tax accrual workpapers contain facts pertaining to Amerada's financial transactions based upon company records and respondent's interviews with company personnel and with third parties. The information in the tax accrual workpapers may identify specific items of questionable deductibility that Amerada claimed for the particular year. If the auditor determines that items are not deductible or could reasonably lead to additional tax liability upon examination by the Internal Revenue Service, it will recommend the establishment of additional contingency reserves (App. B, infra, 24a-25a). In May 1975, the Internal Revenue Service began an audit to determine Amerada's corporate tax liability for 1972 through 1974. Amerada is an integrated oil company incorporated in Delaware, and its reported gross revenues for the years under audit exceeded seven billion dollars. During the course of the audit, Amerada disclosed to the revenue agents that it had maintained a "special disbursement account," a fund from which political contributions, gifts to foreign government officials, and other illegal or questionable payments were disbursed, and that it had convened a special committee to investigate the company's practices with respect to such payments. Amerada turned over the final report of its special committee to the Internal Revenue Service. The report disclosed the deduction of some $7,830 in questionable payments during the years in question (App. A, infra, 2a-3a; App. B, infra, 19a). Upon receipt of this information, the Internal Revenue Service assigned Special Agent Kalemba of the Criminal Investigations Division to join the investigation. In furtherance of the joint investigation, the Special Agent issued an administrative summons, pursuant to 26 U.S.C. 7602, to respondent, seeking, inter alia, its tax accrual workpapers. Pursuant to 26 U.S.C. 7609, notice of the summons was sent to Amerada, which thereupon instructed respondent not to produce any of the documents called for by the summons (App. A, infra, 2a-3a; App. B, infra, 19a-20a). On October 9, 1979, the government commenced this proceeding to enforce the summons in the United States District Court for the Southern District of New York. Pursuant to 26 U.S.C. 7609, Amerada intervened in the proceeding. Both Amerada and respondent filed answers to the petition opposing enforcement of the summons, objecting, inter alia, to the production of the tax accrual workpapers (App. A, infra, 3a; App. B, infra, 18a). The district court enforced the summons and ordered production of the tax accrual workpapers. It found that the documents were relevant to the Internal Revenue Service's tax investigation of Amerada and rejected respondent's claim of an accountant-client privilege. The district court noted this Court had refused to recognize such a privilege in Couch v. United States, 409 U.S. 322, 335-336 (1973), and that the First Circuit adhered to that view, even where the client claimed that it gave the information to the auditor under an expectation of privacy. See United States v. Arthur Andersen & Co., 623 F.2d 725, 728 (1980). As the district court concluded, "While there may be an expectation of privacy insofar as the world at large is concerned, Amerada cannot reasonably have such an expectation (of privacy) with regard to the IRS which, the taxpayer knew, could call for all materials underlying the tax returns and payments" (App. A, infra, 9a). 2. A divided panel of the court of appeals reversed the district court's order with respect to the tax accrual workpapers (App. B, infra, 28a-32a). /2/ The court agreed with the district court's finding that the tax accrual workpapers were relevant to the IRS audit of Amerada's tax liability (App. B, infra, 24a-27a). Despite the relevance of the material, the court refused to enforce the summons because of its belief that "these documents should remain confidential in order to protect the reliability of the independent audit process" (App. B, infra, 19a). In support of its decision, the court of appeals expressed the view that the policies behind the disclosure requirements of the federal securities laws outweighed the policies in support of the Internal Revenue Service summons authority. As the court reasoned, these "countervailing policies" "require(d) * * * (it) to fashion protection for the work that independent auditors, retained by publicly owned companies to comply with the federal securities laws, put into preparation of tax accrual workpapers" (App. B, infra, 28a). If the summons were enforceable, the court feared corporate management "might not be perfectly candid with independent auditors once it knew that the information revealed would be reachable under Section 7602 (footnote omitted)" (App. A, infra, 30a). The court concluded that enforcement would therefore handicap investors, who must rely on independent auditors for financial information regarding publicly traded securities (App. B, infra, 31a). In reaching its decision, the court drew support from the attorney's work-product doctrine of Hickman v. Taylor, 329 U.S. 495 (1947), and created an accountant's work-product privilege, requiring the Internal Revenue Service to make a heightened showing of need to justify production of such documents (App. B, infra, 31a). In the court's view, the Internal Revenue Service had not made the requisite showing because "(t)he corporation's own books and the audit workpapers furnish the IRS with all the raw data that it need(s) to calculate the taxpayer's tax liability" (App. B, infra, 31a). The dissenting judge would have enforced the summons (App. B, infra, 33a-39a). He believed that Congress had legislated in favor of disclosure of all relevant documents not subject to traditional common law privileges, which do not include a privilege for either client communications to an accountant or an accountant's work-product. At all events, the dissent observed that "(i)f there is to be recognition of new privileges, we should leave that task to Congress" (App. B, infra, 35a). The dissent found nothing in the language or the legislative history of Section 7602 to indicate that Congress intended to exempt an accountant's work-product from Internal Revenue Service examination, or anything in Hickman v. Taylor, 329 U.S. 495 (1947), or the Federal Rules of Civil Procedure, that would permit a court to depart from the broad command of Section 7602 (App. B, infra, 36a-37a). As the dissent pointed out, there is no proper analogy between the attorney-client relationship and that of the public corporation and the independent public accountant. The attorney-client relationship is completely private and cloaked in confidence. On the other hand, an independent public accountant has public obligations to assure itself that contingent tax liabilities have been accurately reflected, and must decline to certify a statement if it is not satisfied that it is accurate (App. B, infra, 37a-38a). The dissenting judge also rejected the majority's premise that corporations would be so anxious to minimize their tax payments that they would be willing to deceive their own accountants about debatable tax items and thereby violate their obligations under the securities laws. He doubted "that many corporations will be so anxious to avoid that result that they will conceal these debatable items from their accountants in violation of the securities laws" (App. B, infra, 36a). But even on the assumption that the majority's speculation were accurate, the dissent concluded that the courts should not afford publicly held corporations "any shield behind which they can increase their chances of avoiding detection that they have not paid either the amount of taxes a court might rule was lawfully required or whatever adjustment might result from a post-audit settlement" (ibid.). REASONS FOR GRANTING THE PETITION 1. In refusing to enforce an Internal Revenue Service summons directing a certified public accountant to produce tax accrual workpapers prepared in connection with its regular financial audits of a publicly held corporation and its certification of the corporation's financial statements, the decision below has created an accountant work-product privilege, under the rationale of an accountant-client privilege, that threatens to impede the Internal Revenue Service's tax investigations of public corporations. The case therefore stands in derogation of this Court's ruling in Couch v. United States, 409 U.S. 322, 335 (1973), that "no confidential accountant-client privilege exists under federal law, and no state-created privilege has been recognized in federal cases * * *." Moreover, the decision conflicts with United States v. El Paso Co., 682 F.2d 530 (5th Cir. 1982). There, the court enforced an Internal Revenue Service summons for the identical category of documents prepared by a public corporation's in-house accountants and revealed to its independent accountant as part of the process of establishing a reserve for contingent tax liabilities and certifying its financial statements. In so holding, the court relied upon this Court's admonition in Couch that there is no federal accountant-client evidentiary privilege, and thereby rejected "(t)he logic of (the decision below that) implies that the taxpayer's revelation of tax accrual workpapers to an accountant should be considered a communication in confidence" (682 F.2d at 540-541). /3/ As the substantial amici participation in the court below by representatives of the accounting community demonstrates (App. B, infra, 16a-17a), the question presented is of major importance to the administration and enforcement of the revenue laws, and to the accounting and legal professions. The tax accrual workpapers at issue in this case record the auditor's determination of the adequacy of a public corporation's reserve for contingent tax liability under generally accepted accounting standards. Accordingly, they are concededly relevant to a legitimate tax investigation. While the Internal Revenue Service does not routinely seek these accountants' workpapers, /4/ it does request them in the course of complex audits of large corporations with substantial tax liabilities. Hence, the question of the enforceability of summonses directing the production of such documents has already been the subject of appellate litigation /5/ and is likely to recur with frequency. As matters now stand, these summonses are not enforceable in the Second Circuit, where the financial records of some of the nation's largest corporations are located. This Court should grant certiorari and establish a uniform national rule with respect to the production of such tax accrual workpapers. 2. a. As the Court most recently reaffirmed in Trammel v. United States, 445 U.S. 40, 50 (1980), quoting United States v. Bryan, 339 U.S. 323, 331 (1950), any claim of privilege must overcome the settled principle that "'the public * * * has a right to every man's evidence.'" Accord: Branzburg v. Hayes, 408 U.S. 665, 688 (1972). "Whatever their origins, these exceptions to the demand for every man's evidence are not lightly created nor expansively construed, for they are in derogation of the search for truth." United States v. Nixon, 418 U.S. 683, 710 (1974). See also Herbert v. Lando, 441 U.S. 153, 175 (1979); Blackmer v. United States, 284 U.S. 421, 438 (1932); 8 J. Wigmore, Evidence, Section 2192 (McNaughton rev. ed. 1961). Because testimonial privileges preclude the use of highly relevant evidence and therefore tend to be "an obstacle to the administration of justice" (id. Section 2192, at 73; see United States v. Nixon, supra, 418 U.S. at 711-713), such privileges are tolerable only when they "are designed to protect weighty and legitimate competing interests" (id. at 709). See also Elkins v. United States, 364 U.S. 206, 234 (1960) (Frankfurter, J., dissenting). b. These considerations are fully applicable to the summons authority of the Internal Revenue Service. Section 7602 of the 1954 Code, App. E, infra, 42a-43a, authorizes the Secretary "(t)o summon * * * any * * * person * * * to appear * * * and to produce such books, papers, records, or other data * * * as may be relevant or material" to ascertaining the correctness of any return. "The purpose of the statutes is not to accuse, but to inquire. Although such investigations unquestionably involve some invasion of privacy, they are essential to our self-reporting system, and the alternatives could well involve far less agreeable invasions of house, business, and records." United States v. Bisceglia, 420 U.S. 141, 146 (1975). In determining the scope of this statutory obligation to "appear" and "give testimony to the Internal Revenue Service," this Court has frequently analogized the summons power to the common law duties attaching to the issuance of a testimonial summons. See United States v. Bisceglia, supra, 420 U.S. at 147-148; United States v. Powell, 379 U.S. 48, 57 (1964). This common law duty has been expansively construed and limited principally by relevance and privilege. See, e.g., Blair v. United States, 250 U.S. 273 (1919); United States v. Bryan, supra, 339 U.S. at 331. While the Court has recognized that there may be exemptions from the public duty to give evidence to a competent authority, the "primary assumption" was that a summoned party must "give what testimony one is capable of giving" absent an exemption "grounded in a substantial individual interest which has been found, through centuries of experience, to outweigh the public interest in the search for truth" (ibid.). Moreover, the Court has consistently construed the breadth of the summons authority that Congress intended to confer in Section 7602 as embracing all appropriate measures for enforcement. See, e.g., United States v. Powell, supra; Donaldson v. United States, 400 U.S. 517 (1971); United States v. Bisceglia, supra; United States v. Euge, 444 U.S. 707 (1980). "There is thus a formidable line of precedent construing congressional intent to uphold the claimed enforcement authority of the Service if authority is necessary for the effective enforcement of the revenue laws and is not undercut by contrary legislative purposes (footnote omitted)" (id. at 715-716). Simply put, an Internal Revenue Service summons to produce evidence relevant to a legitimate investigation is enforceable unless an established privilege protects such evidence or there are "unambiguous directions from Congress" to the contrary. United States v. Bisceglia, supra, 420 U.S. at 150. 3. Here, both courts below found that the tax accrual papers sought from respondent were relevant to the Internal Revenue Service's investigation of Amerada (App. A, infra, 8a; App. B, infra, 26a-27a). Despite this finding, the court of appeals refused to order production of these documents prepared by respondent in connection with its determination of the adequacy of Amerada's reserve for contingent tax liabilities and its certification of Amerada's financial statements, as required by the securities laws. As the court saw the matter, "(t)he verification procedure envisioned by the (Securities) Act requires, in turn, that management feel free to cooperate with their auditors, and to disclose to them confidential information, such as the questionable positions taken on tax returns * * *" (App. B, infra, 29a). Hence, the court concluded that the countervailing policies at issue in the case "* * * require(d) (it) to fashion protection for the work that independent auditors, retained by publicly owned companies to comply with the federal securities laws, put into preparation of tax accrual workpapers" (id. at 28a). In support of its decision, the court relied upon the attorney work-product doctrine established by this Court's decision in Hickman v. Taylor, 329 U.S. 495 (1947). But the work-product doctrine has no bearing upon the enforceability of the IRS summons for accountant's workpapers at issue in this case. In Hickman v. Taylor, supra, the Court recognized a qualified privilege against pretrial discovery for certain materials prepared by an attorney "acting for his client in anticipation of litigation" (329 U.S. at 508). See United States v. Nobles, 422 U.S. 225, 236-240 (1975); Upjohn Co. v. United States, 449 U.S. 383, 397-399 (1981). Here, in marked contrast, the papers in question were prepared by accountants in the course of a regular audit of financial statements -- and not in connection with litigation no matter how remotely contemplated. These two factors effectively distinguish Hickman and render the work-product doctrine irrelevant. United States v. El Paso Co., supra, 682 F.2d at 542-543. /6/ The court below therefore erroneously extended the work-product doctrine beyond its settled and appropriate bounds. 4. While the decision below is couched in terms of the work-product privilege, it is plain that the court's underlying reasoning rests upon the creation of an accountant-client privilege. For in refusing to enforce the summons for the accrual workpapers, the court believed that it was fostering candid communications between client and accountant for the benefit of the investing public and the enforcement of the securities laws. Such a rationale is the essence of a communications privilege. See United States v. El Paso Co., supra, 682 F.2d at 541 n.13. There are, we submit, four fundamental errors inherent in the court's conclusion. First, there is no accountant-client privilege, and the courts have uniformly resisted creating one because of the significant differences between attorneys and certified public accountants. Second, the court's conclusion that such a privilege is necessary in order to encourage enforcement of the securities laws is based upon an unfounded speculation that public companies would otherwise deceive their independent accountants. Third, there is no conflict between the enforcement of the securities laws and the tax laws. And fourth, even on the assumption that there is such a conflict, it is for Congress, and not the court below, to resolve it. a. As we have pointed out (supra, page 6), this Court, and every court that has considered the issue, has rejected the creation of an accountant-client privilege. Couch v. United States, supra, 409 U.S. at 335-336; Falsone v. United States, 205 F.2d 734 (5th Cir.), cert. denied, 346 U.S. 864 (1953); Wm. T. Thompson Co. v. General Nutrition Corp., 671 F.2d 100, 103-104 (3d Cir. 1982); United States v. Gurtner, 474 F.2d 297, 299 (9th Cir. 1973); United States v. Wainwright, 413 F.2d 796, 803 (10th Cir. 1969); United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961); United States v. El Paso Co., supra, 682 F.2d at 540. Indeed, the reason the law recognizes an attorney-client privilege and not an accountant-client privilege rests upon the important practical differences between the function of an accountant and that of an attorney. The attorney is an advocate whose duties to his client include presenting the client's case in the most favorable light possible. As this Court noted in Upjohn Co. v. United States, supra, 449 U.S. at 390-391, "(t)he first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant." Accordingly, unless a client's communications to his attorney are to be held in strict confidence, the attorney may not be able to determine the correct facts, and, therefore not be able to represent his client's cause to the best of his ability. An independent certified public accountant performs a very different function from that of an attorney. As the title states, he is independent of his client, and his responsibility is not only to the client whose books he is auditing but also to various governmental agencies regulating his client's industry, to his client's creditors and to investors in his client's securities. This multiplicity of loyalties, in contrast to the attorney's undivided loyalty to his client, exposes accountants to suits by agencies, creditors and investors on the theory that the accountant ignored his duty to them in favor of his loyalty to his client. In such suits, it is common for accountants to disclose their clients' confidential communications and their own work-product in order to demonstrate that they properly discharged their duties to all. /7/ Indeed, it was precisely those differences between accountants and attorneys that this Court recognized in Couch in rejecting the claim of an accountant-client privilege as to a taxpayer's records turned over to an accountant. As the Court stated (409 U.S. at 335-336): (T)here can be little expectation of privacy where records are handed to an accountant, knowing that mandatory disclosure of much of the information therein is required in an income tax return. What information is not disclosed is largely in the accountant's discretion, not * * * (the taxpayer's). Indeed, the accountant risks criminal prosecution if he willfully assists in the preparation of a false return. * * *. His own need for self-protection would often require the right to disclose the information given him. * * * Accordingly, * * * (taxpayer) cannot reasonably claim * * * an expectation of * * * privacy or confidentiality. Thus, an accountant's client obviously cannot have an expectation of confidentiality similar to that of an attorney's client. There is accordingly no justification for the creation of an accountant-client privilege by the decision below. b. Moreover, even on the assumption of the court below (with which we disagree) that there is some privilege that attaches to the communications between a client and his accountant that is somewhat analogous to the attorney-client privilege, the rationale for such a privilege does not exist in this case. The principal contemporary justification for the attorney-client privilege is its presumed value in encouraging clients to make full disclosure to their attorneys. Upjohn Co. v. United States, supra, 449 U.S. at 389; 8 J. Wigmore, supra, Sections 2291 and 2306, at 590. If damaging information could more readily be obtained from an attorney following disclosure than from the client himself in the absence of disclosure, a client aware of that fact would be reluctant to confide in his lawyer. See, e.g., United States v. Louisville & N. R.R., 236 U.S. 318, 336 (1915). The result would be greater difficulty in obtaining fully informed legal advice. "Since the privilege has the effect of withholding relevant information from the factfinder, it applies only where necessary to achieve its purpose. Accordingly it protects only those disclosures -- necessary to obtain legal advice -- which might not have been made absent the privilege." Fisher v. United States, 425 U.S. 391, 403 (1976). But the communications from Amerada to respondent in this case would undeniably have been made in the absence of any protection of an accountant-client privilege. As a publicly held corporation, Amerada was required to file accurate and complete financial statements, certified by its independent auditors, with the SEC, if it wished to continue to have its stock publicly traded. See 15 U.S.C. 78l; 17 C.F.R. 210.1-02(d). Thus, Amerada had an independent legal duty to make the disclosures to respondent wholly without reference to or encouragement by any privilege. As the dissenting judge pointed out, there is accordingly no justification for the majority's premise "that some corporations are so anxious to minimize their tax payments that they are willing to deceive their accountants concerning the existence of debatable items and thereby violate their obligations under the securities laws" (App. B, infra, 36a; (footnotes omitted)). Indeed, the cost of financial deceit is high for it can cut the corporation off from the public capital markets and expose it to private causes of action. It is therefore the accountant's public duty to withhold certification of a false, incomplete or misleading statement, and it is the sanctions of the securities laws -- not the existence of any privilege -- that provide the corporation with the necessary incentive to be candid with its independent auditor (see App. B, infra, 37a-38a). See also In re John Doe Corp., 675 F.2d 482, 488-489 (2d Cir. 1982). c. The court of appeals further erred in assuming a conflict between the federal statutes regulating securities and those enforcing revenue collection. Section 7602 of the 1954 Code unequivocally authorizes agents of the Internal Revenue Service to summon and inspect records that may be relevant to their investigation. On the other hand, the securities regulations relate to nothing more than the duty of listed corporations to file annual audited statements, and the duty of auditors to examine the statements under generally accepted principles of public accounting. The statutes and regulations do not even hint at any duty by the accountants to keep their clients' communications confidential. It would therefore be incongruous to enjoin accountants to do so when their basic function is clearly to insure that the public is informed accurately. As the Court made clear in St. Regis Paper Co. v. United States, 368 U.S. 208 (1961), only a conflict that appears in the statutes themselves, as a clear statement of congressional purpose, will prevent disclosure of information. In St. Regis Paper Co., Section 9(a) of the Census Act, 13 U.S.C. (1958 ed.) 9(a), prevented the Census Bureau from disclosing census information except in the form of statistical reports. St. Regis Paper Co. asserted that this prohibition was, in effect, a pledge of confidentiality and protected the company from having to disclose the same information to the Federal Trade Commission. This Court disagreed, holding that the statute merely forbade dissemination of the information by the Census Bureau; it said nothing to curtail the normal investigatory powers of other government agencies. The Court refused to infer such a limitation: "Ours is the duty to avoid a construction that would suppress otherwise competent evidence unless the statute, strictly construed, requires such a result." 368 U.S. at 218. The Court further pointed out (ibid.) that "when Congress has intended that like reports not be subject to compulsory process it has said so." The present case follows a fortiori from St. Regis Paper Co. since the securities laws and regulations do not contain any requirements of confidentiality for accountants. There is accordingly no justification for creating a privilege for such relevant materials as a defense to an otherwise valid Internal Revenue Service summons issued pursuant to a legitimate investigation. d. Finally, even assuming that the court below correctly identified a conflict between the policies underlying the securities laws and the provisions regarding tax enforcement, the resolution of such a conflict properly lies with Congress and not in the courts. This is particularly true where, as here, the securities laws provide no explicit defense to the Internal Revenue Service's summons and a literal reading of the revenue provision directs that the documents be produced. There is no justification for the implicit assumption by the decision below that the securities law has somehow repealed or cut back on the scope of the Internal Revenue Service's summons authority. "One canon of construction is that repeals by implication are disfavored." Regional Rail Reorganization Act Cases, 419 U.S. 102, 133 (1974). Since the IRS summons statutes and the securities laws are "'capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.'" Id. at 133-134, quoting Morton v. Mancari, 417 U.S. 535, 551 (1974). As the Fifth Circuit put it in El Paso Co. in reaching the opposite conclusion from that of the court below (682 F.2d at 545): "In the absence of a more profound clash between congressional policies, we cannot cut back on the summons power that Congress has given to the Service. We do not feel free to reweave the fabric of national legislation in accord with our notions of how various statutory schemes mesh. Such policy choices belong to the Congress." CONCLUSION The petition for a writ of certiorari should be granted. REX E. LEE Solicitor General GLENN L. ARCHER, JR. Assistant Attorney General STUART A. SMITH Assistant to the Solicitor General CARLETON D. POWELL KRISTINA E. HARRIGAN Attorneys OCTOBER 1982 /1/ Amerada Hess Corporation was also a party below, and is a respondent, along with Arthur Young & Co. For the sake of clarity, however, "respondent" refers only to Arthur Young & Co. /2/ The Internal Revenue Service's summons directed respondent to produce all files related to its client, Amerada Hess Corporation, for which respondent served as independent auditor (App. B, infra, 17a-18a, 20a n.4). The district court ordered the production of all items sought by the summons except respondent's audit program and the documents prepared by the special committee that investigated Amerada's questionable payments. The government did not appeal that portion of the district court's order, except with respect to the stated items. Accordingly, the only issues considered by the court of appeals were the production of audit workpapers and tax accrual workpapers (App. B, infra, 20a-21a). The court of appeals affirmed the district court's order with respect to the audit workpapers (App. B, infra, 21a-24a). They are accordingly no longer at issue (App. B, infra, 24a-32a). Hence, the only question before this Court involves the tax accrual workpapers. /3/ We have been advised by counsel for El Paso Company that he intends to seek certiorari. /4/ See Guidelines for Requesting Audit or Tax Accrual Workpapers, (Audit) I Int. Rev. Man. (CCH) Paragraph 4024.4 (May 14, 1981). /5/ See, e.g., United States v. Noall, 587 F.2d 123 (2d Cir. 1978), cert. denied, 441 U.S. 923 (1979) (enforcing IRS summons to produce internal audit documents); United States v. Arthur Andersen & Co., 474 F. Supp. 322 (D. Mass.), appeal dismissed, 612 F.2d 569 (1st Cir. 1979), cert. denied, 449 U.S. 1021 (1980) (enforcing IRS summons to produce audit work programs, tax accrual workpapers, and tax planning and consulting papers held by independent auditor); cf. United States v. Coopers & Lybrand, 550 F.2d 615 (10th Cir. 1977) (IRS summons for tax accrual papers not enforced on ground of lack of relevancy). /6/ Accord: Coastal States Gas Corp. v. Department of Energy, 617 F.2d 854, 864 (D.C. Cir. 1980) ("(work-product doctrine) has uniformly been held to be limited to documents prepared in contemplation of litigation"); Goosman v. A. Duie Pyle, Inc., 320 F.2d 45, 52 (4th Cir. 1963) (reports prepared in ordinary course of business under Interstate Commerce Commission regulations are not work-product). /7/ See, e.g., Pegasus Fund, Inc. v. Laraneta, 617 F.2d 1335 (9th Cir. 1980) (Arthur Young & Co. produced its work papers to show that it had no reason to know of fraud by its client); Oleck v. Fischer, 623 F.2d 791 (2d Cir. 1980) (Arthur Andersen & Co. testified regarding reserves for notes payable appearing in client's financial statement); Herzfeld v. Laventhol, Krekstein, Horwath & Horwath, 540 F.2d 27 (2d Cir. 1976); SEC v. Geotek, 426 F. Supp. 715 (N.D. Cal. 1976), aff'd, 590 F.2d 785 (9th Cir. 1979). Appendix Omitted