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![handle is hein.gao/gaobadxvo0001 and id is 1 raw text is:
DOCUMEWT RESUME
03465 - [A2593728]
Internal Revenue Service Efforts to Detect Slush Funds in Large
Corporations. September 13, 1977. 16 pp.
Testimony before the House Committee on Ways and Means:
Oversight Subcoumittee; by Victor L. Lowe, Director, General
Government Div.
Issue Area: Accounting and Financial 2eporting (2800); Tax
policy (1500).
Covo-act: General Government Div.
Budget Function: Miscellaneous: Financiil Management and
Information Systems (1002).
Orgamizaticn Concerned: Int*?rnal Revenue Sorvice: Securities and
Txchange Commission.
Longressional Relevance: Hcuse Committee on Ways ant' Means;
Oversight Subcommittee.
Under the Coordinated Pxamination program, the Internal
Revenue Service (IRS) audits corporations with assets over $250
million and financial institutions and utilities with at least
$1 billion in assets and seeks to uncover secret slush funds
used for such purposes as pclitical contributions, bribery,
lobbying, kickbacks, and diversions to personal use. Through the
effc.ts of the Securities and Exchange Com,2issicn (SEC),
approximately 400 corporatiohs have made voluntary aisclosures
relating to such funds. In May 1976, IRS supplemented i'.s audit
instrurtions with a standard set of 11 questions. A sampling of
16 cases, including a series of compliance checks other than the
11 questions, was analyzed to identify areas where slush funds
or illegal payments could be initiated. Only one of the
compliance clecks was successful in uncovering possible
fraudulent activity. Slush funds were disclosed in 13 of the 16
cases examined; mcst of these were dutected through SEC reports
and use of the 11 questions. Payments were reflected on the
books of the taxpayers as ordinary business expenses. Most of
the questicnnaire responses did not disclose whether payments
were deducted on tax returns, and additional audit work was
usually needed to determine tax or criminal ioplications.
Revenue agents and case mana3ers must decide appropriate action
in cases of questionable payments; there appeazed to be a lack
of guidelines on what constitutes a prosecutable ofiense. (HTW)](ViewImageLocal?handle=hein.gao/gaobadxvo0001&div=1&collection=&method=preview&ext=.png&size=3)