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B-236923 1 (1989-09-29)

handle is hein.gao/gaobadton0001 and id is 1 raw text is: G~oUnited L'. Ate GenerA Accoutitig Offle Waahington, D.C. 20848 Office of the General Counsel B-236923 September 29, 1989 The Honorable Thomas C. Komarek Assistant Secretary for Administtation and Management U.S. Department of Labor Dear Mr. Komarek: This responds to your June 16, 1989 letter requesting advice about potential conflicts of interest when contracting with accounting firms. Your letter raises two types of possible conflict of interest issues. The first type concerns accounting firms which perform audits under a contract with the Department of Labor and later seek to provide technical assistance in solving management problems identified in the audit. The second type of issue involves firms which provide technical assistance services on management issues, and then seek to perform audits on the organization the firm advised. You have solicited our advice because of a debate between the Department of Labor Ins,)ector General (IG) and the contracting officer involved in these contracts over the extent of control the Department of Labor must exercise over these conflict of interest issues. The contracting officer has proposed that the Department preclude firms which perform either auditing or technical assistance services from providing the other type of service to the same organization for three years. The IG disputes the existence of an inherent conflict of interest in these situations and argues instead for addressing this issue on a case by case basis. There are two separate conflict of interest or independence requirements applicable to accounting firms which do both management consulting and auditing under federal government contracts. The first of these requirements is found in the Comptroller General's Government Auditing Standards. The second general standard states that [iln all matters relating to audit work, the audit organization and the individual auditors, whether government or public, should be free from personal and external impairments to independence, should be

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