Trump Fraud Trial Highlights Dual Responsibility of Accountants

The relationship between tax professionals and their clients was put in the spotlight this week when Mazars USA accountant Donald Bender testified against his longtime client, Donald Trump, at Trump’s civil fraud trial in Manhattan.

Key information about Trump Organization’s asset valuations was missing from its financial statements over several years, but Bender testified that he wouldn’t have signed off on them had he known. Bender told the court that he only became aware of the missing documents when questioned by prosecutors in early 2021.

A feeling of mutual trust, built over years of open communication and collaborations, doesn’t relieve tax professionals of the obligation to question and verify information provided by clients used in preparing tax returns.

At some point in their careers, many tax professionals come across moments that challenge this trust, particularly when there’s a suspicion that a client may not be entirely honest.

A client’s fidelity doesn’t exempt accountants from their professional duty to cross-check and verify the information they’re provided. Accountants are governed by several ethical pronouncements—Treasury Circular 230, the AICPA Statements on Standards for Tax Services and Code of Professional Conduct, and the regulations of various state licensing boards.

These guidelines, if followed, ensure they uphold the highest standards of integrity. Fundamentally, these frameworks mandate accountants to challenge client-provided data that appears incomplete, inaccurate, or inconsistent.

Tax accountants are in the habit of comparing current year information with that from prior years. And for most clients, they’re examining the impact of new investments and other sources of income throughout the year to determine the effect on estimated taxes.

It is these reviews and comparisons that alert them (if they’re paying attention) to changes that don’t meet the “smell test.” In most instances, discrepancies arise from miscommunication or misinformation from third parties rather than from a client’s intentional deceit. An accountant’s skepticism could shield the client from potential financial penalties or more severe consequences.

However, on the rare occasion where there may be a looming cloud of intentional deceit on the client’s part, the situation demands immediate and decisive action. Compliance with ethical standards and best practices suggest the following course of action:

• Have an open dialogue. Initiate a frank conversation with the client to understand the root cause of the inconsistency.
• Seek legal advice. When in doubt, consulting legal counsel can provide clarity on the best course of action.
• Reevaluate the relationship. If the situation demands, accountants should seriously consider severing ties to protect their professional standing.

Accountants wield a dual responsibility to their clients and their profession. As guardians of financial accuracy and ethics, they must consistently align their actions with their ethical obligations, safeguarding their hard-earned reputation. After all, for every challenging client, there’s another one waiting—a client seeking an accountant’s expertise built on a foundation of trust and integrity.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Michael Greenwald is a tax partner at Marcum and member of its national tax office. He has more than 35 years of experience in public accounting.

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