082. Compatibility Of The Tax Consulting And Audit Functions

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By its decision of 21 April 1997 (DB 1997, 1394), the Federal Court of Justice has relieved fears that the German civil courts might hold the tax consulting and auditing functions to be largely incompatible with one another. Instead, the court's decision confirms that the two functions are in principle compatible within broad limits.

German company law (sec. 319 HGB) provides who is qualified to audit the financial statements of a German corporation and also prohibits otherwise qualified persons from acting as auditor in the case of certain specified conflicts of interest. One such conflict exists with regard to an auditor who "has participated in the keeping of the corporation's accounting records or in preparing its financial statements other than in the exercise of his audit functions" (sec. 319 par. 2 no. 5 HGB). The