Independent auditors rely on tax accrual work papers, which are typically prepared with the help of attorneys, to evaluate companies’ financial statements. The work papers frequently involve analysis of the litigation risks of the company’s tax positions.

In March, the 1st Circuit withdrew its Jan. 21 panel decision which sided with Textron by ruling 2-1 that tax accrual work papers are shielded from discovery by the work-product privilege. U.S. v. Textron Inc., No. 07-2631