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RTC guidelines for contracting with firms in litigation.


The boards of directors of the Resolution Trust Corporation (RTC), the agency created to oversee the bailout of failed savings and loans, and the Federal Deposit Insurance Corporation (FDIC) adopted a statement on their contract policies with CPA firms facing litigation brought by the FDIC.

Earlier, in its final regulations governing the Qualification of Ethical Standards of Conduct for, and Resolution on the Use of Confidential Information by Independent Contractors, the RTC had required potential RTC contractors to disclose any litigation pending against them by the FDIC, Federal Savings and Loan Insurance Corporation (FSLIC) or RTC in which damages sought exceeded $50,000 (see JofA, May88, page 4).

Under the new guidelines, waivers may be granted so the FDIC or the RTC may find a firm meets minimum qualification, despite the litigation, if it can demonstrate that 1. All individuals and specific officers named in the pending litigation are screened from the engagement. 2. A central clearing point monitors compliance with the screening. 3. All screening records are maintained for three years after the contract's termination. 4. A contract with the FDIC or the RTC will not be used as a defense against a claim asserted by any federal deposit insurance fund. 5. Information obtained as a result of the contract will not be used by the firm in defense of any claim asserted by any federal deposit insurance fund.

Under such circumstances, the soliciting office or division may award contracts to approved firms without regard to outstanding lawsuits. For substantially equal bids, however, preference will be given to firms that are not the subject of FDIC, FSLIC or RTC lawsuits.
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Title Annotation:Resolution Trust Corporation
Publication:Journal of Accountancy
Date:Jun 1, 1990
Previous Article:How employers of independent contractors spell relief.
Next Article:Statement on financial instruments disclosures.

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