It seems the Internal Revenue Service isn’t the only government agent interested in perusing corporate audit work papers. It turns out the Securities and Exchange Commission would like to have a look now and then too.

In a speech to the American Institute of Certified Public Accountants this week, Robert Khuzami, director of enforcement for the SEC, said the SEC staff has seen a number of audit firms withhold subpoenaed documents, claiming a privilege over work product on behalf of audit clients. “We are skeptical of such claims,” said Khuzami.

A First Circuit Court decision earlier this year against Textron determined that tax accrual work papers prepared by in-house legal counsel were not entitled to any work product protection. Textron said the documents, requested by the IRS, contained information that should be protected by attorney-client privilege, but the court set aside that argument and said the IRS should be allowed access.

Khuzami said the court noted the work product privilege is intended to protect work done in preparation for litigation, not financial statements. “We do not see how the audit documentation prepared by or relied on by an auditor in connection with an audit report can be privileged, or how any claimed privilege hasn’t been waived,” he said.

Textron prepared the documentation under dispute to comply with relatively new accounting rules (ASC 740, Income Taxes, previously Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes) that say companies must disclose in their financial statements where they have some uncertainty about positions they’ve taken with tax authorities. Companies rallied hard against the new rules, claiming it would require them to expose their private legal strategies to their adversaries. The IRS asked to see the audit work papers that formed the basis for Textron’s tax accruals, but Textron went to court to protect them.

Khuzami says that by giving the documentation to auditors to support assertions in financial statements, companies waive any privilege they may have had or perceived. “Audit documentation is collected or prepared for the purpose of issuing an audit opinion, not for the purpose of litigation,” he said. “And sharing the work product with auditors, who are supposed to be ‘public watchdogs,’ strongly undermines any such claim.”