Are Your Secrets Safe With Your Accountant?

The California Board of Accountancy is over 100 years old, having been established in 1901. In California, the accountants are governed by the Accountancy Act, which can be found in the Business and Professions Code (commencing with Section 5000) and regulations adopted by the Board, which can be found in Title 16, Division 1 of the California Code of Regulations.

Confidentiality is Mandatory, Except . . .

Section 5063.3 of the California Business and Professions Code and Rule 54.1 of the Board’s regulations prohibit a licensee from disclosing confidential information concerning a client or prospective client without written permission from the client or prospective client. However, there are seven exceptions, including when disclosure is made pursuant to a summons or subpoena. Another exception is when disclosures are “specifically required by law”. Section 10A, which was added to the Securities Exchange Act of 1934 in 1995, is one example of a disclosure specifically required by law. The Securities and Exchange Commission’s new whistleblower bounty regulations, on the other hand, don’t mandate disclosure to the SEC (they only reward it in specified circumstances).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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