CBA: get it in writing: clients must grant written permission before you disclose.

• Author: Allen, Bruce C.
• Position: Government relations

Section 54.1 of the California Accountancy Act prohibits the disclosure of any confidential information concerning a client or a prospective client unless the client or prospective client gives permission for that disclosure or the disclosure meets one of the exemptions contained in the regulation.

As of Jan. 1, 2005, the client will be required to give written permission for the disclosure of any confidential information. Also, any disclosures made to individuals or entities outside of the United States in connection with the services provided to the client will have to be specifically disclosed and written permission obtained.

The California Board of Accountancy has indicated that disclosures made in an engagement letter will satisfy the requirement.

Those limited exemptions contained in the regulation include:

* Complying with a subpoena or a summons;

* Disclosures made in defending a legal proceeding initiated by the client or prospective client;

* Responding to an official inquiry from a federal or state government regulatory agency; and

* Disclosures made to another licensee in connection with a proposed sale or merger of the licensee's professional practice or for the purpose of consultation, quality control, ethics or peer review.

Disclosures specifically required by law are exempted from the prohibition on sharing information.

The CBA is proposing an amendment to the regulation to allow an exemption from the written permission requirement for client requested disclosures.

Mandatory Peer Review Requirement Postponed

Legislation has been enacted that will move the requirement that CPA firms, which provide attest services, be required to have a peer review if they have four or more CPAs on staff from the 2006 license renewal period to those renewing after July 1, 2008.

In preparation for implementation of this requirement, the CBA Peer Review Task Force is planning the peer review or inspection program that will be required.

CalCPA member Charles Drott is chair of the CBA Peer Review Task Force. At issue is how the requirement will be administered, who will conduct the reviews and who will furnish peer review reports to the CBA.

Other considerations include whether peer review reports should be made public and at what point should the CBA be required to investigate firms with adverse peer review reports.

More than 20 states require firms performing attest services to have peer reviews completed and some require reporting to the state...