A few months ago, AccountingWEB followed with interest the question before the Colorado legislature about CPA-client privelege. The question was "Should a state Board of Accountancy have the right to view client records without the clients permission?"
The question has now been answered -- for the time being.
State Invasions into CPA Files without Client Knowledge
or Consent Killed by Colorado State Senate
The distrusted Senate provision of House Bill 1258 which would have given the State Board of Accountancy the right to obtain, view, study, and analyze files of CPA clients that had received financial statement audit services has been killed. The proposed law contained no prerequisite for client consent or notification prior to the government's gaining access to the files which are covered by Colorado's 1929 strict accountant-client privilege statute, and no limitation on where the files could be taken or for how long.
On March 20, Senator Terry Phillips, the Senate sponsor of H.B. 1258, recommended a no vote on Section 10 of the Bill which was inserted into the Bill as an amendment by the Senate Business and Labor Affairs committee during its March 6 hearing on the Bill. The Senate overwhelmingly agreed and voted no to Section 10, thereby making no changes to the accountant-client privilege. Absent the assault on client privacy, the Bill is expected to easily pass the Senate and become law with Governor Owens' signature.
Frank Zaveral, a senior fellow of Colorado's prestigious Independence Institute, a proponent of a strong accountant-client privilege, and a critic of H.B. 1258's changes to the privilege, said that âclient privacy always ought to take precedence over the wishes of inquiring bureaucrats, and we should be thankful that the state legislature has the common sense to understand the importance of a free flowing of ideas and information between CPA and client, an exchange which ought to be confidential even from the state.â Zaveral also said that he was pleased that members of the business community supported the privilege of communication between clients and CPAs and that they took the time and effort to speak out on this important issue in opposition to the State Board of Accountancy and its supporters.