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Texas CPAs and Confidentiality

  • 28 June 2016
  • Author: Alexander Carr
  • Number of views: 4424
Texas CPAs and Confidentiality

It’s a case that has business owners scratching their heads. Two former PwC accountants were recently on trial in Luxembourg accused of leaking corporate tax details to the press.  Are the accountants whistleblowers who should be praised or did they commit an unethical breach of confidentiality? Does the case hold any lessons to be learned for Texas small business owners?

Details of the case—which is connected to what was dubbed LuxLeaks in 2014—can be found here. The leak sparked accusations that the Grand Duchy of Luxembourg conspired with multinational companies to deprive other European Union (EU) states of tax revenue. The case is igniting debate on whistleblower rights when it comes to accountant-client privilege.

Whistleblower cases can and do happen in the U.S. In 2005, accountant Tony Menendez blew the whistle on Halliburton’s accounting practices and, eventually, won the case. And, in February, an unidentified internal whistleblower cost agribusiness giant Monsanto $80 million for an SEC penalty involving its internal accounting practices.

Here in Texas, however, business owners can rest assured when it comes to Certified Public Accountant (CPA) confidentiality. State law dictates that CPAs licensed in Texas cannot voluntarily disclose relevant financial or tax information communicated to them by a client unless the client has given permission or by IRS or SEC summons or court order. Even if a court order is presented, the client and the CPA must be named in the order and the specific information requested must be presented before the CPA is compelled to disclose the information.

The bottom line: It always has been and continues to be wise to disclose your entire financial picture to your accountant. Just as an attorney needs to know all the facts in a client’s case before representing them, an accountant should have a clear picture of all the facts before representing a client. However, in order to ensure your confidentially, it’s important to work with a CPA who is licensed by a state that has a strong CPA Privilege Statute.

To check on the licensing status of a specific Texas CPA, visit the Texas State Board of Public Accountancy. For other questions about working with a CPA, feel free to contact us.

Image Copyright: merznatalia / 123RF Stock Photo




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