Brief Notes ~ Comments and Notes on Law and Legal Developments

Accountant-Client Privilege

Under Colorado law:

“A certified public accountant shall not be examined without the consent of his or her client as to any communication made by the client to him or her in person or through the media of books of account and financial records or his or her advice, reports, or working papers given or made thereon in the course of professional employment; nor shall a secretary, stenographer, clerk, or assistant of a certified public accountant be examined without the consent of the client concerned concerning any fact, the knowledge of which he or she has acquired in such capacity.”
C.R.S § 13-90-107(1)(f)(I).

Criminal investigators and civil regulatory authorities investigating alleged fraud or financial wrongdoing both often seek to “follow the money,” and will request financial books and records as part of their investigation.  Depending on the circumstances of the case, investigators may also attempt to interview or subpoena the certified public accountant of a target to testify regarding the books and records prepared by the accountant.  In these instances, the accountant-client privilege comes into play.

Colorado is one of only a few states that expressly recognize the accountant-client privilege.  The privilege prevents an accountant from disclosing confidential information provided by the accountant’s client for the purpose of rendering accounting services.  Similar to the attorney-client privilege, the accountant-client privilege is designed to create an atmosphere in which a client is able to provide confidential information to an accountant without fear that the information will later be disclosed to the client’s detriment.

The accountant-client privilege is not absolute, and there are several exceptions.  First, the privilege is a creation of state law.  This means that if suit is filed in federal court, and involves federal issues, the federal courts will not recognize the privilege.  Second, the privilege can be waived.  Just like the attorney-client privilege, if a client does not maintain the confidential nature of the information provided to his or her accountant, then a court might find that the client has waived the privilege and allow the accountant to testify.  Third, the crime-fraud exception may apply under certain circumstances.