Jul 23, 2014

Should You be Permitted to Report Suspected Fraud to Regulators?

By Allison M. Henry, CPA, CGMA, PICPA Vice President - Professional & Technical Standards
The International Ethics Standards Board for Accountants (IESBA) has been grappling with this question. Its original exposure document, released in August 2012, would have required external reporting of suspected fraud or illegal acts. They received more than 70 comment letters, including one from the PICPA Professional Ethics Committee. Based on the responses they received, they removed this requirement but are continuing to develop guidance that would permit a CPA to report a suspected fraud to regulatory authorities.

Recent roundtable discussions highlight the complexity of this issue, which pits serving in the public interest against client confidentiality. Attitudes are evolving, and the standards are likely to change with them. The IESBA expects to finalize its guidance in the first half of 2016. Changes that are made to the IESBA Code will be closely monitored by the AICPA, and will likely result in changes that affect U.S. practitioners. PICPA’s Ethics Committee is also monitoring developments in this area.

Feel free to reach out to me at ahenry@picpa.org, as the liaison to the committee, to give me your input. 

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.