State Board Report
NASBA was one of the select key organizations at the July 10 International Ethics Standards Board for Accountants’ (IESBA) roundtable on Non-Compliance with Laws and Regulations (NOCLAR). This was one of a series of three global roundtables to provide the IESBA with feedback on the accountants’ responsibilities regarding the disclosure to an appropriate authority of suspected non-compliance with laws and regulation by a client or employer. Executive Vice President Colleen Conrad, who participated in the roundtable along with NASBA Past Chair Gaylen Hansen (CO), told the July NASBA Board of Directors’ meeting: “There is still a lot of controversy” over confidentiality of client records vs. the accountant’s finding of fraud that he or she feels should be reported to a government body.
Back in June 2013, the IESBA tentatively agreed: “The Code [of Conduct] should explicitly permit for PA s [professional accountants]\ to override the duty of confidentiality under the Code and disclose a SIA [suspected illegal act] to an appropriate authority in the appropriate circumstances when it is judged to be in the public interest.” Then in September 2013 the IESBA Task Force “agreed that the real issue is not about whether disclosure to an appropriate authority would be justified if doing so would be in the public interest, but about compelling the PA to do so.” The Task Force recommended that the approach taken should be “making it clear that if the PA then [after appropriate evaluation of the severity of the matter] decides to voluntarily report in such a situation, this would not be a breach of the duty of confidentiality under the Code.”
The IESBA’s work plan calls for a revised exposure draft in January 2015 and approval of their final standard on “Responding to Non- Compliance with Laws and Regulations” in January 2016. The AICPA/NASBA Uniform Accountancy Act Committee has been studying the progress of the IESBA’s work in this area.
Over 65,000 people have provided confidential information to the Securities and Exchange Commission in response to their program offering a bounty of up to 30 percent of penalties for any monetary sanctions the SEC gets over $1,000,000. The Wall Street Journal reported the largest group of professionals among those whistleblowers were engineers. When asked for an explanation by the WSJ reporter, the executive director of the American Society of Engineering Education said: “It’s fundamental to our code of ethics” which states engineers “must be dedicated to the protection of public health, safety and welfare.” However, the first person to receive payment under the IRS’s whistleblower program was an accountant.
At NASBA’s June Regional Meetings, NASBA Legal Counsel Noel L. Allen selected as one of the recent cases for the Boards to watch Lawson v. FMR LLC, a 2014 case in which the U.S. Supreme Court held that the whistleblower protections found in the Sarbanes-Oxley Act were applicable to private firms that act as contractors and subcontractors. “In so holding, the justices noted that this case could have implications for accounting firms,” Mr. Allen underscored.
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