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State Board Report

August 2016

The International Ethics Standards Board of Accountants (IESBA) released its long-awaited final pronouncement in July on "Responding to Non-Compliance with Laws and Regulations." When can an accountant breach confidentiality and make a disclosure to an appropriate authority? The IESBA Standard 225.34 states: "The determination of whether to make such a disclosure depends in particular on the nature and extent of the actual or potential harm that is or may be caused by the matter to investors, creditors, employees or the general public." External factors also impact the determination when to make such a disclosure, including: (1) "Whether there is an appropriate authority that is able to receive the information, and cause the matter to be investigated and action to be taken…." (2) "Whether there exists robust and credible protection from civil, criminal or professional liability or retaliation afforded by legislation or regulation, such as under whistle blowing legislation or regulation." (3)"Whether there are actual or potential threats to the physical safety of the professional accountant or other individuals."

Standard 225.36 recognizes, after exercising professional judgment, the accountant may in exceptional circumstances immediately disclose the matter to an appropriate authority, "….Such disclosure will not be considered a breach of the duty of confidentiality under Section 140 of this Code."

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