Question

Which of the following statements regarding confidential information is INCORRECT?

1) The rule on confidential client information should not be construed as relieving a CPA of his or her professional obligation to comply with accounting principles.
2) In general, a CPA in public practice shall not disclose confidential client information without the specific consent of the client.
3) A client cannot claim that information should not be disclosed in financial statements due to client confidentiality if the information is required by GAAP.
4) The rule on confidential client information does not allow a CPA to comply with a validly issued and enforceable subpoena or summons.

Answer 1

The incorrect statement is the one claiming CPAs cannot disclose information under a legal subpoena or summons; legal orders can compel such disclosures.

Step-by-step explanation:

The statement that is INCORRECT regarding confidential information is: 4) The rule on confidential client information does not allow a CPA to comply with a validly issued and enforceable subpoena or summons. In fact, CPAs may be required to disclose confidential information if they are presented with such a legal order. This is similar to the precedent set in the case of Branzburg v.

Hayes (1972), where the Supreme Court determined that journalists are not exempt from subpoenas and can be compelled to disclose confidential sources. A concurring opinion in this case suggested that if the disclosure of a source is necessary for a criminal trial, the government has the authority to require it. Accordingly, in professional practice, whether in journalism or accounting, there are circumstances where confidentiality must be breached.