Jake is a CPA who worked on the audit of Dream Drive Motors,Inc.Although the client's financial statements fairly presented its financial results and position,certain client personnel had been engaged in illegal activities aimed at defrauding the federal government.Can Jake be called to testify about any matters that he learned in the course of his audit of Dream Drive?

Question

Quizplus · Accepted Answer

Under the federal rules of evidence, a CPA can be compelled to testify in federal court about any matters that he or she learned in the course of the audit. In some state courts, however, the CPA may be protected by the accountant-client privilege which generally prohibits accountants from disclosing client information without the client's consent. However, many states have adopted an exception to the privilege when the auditor is required to report illegal actions or fraud. Thus, while state laws vary, it is possible that Jake could be called to testify in some state courts.

Jake Is a CPA Who Worked on the Audit of Dream