Although there was no accountant client privilege at common law, several U.S states have now adopted the privilege by statute. Some statutes explicitly permit disclosure in judicial proceedings. For example, Texas has a privilege rule that requires that a Certified Public Accountant (CPA) not voluntarily disclose information communicated to the CPA by a client in connection with the engagement without the client’s permission. However, when there is an administrative summons by the IRS, or a summons under the Securities Exchange Act of 1934 or a court order, the privilege does not apply. Accountant-client privilege encourages free and open communication between accountants and their clients.
The accountant client privlege is subject to exceptions such as the crime fraud exception and common interest exception. In Alexander v. Caldwell (In re Terry Mfg. Co.), 2007 Bankr. LEXIS 2420 (Bankr. M.D. Ala. May 29, 2007), the court held that there will not be any privilege for communications that occur before the perpetration of a fraud or commission of a crime and which relate thereto. In Cone v. Culverhouse, 687 So. 2d 888 (Fla. Dist. Ct. App. 2d Dist. 1997), the court held that the common interest exception to attorney-client and accountant-client privileges requires trial courts to examine communications involving a distinct matter to determine if the clients had common interests and the client involved in the communications lacked a reasonable basis to preserve the confidentiality of the communications from the other client. If an accountant represents two clients in common for one professional matter at a given time, the professional communication privilege is not waived for other times and other matters.