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Client privacy notification required.

The Federal Trade Commission has declined grant an exemption for CPAs and other professionals from the Gramm-Leach-Bliley Act privacy policy disclosure mies; therefore, CPAs must continue to comply with its requirements.

Practically speaking, AICPA members will need to do little beyond the procedures they already follow to protect client confidentiality. However, beginning in this year (2002), the Act requires annual disclosure of your privacy protection policies to all non-business, individual clients to whom you provide financial products or services, including tax returns, tax advice and financial planning. The required notice can be included with a client bill, a tax organizer, or other client communication, such as a client newsletter, as long as the notice is "prominent." For new clients, you must provide the privacy disclosure notice no later than the acceptance of the client relationship, generally in the engagement letter.

We are disappointed the FTC did not exempt CPAs even though our Code of Professional Conduct has stricter requirements and stronger sanctions to protect client confidentiality than does the Act. However, the FTC determined it lacked the authority to do so, given the Act's broad consumer-protection language. Although the AICPA intends to seek a legislative exemption for CPAs, members should plan on sending the disclosure notice to clients during calendar 2002.

A model privacy policy notification statement for CPA practitioners, answers to frequently asked questions, and other additional information on the Gramm-Leach-Bliley provisions are available without charge at or
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Publication:CPA Letter
Article Type:Brief Article
Geographic Code:1USA
Date:Jun 1, 2002
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