CPAs – Protect Yourself! 

The accountant’s privilege applies when a licensed or registered Certified Public Accountant (“CPA”) received information or evidence in his/her confidential capacity while assisting a client. Thus, a CPA is not required by any court to divulge such information. The privilege provision is outlined in the Illinois Public Accounting Act (the “Act”).

In Brunton v. Kruger , from 2015, the Illinois Supreme Court interpreted the accountant’s privilege in an estate planning case concerning a will contest. In Brunton , June Brunton sued her brother Robert Kruger in his capacity as trustee of the trusts established by their late parents, and other family members in their individual capacity. During the estate planning process, Kruger and the other family members provided an accounting firm with confidential information including income and family information in order for the firm to provide information to the attorney preparing the Krugers’ trust documents. Brunton sent subpoenas to various CPAs within the firm seeking information provided by the Krugers to the firm. The accounting firm sought protection for the CPAs under the accountant’s privilege provision in the Act.

After conflicting findings from the lower courts on exactly what documents are privileged, who holds the privilege, and whether an exception applies, the Illinois Supreme Court decided a number of issues. The court held: (1) confidential information given to a CPA for estate planning purposes is privileged; (2) as a matter of first impression, accountant-client privilege is held by the accountant, not the client; (3) testamentary exception to attorney-client privilege could not be used to defeat accountant-client privilege; and (4) as a matter of first impression, because CPA had waived accountant-client privilege by disclosing confidential information to personal representative, he could not claim the privilege to avoid disclosure of the same information to the daughter.

The most important point to take from the case is that the Supreme Court was clear in interpreting the accountant’s privilege that “accountancy activities” listed in the Act is very broad when the CPAs are acting in their confidential capacity with their end client. It even encompasses services that may not be listed in the Act but require “the use of professional skills or competencies,” such as estate planning.

The second most important matter to take from the case is that the CPAs hold the privilege and it is their privilege alone to assert and protect. If they do not take the necessary precautions, a CPA can waive the privilege as occurred in Brunton .

If you are a CPA and receive a subpoena requesting you to produce documents pertaining to one of your clients – whether it be a divorce case, a business case, or an estate planning case - you can probably assert your rights under the accountant’s privilege in order to protect you and your client from an unwanted disclosure. Please contact Matt Sheahin at 847-705-7555 or msheahin@lavellelaw.com if you would like to discuss this matter further and he can advise you on how to take advantage of this often misunderstood legal protection.