The International Ethics Standards Board for Accountants (IESBA) recently released for public exposure new requirements that address a professional accountant’s responsibilities to disclose a client’s (or an employer’s) suspected illegal act to an appropriate authority. Notably, such disclosure would likely breach the accountant’s duty of confidentiality, one of the five fundamental principles in the international Code of Ethics for Professional Accountants (the Code).

The exposure draft (ED), Responding to a Suspected Illegal Act, proposes adding two new sections addressing illegal acts to the Code—one each for professional accountants in public practice and professional accountants in business—and several revisions to other related sections. “Breaching confidentiality is not something to be taken lightly,” said Jörgen Holmquist, chair of the IESBA, in a related release. “However, when the consequences of non-disclosure are potentially harmful to individuals or society, confidentiality must be overridden. Accountants have an important role to play in protecting the public interest and enabling authorities to take appropriate action.”

Comments on the ED are requested by Dec. 15, 2012. Notably, the AICPA FVS Executive Committee has drafted comments that point out the proposal would “directly contradict AICPA requirements,” said Eddy Parker, who indicated the draft is currently sitting with the Professional Ethics Executive Committee for further comments and a coordinated statement. For more on the IESBA proposal, see, “When Should Accountants Spill the Beans?” (CFO.com).