May 2012 | accounting today 9
the whistleblower can also obtain
a monetary award for that action
CPAs may fear that reporting will
violate client confidentiality rules
and put their state-issued license
at risk. The AICPA Code of Professional Conduct, as well as most
state codes, prohibit the disclosure
of any confidential client information without the client’s specific
consent. However, these codes
generally do not “prohibit a member’s compliance with applicable
laws and government regulations.”
Therefore, an accountant who reports possible securities violations
consistent with Dodd-Frank and
the program’s rules would be acting in compliance with applicable
laws and regulations.
Even if this were not true, Dodd-Frank and the SEC’s implementing
rules would almost certainly protect accountant whistleblowers.
Pursuant to the Supremacy Clause,
federal laws, including regulations
enacted by a federal agency, preempt conflicting state law if their
enactment was a valid act of Congress or exercise of congressionally
delegated authority, and the pre-emption of state law was intended
— as is the case here.
Accordingly, under these circumstances, an accountant may
disclose confidential information
to the SEC without fear of an adverse state disciplinary action.
Before reporting possible violations to the SEC, you should consult
independent counsel regarding the
risks and requirements.
If you fear retaliation by an em-
ployer or client, consider report-
ing possible securities violations
anonymously to the SEC with the
assistance of counsel.
Dodd-Frank empowers accoun-
tants to make ethical choices about
reporting possible securities viola-
tions. But before whistleblowing,
accountants should consider the
In most cases, you should re-
port possible securities violations
to your employer or client in accor-
dance with relevant rules and regu-
lations. However, your duties to the
public should not be sacrificed in
order to comply with non-binding
professional conduct standards.
Although the rules for the whistleblower program only require a
whistleblower to have a reasonable
belief that a possible securities violation has occurred, is ongoing, or is
about to occur, you should attempt
to confirm the existence of a violation before reporting to the SEC.