Jerry Kopel

Regarding the Denver Post editorial on state board of accountancy subpoena powers: Our statutes provide subpoena powers for every regulatory board under CRS 24-4-105 (4) and (5). The difference is between agencies under a "privilege statute" and those that are not. Accountants are privileged, architects are not.

In 1999, the Dept. of Regulatory Agencies (DORA) recommended amending the accountant-client privilege so the state board could investigate and discipline licensees while "preserving confidentiality (for clients) to the maximum extent possible." The legislature refused, but did pass a bill requiring a signed complaint UNLESS the board acts on its own motion based on reasonable grounds.

In the case cited by the Post, Zaveral Boosalis Raisch (ZBR) was accused of preparing deficient auditing statements "which investors and lenders relied upon to their detriment and the Gaming Commission relied on in issuing gaming licenses" for two casinos.

The board tried to subpoena certain ZBR files. ZBR cited the accountant-client privilege statute claiming unless the client waives that privilege, it could not produce the files because the privilege was "unqualified".

"Unqualified" means no exception under the privilege law for the accounting board subpoena. One law tops the other. The DORA review claimed "of 54 state and territorial accountancy boards, at least 30 have accountant-client privilege laws. Only Colorado and Missouri have no clear exception for the purpose of issuing a subpoena in the event of an investigation."

The Supreme Court felt frustrated. "The investigation of truth and the enforcement of testimonial duty demand the restriction, not the expansion of these privileges. They should be recognized only within the narrowest limits required by principle. Every step beyond these limits helps to provide, without any real necessity, an obstacle to the administration of justice.

"The legislature has chosen to write express exceptions to other statutory privileges in order to provide the authority it deemed necessary."

Why did the legislature ignore the DORA report and the Colorado Society of Certified Public Accountants request to let the board effectively discipline licensees?

Maybe because CRS 7-108-401 allows corporation directors and officers to rely on information and data provided by a public accountant "if they reasonably believe in such person's professional or expert competence."

From the Wall Street Journal Aug.22: "One of the most widely anticipated defense gambits expected to be used by top executives (of Enron) in the event of future criminal trials is that they relied on the professional opinions of outside attorneys and accountants..."

(Jerry Kopel served 22 years in the Colorado legislature.)

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