Ownership of Accountants' Working Papers; Confidentiality of Communications to Accountants; Peer Review Not Subject to Discovery

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  1. All statements, records, schedules, working papers, computer printouts, computer tapes, and memoranda made by a certified public accountant incident to, or in the course of, professional service to clients by such certified public accountant, except reports submitted by a certified public accountant to a client, shall be and remain the property of such certified public accountant and his or her partners, fellow shareholders, or fellow members of the firm, in the absence of an express agreement between such certified public accountant and his or her client to the contrary. No such statement, record, schedule, working paper, or memorandum shall be sold, transferred, or bequeathed, without the consent of the client or his or her personal representative or assignee, to anyone other than one or more surviving partners, fellow shareholders, or fellow members of the firm of such certified public accountant.
  2. All communications between a certified public accountant or employee of such certified public accountant acting in the scope of such employment and the person for whom such certified public accountant or employee shall have made any audit or other investigation in a professional capacity and all information obtained by a certified public accountant or such an employee in his or her professional capacity concerning the business and affairs of clients shall be deemed privileged communications in all courts or in any other proceedings whatsoever; and no such certified public accountant or employee shall be permitted to testify with respect to any of such matters, except with the written consent of such person or client or such person's or client's legal representative; provided, however, that nothing in this subsection shall be construed as prohibiting a certified public accountant or such an employee from:
    1. Disclosing any data required to be disclosed by the standards of the accounting profession in rendering an opinion on the presentation of financial statements or in making disclosure where the practices or diligence of the accountant in preparing, or in expressing an opinion upon, such financial statements are contested;
    2. Disclosing any data when the practice of public accountancy by the accountant is being contested by or against the client for whom the practice of public accountancy was performed or any representative or assignee of such client;
    3. Disclosing any data to other certified public accountants or employees thereof in connection with practice reviews and ethics reviews sponsored by professional groups, the purpose of which reviews is to survey such accountant's business practices, audits, and work papers or to review ethical considerations concerning such accountant; or
    4. Disclosing any data pertaining to an application, investigation by the board, or hearing on its behalf, so long as such data shall be received by the board in camera and shall not be disclosed to the public; and provided, further, that no disclosure provided for in this paragraph shall constitute a waiver of the privilege established in this subsection.
  3. The proceedings of and data obtained through peer review or by the board pursuant to paragraph (3) of subsection (b) of this Code section shall not be subject to discovery or introduction into evidence in any civil action, except in a hearing before the board, against a certified public accountant for matters which are the subject of evaluation and review by such peer review or the board; and no individual who was in attendance at a meeting of such peer review or the board shall be permitted or required to testify in any such civil action, except in a hearing before the board, as to any evidence or the matters produced or presented during the proceedings of such peer review or the board or as to any findings, recommendations, evaluations, opinions, or actions of such peer review or the board or any members thereof; provided, however, that any information, documents, or records otherwise available from original sources shall not be construed as immune from discovery or use in any such civil action merely because they were presented during proceedings of such peer review or the board; and provided, further, that no individual who testifies before such peer review or the board or who is a member of such peer review or the board shall be prevented from testifying as to matters within his or her knowledge, provided that such witness may not be questioned regarding such witness's testimony before such peer review or the board or opinions formed by the witness as a result of such hearings of such peer review or the board.

(Code 1933, § 84-220, enacted by Ga. L. 1977, p. 1063, § 1; Code 1981, §43-3-32; Ga. L. 1988, p. 1616, § 7; Ga. L. 1993, p. 123, § 14; Ga. L. 1997, p. 1545, § 8; Code 1981, §43-3-29, as redesignated by Ga. L. 2014, p. 136, § 1-2/HB 291.)

The 2014 amendment, effective July 1, 2014, redesignated former Code Section 43-3-32 as present Code Section 43-3-29; deleted "or public accountant" following "certified public accountant" throughout this Code section; in subsection (a), substituted "his or her client" for "the client" near the end of the first sentence and substituted "his or her personal representative or assignee" for "his personal representative or his assignee" in the second sentence; in subsection (b), deleted ", public accountant," following "certified public accountant" throughout, in the introductory paragraph of subsection (b), inserted "or her" in the middle, and substituted "representative; provided, however," for "representative, provided" near the end, and substituted the present provisions of paragraph (b)(2) for the former provisions, which read: "Disclosing any data where the professional services of the accountant are being contested by or against the client for whom such services were performed or any representative or assignee of such client;"; and added subsection (c).

Cross references.

- Privileged communications generally, § 24-5-501 et seq.

Editor's notes.

- Ga. L. 2014, p. 136, § 1-2/HB 291, effective July 1, 2014, redesignated former Code Section 43-3-29 as present Code Section 43-3-22.

Law reviews.

- For annual survey of the law of evidence, see 38 Mercer L. Rev. 215 (1986). For annual survey of evidence law, see 56 Mercer L. Rev. 235 (2004). For article, "How Companies Can Keep Their Sensitive Information Away from Adversaries but Still Cooperate with Auditors," see 22 Ga. St. Bar. J. 27 (Feb. 2017). For note discussing confidential communication privileges in Georgia, see 2 Ga. St. B.J. 356 (1966).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under Ga. L. 1943, p. 363, § 4 are included in the annotations for this Code section.

O.C.G.A. § 43-3-32 creates a privilege for all confidential communications between an accountant and a client made for or in the rendition of accounting services and all other confidential information concerning the business affairs of clients and obtained by the accountant for the purposes of preparing financial reports or giving accounting advice. Nashville City Bank & Trust Co. v. Reliable Tractor, Inc., 90 F.R.D. 709 (M.D. Ga. 1981).

No privilege without accountant-client relationship.

- It is elemental that the predicate for the assertion of the accountant-client privilege is that an accountant-client relationship existed. GMAC v. Bowen Motors, Inc., 167 Ga. App. 463, 306 S.E.2d 675 (1983).

Federal courts should recognize state privileges if possible.

- Georgia General Assembly has decided that the accountant-client relationship needs the protection of an evidentiary privilege, and the court agrees that federal courts should recognize state privileges when this can be done at no substantial cost to federal policies. International Horizons, Inc. v. Committee of Unsecured Creditors, 16 Bankr. 484 (N.D. Ga. 1981), aff'd, 689 F.2d 996 (11th Cir. 1982).

Accountant's privilege inapplicable in federal question case.

- In a federal question case, a state privilege need not be honored if the state privilege is broader than those recognized at common law; thus, in a case based almost totally on federal securities laws, the United States District Court will not recognize an accountant's privilege invoked pursuant to Georgia statutory law. Osterneck v. E.T. Barwick Indus., Inc., 82 F.R.D. 81 (N.D. Ga. 1979).

Bankruptcy court is not required to apply the accountant-client privilege when the bankruptcy proceeding does not involve state claims, there is no accountant-client privilege as a matter of federal common law, and considerations of comity do not require federal courts to embrace the privilege. International Horizons, Inc. v. Committee of Unsecured Creditors, 689 F.2d 996 (11th Cir. 1982).

Accountant-client privilege not applied in federal law proceeding initiated by client.

- In a federal law proceeding initiated by an accountant's client, in which a committee for unsecured creditors is seeking discovery pursuant to federal law, the court will decline to apply the Georgia accountant-client privilege. International Horizons, Inc. v. Committee of Unsecured Creditors, 16 Bankr. 484 (N.D. Ga. 1981), aff'd, 689 F.2d 996 (11th Cir. 1982).

Liability for disclosing information to federal agent.

- Accountants are not insulated from liability under state law when the accountants voluntarily disclose information to a federal agent during the course of a federal tax investigation. Roberts v. Chaple, 187 Ga. App. 123, 369 S.E.2d 482 (1988).

Liability of accounting firm for letter sent to controller's firm.

- With regard to a controller's claims for defamation and tortious interference against an accounting/auditing firm that wrote a letter to the controller's employer that resulted in the controller's termination from employment, the trial court erred by dismissing the complaint after concluding that the alleged defamatory statements were inactionable privileged communications that had not been published since the controller sufficiently alleged malice, the communications between the accounting/auditing firm and the employer were conditionally privileged under O.C.G.A. § 51-5-7, and the controller sufficiently alleged publication of the statements. Saye v. Deloitte & Touche, LLP, 295 Ga. App. 128, 670 S.E.2d 818 (2008).

Reliance on statute unreasonable when communications occurred before enactment.

- Georgia's statutory accountant-client privilege was not enacted until 1977, which was long after some of the communications at issue in this case. Thus, any reliance by the parties on the confidentiality of their communication was not reasonable. International Horizons, Inc. v. Committee of Unsecured Creditors, 16 Bankr. 484 (N.D. Ga. 1981), aff'd, 689 F.2d 996 (11th Cir. 1982).

Privilege inapplicable to client lists.

- Requirement under O.C.G.A. § 43-3-32(a) that a client consent to the transfer of the accountant's working papers does not apply to an accounting firm's client list. Crews v. Wahl, 238 Ga. App. 892, 520 S.E.2d 727 (1999).

Privilege inapplicable to subpoenas.

- O.C.G.A. § 43-3-32 did not apply in an action by the Inspector General of the United States Department of Agriculture to enforce subpoenas seeking information on possible payment errors with respect to Agricultural Stabilization and Conservation Service Programs. Inspector Gen. of USDA v. Griffin, 972 F. Supp. 676 (M.D. Ga. 1997).

Privilege is inapplicable to communications which occurred before perpetration of fraud or crime. In re Hall County Grand Jury Proceedings, 175 Ga. App. 349, 333 S.E.2d 389, cert. vacated, 255 Ga. 241, 338 S.E.2d 864 (1985).

Privilege was not necessary when debtors' full disclosure to accountant was guaranteed by the debtors' need for the accountant's certification of their financial statements, and by the unwillingness of a firm of the accountant's stature to make such a certification unless the firm was convinced that the debtors had made full disclosure. International Horizons, Inc. v. Committee of Unsecured Creditors, 16 Bankr. 484 (N.D. Ga. 1981), aff'd, 689 F.2d 996 (11th Cir. 1982).

Unsecured creditors permitted access to accountant's work papers.

- When an accountant has not convinced the court that the court should recognize the accountant-client privilege in the absence of "compelling justification," and has failed to present such justification, the committee of unsecured creditors will be permitted access to the accountant's financial documents and work papers in its possession. International Horizons, Inc. v. Committee of Unsecured Creditors, 16 Bankr. 484 (N.D. Ga. 1981), aff'd, 689 F.2d 996 (11th Cir. 1982).

Audit reports concerning financial condition of debtor's subsidiary.

- State law determined the existence of accountant-client privilege to protect audit reports concerning financial condition of debtor's subsidiary, even though the proceeding was subject to the jurisdiction of the bankruptcy court as claims ancillary to a Title XI case. Providers Fid. Life Ins. Co. v. Tidewater Group, Inc., 65 Bankr. 179 (Bankr. N.D. Ga. 1986).

Claims of breach of contract and tortious conspiracy to defraud did not raise the issue of the defendant's financial condition so as to allow the claimant to discover audit reports to which the defendant had not waived the defendant's accountant-client privilege. Providers Fid. Life Ins. Co. v. Tidewater Group, Inc., 65 Bankr. 179 (Bankr. N.D. Ga. 1986).

Accountant upon leaving accounting firm could properly copy records, statements, working papers, and other materials "prepared" by that accountant, but copying such materials "made" by other accountants in the firm was not proper when done for that accountant's own use. Singer v. Habif, Arogeti & Wynne, P.C., 250 Ga. 376, 297 S.E.2d 473 (1982).

Waiver of accountant-client privilege.

- Since the defendant's disclosure of audit reports in another proceeding had been compelled by the court, this did not constitute a voluntary waiver of the accountant-client privilege to allow another claimant in a separate proceeding access to the reports. Providers Fid. Life Ins. Co. v. Tidewater Group, Inc., 65 Bankr. 179 (Bankr. N.D. Ga. 1986).

Testimony in regard to accountant's employment itself is admissible. Gearhart v. Etheridge, 131 Ga. App. 285, 205 S.E.2d 456, aff'd, 232 Ga. 638, 208 S.E.2d 460 (1974) (decided under Ga. L. 1943, p. 363, § 4).

Cited in Driscoll v. Shuttler, 115 F.R.D. 571 (N.D. Ga. 1987).

OPINIONS OF THE ATTORNEY GENERAL

Editor's notes.

- In light of the similarity of the statutory provisions, opinions under Ga. L. 1943, p. 363, § 4 are included in the annotations for this Code section.

Accountant may not disclose confidential communications for practice review.

- Certified public accountant may not for purpose of practice review disclose to third parties a client's communications to that accountant which are made confidential. 1973 Op. Att'y Gen. No. 73-158 (decided under Ga. L. 1943, p. 363, § 4).

RESEARCH REFERENCES

ALR.

- Right of accountant to lien upon client's books and records in former's possession, 76 A.L.R.2d 1322.

Ownership of, and literary property in, working papers and data of accountant, 90 A.L.R.2d 784.

Privileged communications between accountant and client, 33 A.L.R.4th 539.


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