“The FTC made an appropriate decision in delaying implementation of the Red Flags Rule and we appreciate the commission’s continuing consideration of our request for a CPA exemption,” said Barry Melancon, president and CEO of the AICPA. “We are concerned about the potentially broad application of the Red Flags Rule to the accounting profession.”

 

The AICPA has requested the FTC consider exempting CPAs and CPA firms from the scope of the rule, or at least exempt the “general account receivables” of CPAs and CPA firms. The Red Flags Rule is designed to help prevent identity theft among credit providers and financial institutions. The rule appears to require that any CPA that defers payments for services rendered, even in the normal course of regular billing, would be covered under the rule and thus required to develop and implement a written identity theft prevention program.

 

“We do not believe that there is any reasonably foreseeable risk of identity theft when CPA clients are billed for services rendered,” Melancon said. “As trusted advisors, CPAs are personally acquainted with their clients and adhere to strict privacy requirements over identifying information.”

 

The American Institute of CPAs is ready to offer its assistance to the FTC to find an appropriate balance between the laudable goals of the Red Flags Rule to deter identity theft, and the practical aspects of implementation. A copy of the AICPA’s Oct. 30 letter to the FTC requesting a delay is available online here http://www.aicpa.org/download/news/2009/AICPA-Letter-to-FTC.pdf.