Interested parties may ask CPA to be mandated by its lawyers for a Kovel arrangement (from the Kovel case, 296 F.2d 918 (2d Cir. 1961)). A letter from Kovel is issued by a lawyer to the legal counsel or client services and is designed to protect all communications of the CPA company and working documents under the guise of privilege between the lawyer and the client. The letter generally contains restrictions on the confidentiality, ownership and control of working documents. Kovel letters may be required in legal aid operations or ongoing tax cases, but they may also be presented in other types of undertakings. CPAs should consult their own lawyer before entering into a Kovel agreement. For more information, visit the AICPA Attorney Client Privilege and Use of Kovel Arrangements FAQs. The approach to the confidential customer information rule differs slightly: Interpretation 1,700.040 deals with customer confidentiality and the use of third parties (GST). Interpretation begins with the premise that the use of a GST may compromise compliance with the client`s confidential information rule. Since the client cannot expect the member to use a GST, the member should either enter into a contractual agreement with the GST to preserve the confidentiality of the information and ensure that the GST has appropriate procedures in place to prevent unauthorized disclosure of confidential information, or the member should obtain specific consent from the client before disclosing the client`s confidential information to the GST. For example, members must determine whether an auxiliary claimant is also a GST in accordance with the provisions of S. 7216 and what steps must be taken to comply with the standards of Interpretation 1,700.040. The old Rule 301 stated that “in public practice, a member cannot disclose the client`s confidential information without the client`s express permission,” but did not indicate the method of obtaining consent.
However, Rule 391, ethical decisions regarding client responsibilities, proposed to make written consent (see interpretation 391-2, “Disclosure of client information to third parties”).