Request By:
Mr. James T. Ahler
Executive Director
State Board of Accountancy
332 W. Broadway, Suite 310
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Cicely D. Jaracz, Assistant Attorney General
You have requested an opinion of the Attorney General as to whether proposed quarterly reports of actions of a disciplinary nature furnished to the State Board of Accountancy by a non-profit professional association would be exempt from public inspection under the Open Records law.
More specifically, the Kentucky Society of CPAs, a non-profit professional association of Certified Public Accountants, has agreed to file with the State Board of Accountancy a quarterly report constituting a Quality Review Program. The purpose of this program is to review and ascertain the quality of audit reports issued by Board licensees and to take educational action to upgrade the practitioners found to be performing substandard work. The quarterly report would contain the number of audit reports reviewed, the number of suspected deficient reports found, the number of work papers requested and reviewed, the number of reports determined to be substandard and the extent of deficiencies, and the number of educational remedies recommended to resolve each case. The Kentucky Society of CPAs is reluctant, however, to release in these quarterly reports the names of practitioners and/or firms found by the Society to be issuing substandard reports for fear that these reports would be open to public inspection once they are received by the Board. The Board is of the opinion that this reluctance will undermine the success of this cost-effective and cost-beneficial program. Therefore, the Board is requesting this opinion to determine if these reports are open to public inspection under the Open Records law.
OPINION OF THE ATTORNEY GENERAL
It is the opinion of the Attorney General that quarterly reports issued by the Ethics Committee of the Kentucky Society of CPAs are exempt from public inspection under the Open Records law.
Although the Kentucky Society of CPAs is not a public agency, the State Board of Accountancy is a public agency pursuant to KRS 61.870(1) and any papers prepared, used, or in the possession of or retained by a public agency are public records pursuant to KRS 61.870(2). Thus, the quarterly reports of the Kentucky Society of CPAs would be open to public inspection in the possession of the State Board of Accountancy, unless exempted under Open Records law.
First, the names of practitioners and/or firms found to be substandard by the Kentucky Society of CPAs' Ethics Committee are not open to public inspection pursuant to KRS 61.878(1)(a) which exempts:
Public records containing information of a personal nature where the public disclosure thereof would constitute a clearly unwarranted invasion of personal privacy.
This protection against an unwarranted invasion of personal privacy extends not only to the individual practitioners and firms, but also to the Ethics Committee. The public's need to know in this instance is not outweighed by the individual's right to privacy since the reports of substandard work are only preliminary, no formal complaint having yet been filed.
A second applicable exemption is KRS 61.878(1)(g) which exempts:
Preliminary drafts, notes, correspondence with private individuals, other than correspondence which is intended to give notice of final action of a public agency.
The quarterly reports are prepared through correspondence with individual practitioners and firms. They contain information preliminary to any final action possibly taken by the State Board. See OAG 77-55, 82-263. KRS 61.878(1)(g) thus exempts them from public inspection.
A third applicable exemption is KRS 61.878(1)(h) which exempts:
Preliminary recommendations, and preliminary memoranda in which opinions are expressed or policies formulated or recommended.
The quarterly reports contain the opinions of the Kentucky Society of CPAs' Ethics Committee on suspected deficient audit reports. The reports also contain the committee's recommended remedies to resolve each case. Thus they are exempt under KRS 61.878(1)(h).
Therefore, it is the opinion of this office that the quarterly reports of the Kentucky Society of CPAs' Ethics Committee, made to the State Board of Accountancy for their Quality Review Program, are exempt from public inspection under the Open Records law.