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AICPA offers guidance on 'Red Flag' privacy rule

NEW YORK, Oct. 17, 2009 -- The AICPA has compiled a number of resources that can help CPAs better understand the Federal Trade Commission's "Red Flag Rule" and create an effective identify theft protection program.

• Access the AICPA's "Red Flag" resources here.
• Read more about the rule on the FTC Web site.

"The Red Flags Rule, which was released Nov. 9, 2007 under the Fair and Accurate Credit Transactions Act of 2003, requires businesses and organizations within its scope to implement a written identity theft prevention program to detect warning signs of identity theft in their day-to-day operations," the Journal of Accountancy explains in this article. "Enforcement of the rule has been postponed three times since the original Nov. 1, 2008, effective date.

"The rule applies to what it calls 'financial institutions' and 'creditors,'" the JofA article continues. "However, according to the FTC Web site, the definition of 'creditor' in the rule is broad, and includes businesses or organizations that regularly provide goods or services first and allow customers to pay later. As examples, the FTC says utilities, health care providers, lawyers, accountants, and other professionals, and telecommunications companies may fall within the definition."

The AICPA is trying to ensure that CPAs are exempt from the rule. In the meantime, the implementation date for the rule has been extended to June 1, 2010.