In a victory for the accounting profession, President Obama signed into law a measure exempting CPAs engaged in public accounting from the Federal Trade Commission's Red Flags Rule. Designed to mitigate identity theft, the Red Flags Rule applies to "financial institutions" and "creditors." As originally interpreted, public accounting firms would have been deemed creditors – and therefore subject to the legislation – if the exemption had not been granted.

Though accounting firms are now exempt from direct compliance with the Red Flags Rule, CPAs in public practice should still become familiar with these rules and how their client's operations might need to be revised in order to facilitate compliance. Further, CPAs working in any business which might be considered a "financial institution" or "creditor" under the Red Flags Rule should act immediately to ensure that their organization is complying with these requirements. For more information, visit http://www.ftc.gov/redflagsrule.