Upon discovering fraudulent data in a client's tax return that the client would not correct, a CPA withdraws from the engagement. How should the CPA respond if asked by the successor CPA why the relationship was terminated?

Even though a client cannot force CPA to engage in illegal activities, like any other employer cannot force an employee to commit a crime, there exists a - accountant-client privilege that cannot be violated. This means that the accountant cannot disclose any information regarding past clients unless ordered by a court or authorized by the client himself/herself.

So, before discussing any previous events, the successor CPA must obtain the client's permission to discuss any events related to the previous relationship.

I would suggest that the client requests permission for us to discuss all matters on a platter.