One of the five fundamental principles of Auditing is confidentiality. This principle states that information obtained in the course of professional work should not be disclosed to others, except where:
- consent has been obtained from the person or entity to which the information relates, or
- there is a legal or professional right or duty to disclose (as described below). In addition, information gained when acting in a professional capacity should not be disclosed in order to:
- gain a personal advantage, or
- gain an advantage for another party.
One of the reasons for this requirement for auditors is that auditors need to obtain full and open disclosure of information from a client in order to carry out their duties. If the client cannot be assured of the confidentiality of this information, he may be unwilling to provide the auditors with all the information that they need.
Obligatory disclosure
- disclose relevant information to an appropriate authority if he knows, or has reason to suspect, that a client has committed treason, terrorism, drug trafficking, or money laundering
- disclose information if forced to do so by the process of law (for example, a court)
Voluntary disclosure of confidential information is permitted in the following circumstances:
- to protect the member’s interests (for example, in making a defense against an official accusation of professional negligence)
- in the public interest (for example, making disclosures to the tax authorities of non-compliance by a client company with tax regulations)
- when authorized by local statute
- to non-governmental bodies which have the power to force such disclosure.