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Audit and Assurance

In the field of audit and assurance, maintaining client confidentiality is paramount. This lecture explores the professional obligation to not disclose client information without consent, highlighting that in the UK, this duty is an implied contractual term. It discusses circumstances under which fraud must be reported to relevant authorities in the public interest. The concept of 'Chinese Walls' is introduced to ensure a physical separation of departments and information to maintain confidentiality. We also cover the requirements for a valid 'Chinese Wall' and enforcement of compliance through training and disciplinary measures.

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Audit and Assurance

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  1. Audit and Assurance Lecture 5b Confidentiality

  2. Confidentiality • There is a professional duty not to disclose information about a client (without consent) • In the UK theduty of confidentiality is an implied contractual duty • In some circumstances fraud must be reported to an appropriate proper (third party) authority in the public interest (fe police, FSA regulatory bodies, HMRC, SE)

  3. Common law (UK) - Chinese walls • A ‘Chinese Wall’ • A physical separation of departments and information within an audit firm • To prevent the use of data in non-audit contexts without a client’s permission

  4. Common law (UK) - Chinese walls • Requirements for a valid ‘Chinese Wall’ • Physical separation of departments • Training about treatment of confidentiality • Strict, defined procedures (including recording) when crossing the wall • Compliance officers monitoring effectiveness of wall • Disciplinary sanctions for breaches (Refer the Prince Jefri case -http://sunzi1.lib.hku.hk/hkjo/view/15/1501616.pdf)

  5. Further reading • House of Lords (1998) Prince Jefri Bolkiah v. K.P.M.G • http://www.publications.parliament.uk/pa/ld199899/ldjudgmt/jd981218/prince01.htm • Kelly, E. (1999) Hong Kong Lawyer • http://sunzi1.lib.hku.hk/hkjo/view/15/1501616.pdf

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