Ethics and confidentiality(1)

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Ethics and confidentiality(1)

  1. 1. ETHICS ANDCONFIDENTIALITYFACULTY: BATUL TOWFIQUE
  2. 2. GROUP MEMBERS:TAHIA ASAD – 0930544530FARIHA NOWSHIN HAQUE – 1020276030NAVERA KHAN – 0930691530MD. AFZAL HOSSAIN – 0930745030TAUFIQ UL ISLAM – 0920436030
  3. 3. CONFIDENTIALITY OF AUDITOR-CLIENTRELATIONSHIP
  4. 4. CLIENT CONFIDENTIALITY ANDFRAUD: DOES SARBANES-OXLEYDEAL WITH THE ISSUE?
  5. 5. PERSONAL VERSUSPROFESSIONALETHICS INCONFIDENTIALITYDECISIONS: ANEXPLORATORYSTUDY IN WESTERNEUROPE
  6. 6. CLIENTCONFIDENTIALITYAND FRAUD:DOES SARBANES-OXLEY DEALWITH THEISSUE?
  7. 7. SAS NO.99 WHOM TO REPORT THE FRAUD DUTIES AND COMPOSITION OFAN AUDIT COMMITTEE OF THEBOD DEALING WITH THE FRAUD ARGUMENTS ON SAS NO.99• AICPA RULE 301
  8. 8. “WIGMORE TEST” TO DETERMINE WHETHERCLAIMS OF PRIVILEGE APPLY TOPERSONS IN A GIVEN RELATION FOUR CRITERIA MUST BE MET ARGUMENTS
  9. 9. BENEFITS OF CONFIDENTIALITY: MORE COOPERATION LESS HIDINGS & COMPLEXITY SECURING CONFIDENTIAL INFORMATION OFBUSINESS (PROTECTING BUSINESSGOODWILL FROM WRONG SUSPECTING)SARBANES-OXLEY ACT ADDRESSES MATTERS OF AUDITORINDEPENDENCE AND OVERSIGHT CHANGES IN REPORTING RESPONSIBILITIESFOR MANAGEMENT, AUDITORS AND THEAUDIT COMMITTEE
  10. 10. LIMITATIONS:SUSPECTED FRAUD NOT AVAILABLE DIRECTLY TOANYONE OTHER THAN THE AUDIT COMMITTEE.DISCLOSURE IS INDIRECT AND PASSIVE.THE AUDIT COMMITTEE IS NOT REQUIRED TO PURSUETHE CHARGES OF FRAUD WITH ANY REGULATORY ORG.
  11. 11. SUMMARY: PEOPLE LOSING TRUST IN AUDITORS SAS NO. 99 & SARBANES-OXLEY ACT HELPING TOREGAIN TRUST BALANCE BETWEEN CLIENT CONFIDENTIALITY ANDPUBLIC TRUST IS NEEDED
  12. 12. PERSONAL VERSUSPROFESSIONALETHICS INCONFIDENTIALITYDECISIONS: ANEXPLORATORYSTUDY IN WESTERNEUROPE
  13. 13. CONFLICT:PERSONAL ETHICSOR PROFESSIONALRESPOSIBILITY???THE “GREATER CLIENTGOOD” CONFIDENTIALITYOR
  14. 14. PROFESSIONAL195 European auditpartners and managersfrom Denmark,Ireland, Italy,Spain, Sweden,the Netherlands andthe United Kingdom
  15. 15. .AUDITORS WOULD NOTSIGN A CLEAN AUDITREPORT WITHOUTCONSIDERING –•FAIRNESS•LEGAL IMPLICATIONS•CONFLICTS•COMMUNITY NEEDS•SITUATIONSFOCUS IS NOT ONLY ON“CONFIDENTIALITY”
  16. 16. THECONFIDENTIALITY OF THEAUDITOR-CLIENTRELATIONSHIP
  17. 17. AICPA CODE OF CONDUCT:• 4 COMPONENTS• RULES OF CONDUCT• RULE 301-CONFIDENTIALITY STATES “MEMBER INPUBLIC PRACTICE CANNOT DISCLOSE ANYCONFIDENTIAL INFORMATION WITHOUT THESPECIFIC CONSENT OF THE CLIENT.”
  18. 18. DEBATE OF AUDITOR-CLIENTCONFIDENTIALITY• ACCOUNTING PROFESSION VS. IRS ORJUSTICE DEPARTMENT.• ACCOUNTING PROFESSION SAYSOPEN COMMUNICATION BETWEENCLIENT AND AUDITOR SHOULDREMAIN UNIMPAIRED, FOR PUBLICINTEREST.• IRS DEPT SAYS IT IS MORALLY BINDINGFOR IT TO SCRUTINIZE ALL RELEVANTINFORMATION WHEN FRAUD IS ATISSUE, FOR PUBLIC INTEREST• PREVENTS CORPORATE CRIMINALSFROM HIDING “ BEHIND THE VEIL OFCONFIDENTIALITY”• MANIPULATION OF DATA.
  19. 19. • TESTIMONIAL PRIVILEGE IN 16 STATES• ACCOUNTING PROFESSION TWO CONCERNS-1. FREE FLOW OF INFO2. CONFIDENTIAL NATURE OF AUDITOR POSSESSEDINFORMATIONFOR CALCULATION OF INCOME TAX RETURN OFGOVERNMENT:• CLIENT INFO DISCLOSED AT AUDITORSDISCRETION• BUT ON GROUNDS OF RELEVANCE, IFGOVERNMENT ALREADY POSSESSESINFORMATION• HOWEVER, GOVERNMENTS VIEW AUDITRECORDS EXTENSIVELY RELEVANT , TO FINDINTERNAL CONTROL WEAKNESS. THIS MEANSMORE ILLEGAL ACTIVITIES OCCUR. THISIDENTIFICATION WILL GIVE ACTUAL EARNINGSCALCULATION.
  20. 20. AUDITOR-CLIENT PRIVILEGEUNCLEAR• SHOULD BE CLEARLY DEFINED,WITH EXTENT OF PRIVILEGE.• TO RESTORE OR FOSTER PUBLICCONFIDENCE, PUBLIC AUDITINFORMATION DURINGINQUIRIES SHOULD BERESTRICTED• BUT AUDIT PROCEDURESSHOULD BE SUBJECT TOSPECULATION IN ORDER TOPLACE ANOMALIES INCONCERNED FIRM’S INTERNALCONTROL.
  21. 21. • “A member in public practiceshall not disclose anyconfidential client informationwithout the specific consent ofthe client”• The auditor-client relationshiphas been debatable• Auditor client relationshipshould be clearly defined.CONFIDENTIALITYOF THE AUDITOR-CLIENTRELATIONSHIP
  22. 22. • The conflicts auditors facebetween professional andpersonal ethics.• Auditors shouldn’t sign upunless he considers a fairreport.PERSONAL VS.PROFESSIONALETHICS INCONFIDENTIALITYDECISIONS: ANEXPLORATORYSTUDY INWESTERNEUROPE
  23. 23. • Refers to themisstatements/frauds auditors’have to uncover and notify thecompany and suggest a set ofadjusting entries.• How to deal with the fraud,whom to report to, duties of anaudit committeeCLIENTCONFIDENTIALITYAND FRAUD:DOES SARBANES-OXLEY DEALWITH THEISSUE?

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