AA syllabus

Disclosure of Client Information (ACCA AA Exam Focus)

General Rule of Confidentiality

Auditors must not disclose client information unless:

• Legal/professional duty requires it (e.g., statutory reporting).
• Client authorises disclosure (e.g., for third-party due diligence).

Key Principle: All unpublished client information (e.g., financial data, internal controls) is confidential.

Exceptions Permitting Disclosure

1. Obligatory Disclosure (Legal Requirements)

Auditors must disclose when:

• Law/regulation compels it (e.g., court orders, anti-money laundering laws).
• Non-compliance with laws is identified (e.g., fraud, tax evasion).

Examples:

• Reporting suspected money laundering to authorities.
• Responding to statutory requests from tax authorities.

2. Voluntary Disclosure (Professional/Public Interest)

Auditors may disclose without client consent if:

• Public interest is at risk (e.g., health/safety hazards, systemic fraud).
• Protecting the auditor’s interests (e.g., defending against legal claims).

Limitations:

• Requires legal advice to avoid liability.
• Document rationale for public interest disclosures.

Key Exam Scenarios

Safeguards & Documentation

• Client consent: Obtain written approval before sharing data.
• Documentation: Record decisions, legal advice, and disclosures.
• Secure handling: Restrict access to confidential data.

Common Exam Pitfalls

• Confusing public interest with minor issues (e.g., wage underpayment ≠ public harm).
• Assuming disclosure to non-governmental bodies (e.g., industry regulators) is always allowed.

Key Takeaways for Exams

1. Prioritise legal duties: Statutory requirements override confidentiality.
2. Apply public interest test: Only severe risks (e.g., terrorism, systemic fraud) justify voluntary disclosure.
3. Document everything: Rationale for disclosures must be clear and defensible.