The document discusses several topics related to ethics and confidentiality in auditing: 1. It examines the debate around the confidentiality of the auditor-client relationship and whether auditors should be required to disclose confidential client information. 2. It explores a study on the conflicts auditors face between adhering to personal ethics versus professional responsibilities in decisions around client confidentiality. 3. It addresses the Sarbanes-Oxley Act and how it deals with issues of client confidentiality and fraud, including reporting requirements for auditors.

1. ETHICS AND
CONFIDENTIALITY
FACULTY: BATUL TOWFIQUE

2. GROUP MEMBERS:
TAHIA ASAD – 0930544530
FARIHA NOWSHIN HAQUE – 1020276030
NAVERA KHAN – 0930691530
MD. AFZAL HOSSAIN – 0930745030
TAUFIQ UL ISLAM – 0920436030

3. CONFIDENTIALITY OF AUDITOR-CLIENT
RELATIONSHIP

4. CLIENT CONFIDENTIALITY AND
FRAUD: DOES SARBANES-OXLEY
DEAL WITH THE ISSUE?

5. PERSONAL VERSUS
PROFESSIONAL
ETHICS IN
CONFIDENTIALITY
DECISIONS: AN
EXPLORATORY
STUDY IN WESTERN
EUROPE

6. CLIENT
CONFIDENTIALITY
AND FRAUD:
DOES SARBANES-
OXLEY DEAL
WITH THE
ISSUE?

7. SAS NO.99
 WHOM TO REPORT THE FRAUD
 DUTIES AND COMPOSITION OF
AN AUDIT COMMITTEE OF THE
BOD
 DEALING WITH THE FRAUD
 ARGUMENTS ON SAS NO.99
• AICPA RULE 301

8. “WIGMORE TEST”
 TO DETERMINE WHETHER
CLAIMS OF PRIVILEGE APPLY TO
PERSONS IN A GIVEN RELATION
 FOUR CRITERIA MUST BE MET
 ARGUMENTS

9. BENEFITS OF CONFIDENTIALITY:
 MORE COOPERATION
 LESS HIDINGS & COMPLEXITY
 SECURING CONFIDENTIAL INFORMATION OF
BUSINESS (PROTECTING BUSINESS
GOODWILL FROM WRONG SUSPECTING)
SARBANES-OXLEY ACT
 ADDRESSES MATTERS OF AUDITOR
INDEPENDENCE AND OVERSIGHT
 CHANGES IN REPORTING RESPONSIBILITIES
FOR MANAGEMENT, AUDITORS AND THE
AUDIT COMMITTEE

10. LIMITATIONS:
SUSPECTED FRAUD NOT AVAILABLE DIRECTLY TO
ANYONE OTHER THAN THE AUDIT COMMITTEE.
DISCLOSURE IS INDIRECT AND PASSIVE.
THE AUDIT COMMITTEE IS NOT REQUIRED TO PURSUE
THE CHARGES OF FRAUD WITH ANY REGULATORY ORG.

11. SUMMARY:
 PEOPLE LOSING TRUST IN AUDITORS
 SAS NO. 99 & SARBANES-OXLEY ACT HELPING TO
REGAIN TRUST
 BALANCE BETWEEN CLIENT CONFIDENTIALITY AND
PUBLIC TRUST IS NEEDED

12. PERSONAL VERSUS
PROFESSIONAL
ETHICS IN
CONFIDENTIALITY
DECISIONS: AN
EXPLORATORY
STUDY IN WESTERN
EUROPE

13. CONFLICT:
PERSONAL ETHICS
OR PROFESSIONAL
RESPOSIBILITY???
THE “GREATER CLIENT
GOOD” CONFIDENTIALITY
OR

14. PROFESSIONAL
195 European audit
partners and managers
from Denmark,
Ireland, Italy,
Spain, Sweden,
the Netherlands and
the United Kingdom

15. .
AUDITORS WOULD NOT
SIGN A CLEAN AUDIT
REPORT WITHOUT
CONSIDERING –
•FAIRNESS
•LEGAL IMPLICATIONS
•CONFLICTS
•COMMUNITY NEEDS
•SITUATIONSFOCUS IS NOT ONLY ON
“CONFIDENTIALITY”

16. THE
CONFIDENTIALITY OF THE
AUDITOR-CLIENT
RELATIONSHIP

17. AICPA CODE OF CONDUCT:
• 4 COMPONENTS
• RULES OF CONDUCT
• RULE 301-CONFIDENTIALITY STATES “MEMBER IN
PUBLIC PRACTICE CANNOT DISCLOSE ANY
CONFIDENTIAL INFORMATION WITHOUT THE
SPECIFIC CONSENT OF THE CLIENT.”

18. DEBATE OF AUDITOR-CLIENT
CONFIDENTIALITY
• ACCOUNTING PROFESSION VS. IRS OR
JUSTICE DEPARTMENT.
• ACCOUNTING PROFESSION SAYS
OPEN COMMUNICATION BETWEEN
CLIENT AND AUDITOR SHOULD
REMAIN UNIMPAIRED, FOR PUBLIC
INTEREST.
• IRS DEPT SAYS IT IS MORALLY BINDING
FOR IT TO SCRUTINIZE ALL RELEVANT
INFORMATION WHEN FRAUD IS AT
ISSUE, FOR PUBLIC INTEREST
• PREVENTS CORPORATE CRIMINALS
FROM HIDING “ BEHIND THE VEIL OF
CONFIDENTIALITY”
• MANIPULATION OF DATA.

19. • TESTIMONIAL PRIVILEGE IN 16 STATES
• ACCOUNTING PROFESSION TWO CONCERNS-
1. FREE FLOW OF INFO
2. CONFIDENTIAL NATURE OF AUDITOR POSSESSED
INFORMATION
FOR CALCULATION OF INCOME TAX RETURN OF
GOVERNMENT:
• CLIENT INFO DISCLOSED AT AUDITORS
DISCRETION
• BUT ON GROUNDS OF RELEVANCE, IF
GOVERNMENT ALREADY POSSESSES
INFORMATION
• HOWEVER, GOVERNMENTS VIEW AUDIT
RECORDS EXTENSIVELY RELEVANT , TO FIND
INTERNAL CONTROL WEAKNESS. THIS MEANS
MORE ILLEGAL ACTIVITIES OCCUR. THIS
IDENTIFICATION WILL GIVE ACTUAL EARNINGS
CALCULATION.

20. AUDITOR-CLIENT PRIVILEGE
UNCLEAR
• SHOULD BE CLEARLY DEFINED,
WITH EXTENT OF PRIVILEGE.
• TO RESTORE OR FOSTER PUBLIC
CONFIDENCE, PUBLIC AUDIT
INFORMATION DURING
INQUIRIES SHOULD BE
RESTRICTED
• BUT AUDIT PROCEDURES
SHOULD BE SUBJECT TO
SPECULATION IN ORDER TO
PLACE ANOMALIES IN
CONCERNED FIRM’S INTERNAL
CONTROL.

21. • “A member in public practice
shall not disclose any
confidential client information
without the specific consent of
the client”
• The auditor-client relationship
has been debatable
• Auditor client relationship
should be clearly defined.
CONFIDENTIALITY
OF THE AUDITOR-
CLIENT
RELATIONSHIP

22. • The conflicts auditors face
between professional and
personal ethics.
• Auditors shouldn’t sign up
unless he considers a fair
report.
PERSONAL VS.
PROFESSIONAL
ETHICS IN
CONFIDENTIALITY
DECISIONS: AN
EXPLORATORY
STUDY IN
WESTERN
EUROPE

23. • Refers to the
misstatements/frauds auditors’
have to uncover and notify the
company and suggest a set of
adjusting entries.
• How to deal with the fraud,
whom to report to, duties of an
audit committee
CLIENT
CONFIDENTIALITY
AND FRAUD:
DOES SARBANES-
OXLEY DEAL
WITH THE
ISSUE?