Question

In what circumstances can an auditor disclose confidential information about a client without the client's permission?

Answer 1

Normally, Auditors cannot disclose any confidential information without the specificconsent of the client.Although, when fraudulent acts are suspected by auditors this consent isdismissed.If auditors know that members of the company are trying to do fraudulent schemesuch as insider trading to gain money at the loss of the other stakeholders.Auditors for thecompany have the responsibility to protect the interests of the stakeholders. So auditors need to pass the information to a third party.If the management doesn’t do anything to prevent thefraudulent scheme after auditors have brought it to their attention, then auditors should inform athird party to control the activities.

Other instances when confidential company information should be share, are when auditors are using a third party service provider offering professional services or administrativeservice support to the firm or its clients.In this case, there should be a contract coveringconfidentiality with the third party before any information is released.If the information is beingused in a legal proceeding or when confidential client information is requested by a successor accountant or auditors about previous tax return irregularities.Then the information should be shared as well.

Unless the client agrees in writing, or compelled by law, do not disclose any informationabout the client or business to anyone.