16: Confidentiality

Question 1

What are risks of confidentiality

Answer 1

Accidental disclosure of information e.g. overheard discussions of audit staff or seeing documents that should be hidden but are unprotected physically or through a lack of electronic controls.

Question 2

Give security procedures to prevent accidental disclosure of info

Answer 2

• Not discussing client matters with any party outside accountancy firm e.g. friends/families or with colleagues in a public place.
• Do not leave audit files unattended anywhere unsecured
• Do not remove working papers from office unless strictly necessary.
• Do not work on electronic working papers on systems that do not have the requisite protection.

Question 3

When is disclosure allowed?

Answer 3

• Consent obtained from client
• Public duty to disclose
• Legal or professional duty to disclose

Question 4

When is disclosure required by law ?

Answer 4

• Audit discovers employee fraud
• Clients involved in terrorist activity
• Regulatory breaches or suspected money laundering

Question 5

What is money laundering

Answer 5

the process by which criminal proceeds are santised to disguise their illicit origins

Question 6

What are suspicions of money laundering

Answer 6

• Credits on recievables ledger
• High number of cash transactions
• Complicated group structure with no business reason

Question 7

What criminal offences must accountants avoid in regards to money laundering

Answer 7

• Failure to report a suspicion of money laundering (will be treated as involved)
• Tipping off suspected money launderer that a report has been made

Question 8

What is the difference between a money laundering nominated officer (MLNO) and a money laundering compliance principal (MLCP)

Answer 8

MLNO responsible for receiving reports re suspected money laundering. and reporting to national crime agency.

MLCP responsible for ensuring the firms compliance with ML regulations e.g. training, doc retention, client due diligence.

Can be held by same person

Question 9

What are safeguards for conflicts of interest?

Answer 9

• Disclosure of circumstances of conflict to client
• Obtain informed consent of client to act
• Regular review of application of safeguards to ensure they’re still effective.
• Information barriers (Chinese walls):
  No overlap between different teams, physical separation.