Auditing is a well-respected and rewarding career. It is a challenging profession that requires high standard of ethics, meticulousness, and professionalism. While all professionals must exhibit professionalism, some professions have more rigorous expectations than others. Auditing is one of those professions. Auditors are expected to demonstrate professional conduct during the performance of audit activities.
The auditor profession is an honorable and useful profession, as a guard for the economy and business. This challenging profession requires high ethical standards, precision and professionalism. Although all professionals must demonstrate an attitude of professionalism, certain professions have stricter expectations compared to other professions, such as the independent auditor profession.
The International Ethics Standards Board for Accountants (IESBA) develops and promotes the International Code of Ethics for Professional Accountants including International Independence Standards (“the Code”). Ikatan Akuntan Indonesia (IAI), Institut Akuntan Publik Indonesia (IAPI), and Ikatan Akuntan Manajemen Indonesia (IAMI) have collaborated to issue the Kode Etik Profesi Akuntan Publik 2021 with provisions that are in accordance with the Code published by IESBA.
The Code sets out fundamental principles of ethics for professional accountants which are integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. These principles of ethics established the standard of behavior that are expected to be adhered by auditor reflecting the profession’s recognition of its responsibility to public interest.
In order to accomplish a successful audit and for the financial report to achieve its usefulness to the stakeholder, the auditor must have access to all the client’s financial records, documents and other relevant information. From the management’s perception, the auditor should ensure to uphold high level of confidentiality in relation to the client’s information and records since any public disclosure could result to significant impact on the client’s business operations. Subsection 114 of the Code discussed about confidentiality to address this particular concern of the client.
Subsection 114 of the Code states that a professional accountant shall comply with the principle of confidentiality, which requires an accountant to respect the confidentiality of information acquired as a result of professional and business relationships. An accountant shall:
- Be alert to the possibility of inadvertent disclosure, including in a social environment, and particularly to a close business associate or an immediate or a close family member.
- Maintain confidentiality of information within the firm.
- Maintain confidentiality of information disclosed by a prospective client.
- Not disclose confidential information acquired as a result of professional and business relationships outside the firm without proper and specific authority, unless there is a legal or professional duty or right to disclose.
- Not use confidential information acquired as a result of professional and business relationships for the personal advantage of the accountant or for the advantage of a third party.
- Not use or disclose any confidential information, either acquired or received as a result of a professional or business relationship, after that relationship has ended.
- Take reasonable steps to ensure that personnel under the accountant’s control, and individuals from whom advice and assistance are obtained, respect the accountant’s duty of confidentiality.
Nevertheless, Subsection 114 of the Code provides guidance and circumstances where professional accountants are or might be required to disclose confidential information or when such disclosure might be appropriate:
- Disclosure is required by law, for example the production of documents or other provision of evidence in the course of legal proceedings, or disclosure to the appropriate public authorities of infringements of the law that come to light,
- Disclosure is permitted by law and is authorized by the client.
- There is a professional duty or right to disclose, when not prohibited by law, such as:
- To comply with the quality review of a professional body.
- To respond to an inquiry or investigation by a professional or regulatory body.
- To protect the professional interests of a professional accountant in legal proceedings.
- To comply with technical and professional standards, including ethics requirements.
Subsection 114 of the Code reminds the auditor that maintaining the confidentiality of information acquired in the course of professional and business relationships involves the professional accountant taking appropriate action to protect the confidentiality of such information in the course of its collection, use, transfer, storage or retention, dissemination and lawful destruction.
The engagement data may be compromised if the documents could be altered and deleted without the audit team’s knowledge. Consequently, audit firm must design and implement controls to prevent unauthorized modification or possible loss of engagement documentation. These measures may include:
- Utilize password among engagement team members to limit access to electronic engagement documentation to authorized user only. Process to enable the determination of when and whom engagement documentation was created, reviewed, or changed.
- Measures for restricting access to and enabling proper distribution of engagement documentation to the team members at the start, during and end of engagement.
- Appropriate back-up routines for electronic engagement documentation at all stages of the engagement.
- Confidentiality agreements signed by personnel and partners of the firm.
- Specific and dedicated training and communication.
Public trust and public interest should not be subordinated to personal gain and benefit. To broaden public confidence, auditor must adhere to the principles of ethics to demonstrate to the client that the business records and information are secured and protected.