Describe the auditor's responsibility with regard to auditor independence, conflicts of interest and confidentiality

Auditor independence

The auditor shall communicate the following for listed entities:

· A statement that the engagement team and others in the firm, the firm, and network firms have complied with relevant ethical requirements regarding independence

· All relationships between the firm and entity that may reasonably be thought to bear on independence

· Related safeguards that have been applied to eliminate identified threats to independence or reduce them to an acceptable level

Conflicts of interest

In some ways conflict of interest issues are similar to the difficulties firms have in maintaining independence. They can arise in a variety of circumstances and each problem has to be dealt with on its own merits.

A professional accountant must take reasonable steps to identify circumstances that could pose a conflict of interest because such circumstances may create threats to compliance with the fundamental principles.

When considering whether to accept a client or when there is a change in a client's circumstances, audit firms must take reasonable steps to ascertain whether there is a conflict of interest or if there is likely to be one in the future.

Confidentiality requires members to refrain from disclosing information acquired in the course of

professional work except where:

(a) Disclosure is permitted by law and is authorised by the client or the employer;

(b) Disclosure is required by law, for example:

Production of documents or other provision of evidence in the course of legal proceedings; or

(ii) Disclosure to the appropriate public authorities of infringements of the law that come to light;

and

(c) There is a professional duty or right to disclose, when not prohibited by law:

(i) To comply with the quality review of ACCA or another professional body;

(ii) To respond to an inquiry or investigation by ACCA or a regulatory body;

(iii) To protect the professional interests of a professional accountant in legal proceedings; or

(iv) To comply with technical standards and ethics requirements.

There are a number of factors to consider when deciding whether to disclose confidential information and the following factors are identified in the ACCA Code:

· Whether the interests of all parties, (including affected third parties) could be harmed if the client or employer consents to the disclosure of information by the professional accountant

· Whether all the relevant information is known and substantiated, to the extent it is practicable

· The type of communication that is expected and to whom it is addressed

· Whether the parties to whom the communication is addressed are appropriate recipients.

A member acquiring information in the course of professional work should neither use nor appear to use that information for his personal advantage or for the advantage of a third party.

In general, where there is a right (as opposed to a duty) to disclose information, a member should only make disclosure in pursuit of a public duty or professional obligation.

A member must make clear to a client that he may only act for him if the client agrees to disclose in full to the member all information relevant to the engagement.

Where a member agrees to serve a client in a professional capacity both the member and the client should be aware that it is an implied term of that agreement that the member will not disclose the client's affairs to any other person except with the client's consent or within the terms of certain recognized exceptions, which fall under obligatory and voluntary disclosures.