The financial information confidentiality agreement is frequently used when financial information (and related documents) are disclosed in connection with a business acquisition, merger, audit or accounting analysis. The party making the disclosure may be the buyer in a sale transaction (for example. B disclosure of the financial ability to complete the purchase) or sometimes the seller (for example.B. disclosure of the cash flows of a purchased business). Corporate managers and accountants are often familiar with confidential financial information. Accountants manage the company`s finances and managers often receive accounting reports detailing accounting statements by department, department or product line. Protecting the confidentiality of this company`s financial information is an important ethical consideration for anyone with access to this information. Therefore, you should consider that these employees sign confidentiality agreements to protect themselves from early sharing of finances against a proposed public announcement. The AICPA Code of Professional Conduct (No. 1,700.001) already states that a member cannot disclose confidential information in public practice without the client`s consent, so that an NDA with clients may be redundant or contrary to professional standards. For this reason, companies should consider backing down when they are invited to sign an NOA. While the retention of confidential information is not new to an audit firm, the typical NDA routinely poses the following three challenges: requests for confidentiality or confidentiality agreements (NDA) are becoming more and more common in the accounting profession.
CPAs receive NOA applications through exploratory interviews on future business relationships and through real service agreements for clients. For audit firms, the question is whether many NOAs contain provisions that may be contrary to professional and legal public accounting requirements. Audit firm clients increasingly need NDAs before they start getting involved. However, the typical form of NOA was not created taking into account the accounting-client relationship and can therefore lead to erroneous customer expectations and unexpected conflicts with professional standards and legal requirements. As a result, audit firms must be vigilant about auditing the NDA or service agreements that contain confidentiality clauses. While it may be acceptable to use an NOA to discuss a possible commercial relationship between the parties, the terms of such a “prospecting” NOA should cease before a final service agreement is concluded. At this stage, audit firms should pay attention to the three issues mentioned above.