If a client insists on a confidentiality agreement, you should consult your company`s policies and procedures and, if necessary, contact the ethical partner or ethical function. Some companies have a policy of not signing confidentiality agreements; others have a formal internal audit process. If you have an NDA that raises such questions, take the time to verify the content and discuss it with your own lawyer and risk consultant before proposing changes to the potential client. In some situations, the client may be required to disclose certain proprietary information only to discuss the extent of the services offered, and a limited NOA may be appropriate. However, in many cases, the provisions of the NDA can and should be detailed in a signed engagement letter tailored to the situation. It is important that the CPA Registry consults with its own lawyers and risk advisors before reaching an agreement on the terms of an NOA, including confidentiality rules that go beyond current professional standards. 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. If in doubt, look for a lawyer who is aware of the unique problems facing CPAs. “As is” clauses and warranty exclusions are often found in NAs, but are not compatible with elements of certain certification obligations. These provisions may prohibit an audit firm from relying on information provided by the client and are contrary to the basic requirement that the statutory auditor must collect and provide certain audit statements. When a customer proposes the use of a confidentiality agreement, it should be remembered that you are bound by the code of ethics, highlighting the restrictions in which you already work. Confidentiality rules sometimes limit the service provider`s ability to communicate with representatives other than those expressly authorized by the client. Such a provision may be to protect the confidential information available to CPA from disclosure to other members of the client`s staff, but it may also restrict the CPA`s ability to effectively implement a tax or advisory service commitment. In the case of a consulting service focused on improving business efficiency, CPA may be required to collect information from a client`s employees and answer questions about information already provided by the client`s representative.