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Responsibility for Transparency and Confidentiality
- As trusted advisors, PAs bring credibility to information through exercising professional judgment and professional skepticism, among others. Given the increased level of uncertainty that comes with applying many emerging and disruptive technologies, in addition to the complexity of today’s digital world overall,160 the Working Group believes that it is important that Pas provide or communicate clear information in a straightforward manner to users of their services or activities about the limitations inherent in such services or activities,161 and explain the implications of such limitations.162 For example, this might include limitations of the technology employed, including the uncertainties inherent in it, related risks of unintended consequences, and the broader potential for ethics risks, including threats to a PA’s compliance with the fundamental principles when employing such technology.
- Providing such transparency around the challenges that PAs face in their different roles enhances public trust. Nevertheless, the level of transparency that PAs should aim for needs to be appropriate in the context and must continue to be bound by the Code’s fundamental principle of confidentiality, which requires a PA to respect the confidentiality of information acquired as a result of professional and business relationships.
Stakeholders observed that achieving the appropriate balance between transparency and confidentiality has sensitive and complex consequences for PAs which entail professional judgment. For example, if a PA determines that disclosure of noncompliance of laws and regulations to an appropriate authority is an appropriate course of action, they should also consider whether there would be legal protection in the particular jurisdiction if the PA overrides the confidentiality terms of their employment contract – this might warrant seeking legal advice. In addition, stakeholders highlighted the importance of recognizing that maintaining confidentiality is different from “secrecy” or “silence,” which extends beyond professional confidentiality requirements. For example, stakeholders indicated that PAs need to have a clear “ethical rudder” to be aware of situations where information is deliberately controlled, withheld, or hidden to limit transparency under the premise of maintaining confidentiality.- Specific to technology, stakeholders noted that fully transparent technology, such as open-source software, can allow company leaders to have greater trust in the technology. It was suggested that source code visibility allows organizations to have a competent team analyze the code and its functionality. This would then enable the team to implement appropriate safeguards to assess that the code continues to function as intended and that the potential risks of its not doing so are identified. Such visibility is seen as being similar to having access to a human team and interviewing them about their thought processes and decisions.
- Stakeholders also observed that once there is a “trusted” logo on a technology tool or system, trust reliance is created (see discussion on - Objectivity: Over-reliance). Therefore, it was stressed that in order not to mislead stakeholders, and to uphold the fundamental principle of integrity, the “trusted” technology provider (which could be a large professional firm) should be transparent and disclose the scope of its involvement with the technology. For example, stakeholders noted that such transparency and related disclosures would be useful to understand because they have observed instances where firm logos were marketed prominently alongside certain technology company logos even though the involvement of the firm was limited to the completion of a “demo” of a very specific component within the whole technology tool.
Finally, it was noted that organizations have varying levels of disclosures around non-financial matters, risk and corporate governance, etc. Stakeholders warned that too much disclosure can have the effect of making such information less useful. Transparency is considered useful and deemed to add value where it supports relevant decisions made by users of the information. So, the goal should be to match disclosures with decision making in an effort to produce better, and not simply greater, disclosure.163 This translates into PAs striving to be transparent, motivated by a desire and intent to inform users and decision makers, while not releasing confidential information other than as permitted or required by law, regulation, or technical or professional standards.
Endnotes
160 Supra note 133
161 Paragraph R113.3 of the Code
162 See revisions arising from the Technology Project.
163 For example, the IASB’s current project on “Disclosure Initiative—Targeted Standards-level Review of Disclosures.” IFRS, https://www.ifrs.org/projects/work-plan/standards-level-review-of-disclosures/.