Confidentiality Agreement in Accounting

Client requests for confidentiality agreements or non-disclosure agreements (NDAs) are becoming common in accounting. CPAs receive requests for confidentiality agreements both as part of exploratory discussions on future business relationships and in the context of actual service agreements for clients. The problem for accounting firms is that many NDAs contain standard provisions that may conflict with professional standards and public accountancy laws. The document will clarify that exclusions from the agreement include information that reads as follows: Before issuing a confidentiality agreement, you must investigate your recipient`s intended practices to keep their own information private. If these practices do not exist or are bad, your confidentiality agreement should include specific clauses to restrict access to sensitive data. While the information contained in a confidentiality agreement is always unique, these documents fall into two key categories. Information known to the recipient before the agreement is signed. In many situations, such requests are not justified or necessary because CPAs are subject to the Confidential Client Information Rule (ET § 1 700.001) of the AICPA Code of Business Conduct and the confidentiality requirements of the Internal Revenue Code § 7216, which respect a client`s tax return information. Start by explaining to the client that the client`s confidential information rule and relevant ethical interpretations already require the CPA firm to protect the confidentiality of all client information.

Therefore, a separate agreement or letter of commitment should not be required. However, this cannot satisfy all customers. Before thinking about how to respond to the situation, it is important to understand the issues that may arise in the requested confidentiality agreements and the provisions of the letter of commitment. Employers can also avoid confidentiality agreements after employees have worked in their roles for a period of time. These employees may feel that their employer is changing the rules of their employment, which could lead to low morale and high staff turnover. For this reason, many employers encourage new employees to sign confidentiality agreements shortly after hiring. "Non-use" clause to ensure that the recipient does not use the information for purposes not defined in the agreement. CPA firms are increasingly confronted with NDAs and other client confidentiality requirements that go beyond the scope of the Confidential Client Information Rule, Section 7216, and other applicable laws and regulations. It is important to carefully consider these requests and determine whether they are appropriate in the circumstances. Consult the resources available from the AICPA and your professional liability insurer on this matter and ask your lawyer to review the requirements of NDAs, mandate letters or other contracts that extend or may conflict with professional standards, laws or regulations. Confidentiality agreements can also deter individuals or companies from profiting from your information because they know they will face legal consequences – including fines and a court order to stop cases arising from that information if they do. The reputation of the company that disclosed the sensitive information can also suffer in the short and long term.

Confidentiality agreements submitted by customers may also include definitions that broaden the scope of confidentiality obligations. While CPAs are required to keep client information confidential, this obligation does not extend to confidential third-party information that is not subject to the agreement. If the agreement requires the CPA to keep this information confidential, discuss it with the client and consult with your own lawyer about the provision. Integration (this Agreement supersedes the others and may only be amended in writing) The "Affected Periods" and "Miscellaneous" sections use plain language to cover the term of the Agreement and any other matters deemed important. These questions may include details, such as. B which state law applies to the agreement and which party will pay attorneys` fees in the event of a dispute.. .

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