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ABSTRACT
This exploratory research examines the existence of variations in the application of the principle of auditor confidentiality within a western European setting. A case study method was used employing a series of open ended questions to isolate participants' views on the importance of and factors influencing the practice of keeping client information confidential. The interviews yielded substantially different views on the application of the principle of confidentiality when placed in the context of a dilemma situation. Participants were partners and managers from four large international accounting firms located in eight western European countries (Denmark, France, Ireland, Italy, Spain, Sweden, the Netherlands and the United Kingdom). The findings imply that, although similar codes regarding confidentially exist, in practice there may be substantial variations in western European auditors' interpretations of the codes, resulting in potential audit opinion variations despite similar factual situations. Understanding this type of variation is critical to stakeholders in the international financial communities who rely on auditors to attest to the accuracy of the financial statements for decision making purposes.
INTRODUCTION
In order to complete a successful audit, auditors must have access to proprietary business information given to them by the client's management. The client will only be willing to provide this information with the assurance that it will not be revealed. This principle of confidentiality is guaranteed by the various national codes of conduct to which auditors ascribe. However, due to the existence of various stakeholder groups in the financial communities who rely upon the audit (e.g. current and potential investors and creditors), an auditor may be faced with situations in which responsibilities to some of these groups are in conflict, creating a challenging situation for adhering to the confidentiality principle.
The current exploratory research uses a dilemma based case study with open ended interview questions to document perceptions regarding confidentiality based auditor decisions of 69 auditor partners and managers from eight western European countries. The perceptions sought focused on their decision regarding disclosure of confidential client information and important factors that might influence such a decision.
LITERATURE REVIEW
Although confidentiality is critically important to such other professions as medicine and law, in no other profession are the lines of allegiance to the various stakeholders so multi-faceted. Medicine has the...