Auditing practitioner and client privilege in Malta : an analysis

Abstract

Purpose: The objective of this research is to identify if Auditing Practitioner and Client Privilege (APCP) exists here in Malta. The study will clarify to what extent of confidential communication and information is protected. Most of the clients think that the information being disclosed to AP will be kept in confidence. Design: The objective is to understand what lawyers, CPAs and financial officers in listed companies understand by the term APCP. This was done by analyzing the current Maltese and European Union Legislations and International Auditing Standards as well as gathering opinions to see if APCP should be implemented in Malta. Opinions were gathered through interviewing CPAs and lawyers and by sending questionnaires to listed companies. Findings: The majority of the participants were able to define the term APCP and brought out its key points being that the privilege should be waived in case of criminal activity and when confidential information is disclosed by the client himself to third parties. Furthermore, they identified that the privilege is in the hands of AP and that it covers both communication and information. In order to apply, APCP current legislation has to improve communication protection. When AP is defending oneself in court, the AP is allowed to disclose confidential information without client’s consent if such information relates to criminal activity. The privilege should exist in non-audit services and tax advice. Conclusions: The study shows that under the current Maltese Legislation APs should not have the same privilege as lawyers. There is no interest from local practitioners to implement such privilege here in Malta. Research respondents suggested to continue using the current methods of confidentiality. Values: Having this privilege implemented in Malta might increase client’s trust in the AP leading to increased disclosure of information which could help the AP to give the best advice to their client.