Justin, a member, has been in public practice for 25 years. His firm does bookkeeping and financial statements for approximately 50 business clients and prepares approximately 75 business tax returns and 200 personal tax returns. Justin's firm has never had a malpractice claim. Justin is contemplating retirement and wants to sell his accounting practice. He has hired a professional practice sales firm to help him identify potential buyers and assist in the practice sale. What is Justin's firm required to do to protect its client's confidential information in this type of situation?
A) Justin's firm must receive written permission from each of his clients before disclosing any client confidential information to a prospective buyer.
B) Justin's firm is not allowed to disclose any client confidential information to a prospective buyer and thus the potential buyer must rely exclusively on representations made by Justin's firm.
C) A review of a member's accounting practice pursuant to a potential sale is allowed if the member takes appropriate precautions (such as a written agreement) so that the prospective buyer does not disclose any client confidential information obtained during his review of the practice.
D) None of the above

Question

28-12-2021
Business

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Justin, a member, has been in public practice for 25 years. His firm does bookkeeping and financial statements for approximately 50 business clients and prepares approximately 75 business tax returns and 200 personal tax returns. Justin's firm has never had a malpractice claim. Justin is contemplating retirement and wants to sell his accounting practice. He has hired a professional practice sales firm to help him identify potential buyers and assist in the practice sale. What is Justin's firm required to do to protect its client's confidential information in this type of situation?
A) Justin's firm must receive written permission from each of his clients before disclosing any client confidential information to a prospective buyer.
B) Justin's firm is not allowed to disclose any client confidential information to a prospective buyer and thus the potential buyer must rely exclusively on representations made by Justin's firm.
C) A review of a member's accounting practice pursuant to a potential sale is allowed if the member takes appropriate precautions (such as a written agreement) so that the prospective buyer does not disclose any client confidential information obtained during his review of the practice.
D) None of the above

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michell96 michell96 · Answer 1 · 2022-01-03T13:38:00+01:00

What Justin must do to protect his clients' confidential information is to allow a review of a member's accounting practice in accordance with a potential sale if the member takes appropriate precautions (option C).

What is confidential information?

Confidential information is a type of information that includes the personal data and other personal information of a person. This type of information is of high importance so it cannot be disclosed without the express consent of its owner. Additionally, this information never loses the characteristic of being confidential so it is not conditioned or limited to a term or time.

According to the above, Justin must be very careful with the information he has in his company since he cannot sell all the information because a percentage of that information is confidential and cannot be transferred without the consent of the owner of that information.

Therefore, Justin will only allow access to non-confidential information by making the potential buyer agree not to disclose confidential information that he may find in his study.

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