1. Topic 12 : Confidentiality And Whistle-Blowing
2019/1/2
Topic 12 : Confidentiality And Whistle-Blowing
2019/1/2
Week 1

2. Definition Of Whistle-Blowing
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Definition Of Whistle-Blowing
Unauthorized disclosure of unethical or illegal acts
“Internal” whistle-blowing versus “external” whistle-blowing
Acquired knowledge of unlawful act lead to conflicting fiduciary duties
Fiduciary relationships >> duty of confidentiality
Whistle-blowing >> violation of such relationships
Fiduciary relationships >> loyalty to the interests of one’s counterpart
Whistle-blowing >> act of disloyalty to such interests
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3. Ethical Considerations Of A Whistle-Blower
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Ethical Considerations Of A Whistle-Blower
Loyalty as an issue to a whistle-blower?
Traditional view versus other views
A tradeoff between confidentiality to client/
employer versus obligations to fulfill the public’s
right to know
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4. Ethical Considerations Of A Whistle-Blower
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Ethical Considerations Of A Whistle-Blower
Employees (Professionals) possess a prima facie duty of loyalty to their employers (Clients)
There is a tradeoff between interests to employer/client and interests to public
Loyalty as an issue to a whistle-blower?
Traditional view versus other views
A tradeoff between confidentiality to client/
employer versus obligations to fulfill the public’s
right to know
2019/1/2
Week 1

5. Ethical Considerations Of A Whistle-Blower
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Ethical Considerations Of A Whistle-Blower
Loyalty is only appropriate in the context of mutual surrendering of self-interests
Whistle-blowers demonstrate greater loyalty to their employers than non-whistle-blowers
Loyalty as an issue to a whistle-blower?
Traditional view versus other views
A tradeoff between confidentiality to client/
employer versus obligations to fulfill the public’s
right to know
2019/1/2
Week 1

6. Ethical Considerations Of A Whistle-Blower
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Ethical Considerations Of A Whistle-Blower
Other factors
e.g. consequences of whistle-blowing
Positive and negative effects
Adequacy ofinformation
Reasonable belief or practical certainty that conduct is harmful or wrongful
Channels for consultation and advice
Professional and legal advice
Avenues for blowing a whistle
‘internal whistle-blowing’ v. ‘external whistle-blowing
Possibility of over-blowing
Are good intentions well-served by the results
Use of decision-making models….
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7. Confidentiality Requirements
Fiduciary R-ships
Obligation
to disclose
Freedom
to disclose
Confidentiality
Absolute or Not
Not Absolute
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8. Confidentiality Requirements Of Practising Members To Clients
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Confidentiality Requirements Of Practising Members To Clients
Statement 1.204B : Confidentiality as an important but not absolute requirement
Exception One : Auditor’s duty to disclose
Duty-bound by Common Law and Statue to disclosure in audit report
Exception Two: Obligation to disclose
e.g. compelled by process of law
However, legal notice be addressed to the member
NOT to produce documents unconditionally
Exception Two : Freedom to disclose
i.e. where member’s own interests require disclosure
e.g. defending against charges or clear suspicion
Resisting an action for negligence of duty
Defending against HKSA’s disciplinary proceedings
Suing for fees
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9. Confidentiality Requirements Of Non-Practising Members To Employers
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Confidentiality Requirements Of Non-Practising Members To Employers
Statement 1.290C : Confidentiality as an important but not absolute requirement
Allowing “internal” whistle-blowing but not “external” whistle-blowing
Report to management internally at an appropriate level
Report to non-executive directors
Consider making a report to a third party
Exceptions for “external” w/b :
Exception One - Obligation to disclose: compelled by law
Exception Two - Freedom to disclose: protection own interest
Defend against a criminal charge or clear of suspicion; resist proceedings for a taxation offence; resist legal actions brought by employer; defend against disciplinary proceedings; take legal actions against unfair dismissal or redundancy payment claim
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10. Confidentiality Requirements Of Non-Practising Members To Employers
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Confidentiality Requirements Of Non-Practising Members To Employers
Exception Three: Disclosure in the public interest
Matters for consideration:
The relative size of the amounts involved and the extent of the likely financial damage;
The reasons for the employer’s/client’s unwillingness to disclose the matters to the proper authority;
The gravity of the matter;
The possibility of likelihood of repetition;
Whether members of the public are likely to be affected
Any legal advice obtained
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11. Knowing More About Whistle-Blowers
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Knowing More About Whistle-Blowers
Common characteristics of whistle-blowers
e.g. strong belief in moral principles and values
Long-serving conscientious employees
47-year-old family man
Consequences for whistle-blowers
e.g. fired, increased financial burdens, lost homes, divorced, physical deterioration, emotional stress …
However, few regrets for most of the whistle-blowers
Lost income can be replaced but lost self-esteem is more difficult to retrieve
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12. Do We Need To Protect Whistle-Blowers ?
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Do We Need To Protect Whistle-Blowers ?
Arguments FOR protecting whistle-blowers
e.g. preventing retaliation
Encouraging potential whistle-blowers to speak up
Encouraging accountants to be more ethical
Protecting the public interest
Arguments AGAINST protecting them
e.g. inconsistent with the duty of confidentiality
Encouraging professionals to think twice
Discouraging self-interest pursuing behaviour
Who bears the costs of protecting them ?
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13. Ways Of Protecting Whistle-Blowers
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Ways Of Protecting Whistle-Blowers
Public education
Importance of protecting public interest
Legal protection
Against unfair dismissal resulting from whistle-blowing
Umbrella of the mass media
Judging whistle-blowing with a new perspective
Corporate measures
Corporate culture and code of conduct
2019/1/2
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