jl0329
Regular
Joined: 15 Feb 2011
Location: United States
Online Status: Offline
Posts: 186
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| Posted: 17 Sep 2012 at 19:31 | IP Logged
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It's related to disclosing confidential information to
3rd party services provider.
ET Section 191 and ET section 391 gives 2 different
answers to such situation.
1 says you have to tell the clients you are disclosing
their info to the 3rd party.
The other says you don't have to if you can make sure the
3rd party can keep that confidential info safe.
So which one is correct???
I've pasted both ruling below.
Ruling 112 states that:
Yes. The concept of integrity set forth in Rule 102,
Integrity and Objectivity [ET section 102.01] and Article
III, Integrity [ET section 54] requires a member to be
honest and candid. Clients might not have an expectation
that a member would use a third-party service provider to
assist the member in providing the professional services.
Accordingly, before disclosing confidential client
information to a third-party service provider, a member
should inform the client, preferably in writing, that the
member may use a third-party service provider. This
disclosure does not relieve the member from his or her
obligations under ethics ruling No. 1 [ET section
391.001–.002] under Rule 301, Confidential Client
Information [ET section 301.01]. If the client objects to
the member’s use of a third-party service provider, the
member should provide the professional services without
using the third-party service provider or the member
should decline the engagement.
A member is not required to inform the client when he or
she uses a third-party service provider to provide
administrative support services (for example, record
storage, software application hosting, or authorized e-
file tax transmittal services) to the member.
Ruling 1 under 301 states:
No. Rule 301 [ET section 301.01] is not intended to
prohibit a member in public practice from disclosing
confidential client information to a third-party service
provider used by the member for purposes of providing
professional services to clients or for administrative
support purposes. However, before using such a service
provider, the member should enter into a contractual
agreement with the third-party service provider to
maintain the confidentiality of the information and be
reasonably assured that the third-party service provider
has appropriate procedures in place to prevent the
unauthorized release of confidential information to
others. The nature and extent of procedures necessary to
obtain reasonable assurance depends on the facts and
circumstances, including the extent of publicly available
information on the third-party service provider’s
controls and procedures to safeguard confidential client
information.
In the event the member does not enter into a
confidentiality agreement with a third-party service
provider, specific client consent should be obtained
before the member discloses confidential client
information to the third-party service provider.
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