The CPA Journal

Protecting Proprietary Information

By John Di Frances

Few businesses realize that U.S. export laws apply to a wide range of products and technical information. Computer software, including off-the-shelf commercial office programs, is in many cases subject to export controls, as are many other seemingly commercial items having a potential dual use.

The loss of proprietary advantage is an even larger danger. Increasing industrial espionage is forcing companies to find new ways to safeguard information from competitors. A recent U.K. report called France an intelligence threat similar to Russia—not for military secrets, but rather industrial espionage.

Businesses in many non-space, military, or high-tech industries may not realize they are at risk or that they have been victimized. Business plans, customer lists, technology, and other strategic assets are often lost or severely compromised without the company knowing it until long afterward.

To keep information from reaching the wrong hands, a company needs policies and procedures that cover the following areas:

Because policies are never enough, companies must also educate all employees and independent contractors not to disseminate technical or commercial information to anyone outside the organization, except on a need-to-know basis. This extends even to social conversation, which often reveals information such as production problems, order backlogs, customer and supplier names, quality problems, new product developments and strategies, capital expansion plans, and personnel decisions.

In addition, companies must brief management, marketing, technical, and contracts staff on applicable government technical data export regulations. This mandatory education should be standard for all new hires, and reviewed periodically in meetings, newsletters, and other means. Finally, the executive team should appoint a single contact person, with a designated alternate, who must approve the export of any documentation. This includes data released in hard copy, electronically, verbally, and during visits to or by foreign companies.

John Di Frances, managing partner of Di Frances & Associates, LLC, is the author of the forthcoming book
Radical Leadership: Leaders Creating Synergistic Innovation.

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The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.