Due diligence reports and AI data leakage: what a business purchase report gives away in ChatGPT or Claude.

A financial due diligence report is written by one accounting firm about two sets of people. The buyer is the client. The vendors handed over their records under a confidentiality deed, and their staff and customers appear on every page. A long report with tables of figures is exactly what people paste into ChatGPT or Claude to tighten the summary. This page marks every item in a realistic buy-side report that APES 110, the TPB Code, the Privacy Act and AUSTRAC’s new rules for accountants bear on, and shows how the same report is drafted on Ermos inside the practice.

The business sale due diligence report

Prepared for a buyer after the vendors open their records under a confidentiality deed and before the buyer commits to the price in a share sale agreement.

Financial due diligence report: draft for discussion
Northgate Partners · 30 October 2026

1. Parties and scope.

2. Earnings.

3. Customers.

4. People.

5. Tax and compliance.

6. Premises.

7. Price.

8. Our own obligations.

An invented report about an invented business. Hover or tap any highlighted item for the analysis; the full list is below.

What leaves the firm

  1. 1
    The buyers, the vendors, the target and the deed

    Four named individuals and a company, and that the vendors gave their records under a confidentiality deed. The buyers are the firm’s clients. The vendors are not, but information acquired in the course of the engagement, including from the other side, can be confidential information acquired in a professional or business relationship under APES 110, and the deed adds a contract duty. APES 110 confidentiality guide.

  2. 2
    Reported and normalised earnings

    The target’s profit and the firm’s adjusted figure. The vendors’ financial information and the buyers’ valuation basis, together. APES 110 confidentiality guide.

  3. 3
    The add-backs

    The vendors’ private expenses by type, their market-wage view and rent assumption. Personal information about two individuals, and the firm’s judgement about what is a real cost. The adjusted figure rests on this and needs a person to check it. Checking AI output guide.

  4. 4
    Customer concentration and an expiring contract

    Which customers matter, what they pay and that the largest may leave. The most commercially sensitive fact about the target, and one the vendors have not volunteered. APES 110 confidentiality guide.

  5. 5
    A named employee and what he has said

    Entitlements for the whole team and a key employee’s stated intention to leave. Personal information about an individual who is not the firm’s client, and a confidence passed on by the vendors. Privacy Act guide.

  6. 6
    Late lodgment and an ATO instalment arrangement

    The target’s compliance history with the regulator. Confidential to the vendors and decisive for the buyers. TPB Code guide.

  7. 7
    The premises and the vendors’ fund as landlord

    Lease term, option and a related-party landlord with below-market rent. Contract terms, and an assumption the buyers will negotiate against. APES 110 confidentiality guide.

  8. 8
    The presenter and the reviewer

    Ties the report to the practitioners who stand behind it, and makes any leak traceable to the practice. TPB Code guide.

  9. 9
    The price the buyers will pay

    The suggested offer, the buyers’ ceiling and the working capital peg. The most valuable sentence in the report. Told to the other side, it would move the negotiation. APES 110 confidentiality guide.

  10. 10
    The firm’s own AML/CTF position

    AUSTRAC’s table 6 includes assisting in a transaction to sell, buy or transfer a body corporate (item 2). Its guidance says the work must directly advance the transaction, gives tax advice on the implications of selling as an example that does not, and lists conducting due diligence and valuing assets and liabilities in anticipation of a sale among the preparatory steps that are regulated. The obligations began on 1 July 2026, and a business must enrol within 28 days of starting a designated service. Whether the firm’s work is one is for the firm, and the buyers’ identity records are personal information. Privacy Act guide.

What happens in Frontier Models (ChatGPT, Claude)

  • The whole document is transmitted to the provider’s servers. On personal plans the user cannot choose where it is stored or processed, and for the major providers that has generally meant outside Australia, under that country’s legal process. Some business plans offer storage in Australia, but the provider still receives the content.
  • On consumer tiers, prompts can be retained and used to train future models.
  • The provider’s staff and systems can reach the content under the provider’s own policies.
  • Once sent, the firm no longer controls it. Retention and deletion happen on the provider’s terms.

The same document on Ermos

Ermos Dominion

The document is drafted on a unit in your office, from your own templates and the client file. Every marked item stays on the unit, which keeps working with the internet switched off. Nothing in it is transmitted to an AI provider, so there is no disclosure to analyse: the confidentiality work is the same as for your file server.

Ermos Edge

Your documents, the index and your access boundaries stay on your own instance in an Australian data centre. When a staff member asks for this draft, only their question and the excerpts they are permitted to see go to a named Australian provider, who is contractually barred from keeping the content or training any model on it. Nothing is processed outside Australia.

Frontier Models (ChatGPT, Claude)Ermos EdgeErmos Dominion
Where the document is processedProvider servers, generally offshore on personal plansYour instance in an Australian data centre; answers generated in AustraliaThe unit in your office
Who can read itProvider staff and systems, under policyYour staff, within the boundaries you set. The named Australian provider processes only permitted excerpts, under contract, and keeps nothingYour staff only
Is it keptOn the provider’s termsKept on your instance; the provider is barred from retaining itStays on the unit
Can it train a modelOn consumer tiers, yesNo, by contractOnly your own unit learns from it, on your hardware

Part of AI data leakage in accounting firms. See how this works in practice: Tax and advisory work on Ermos.

Common questions

Do ChatGPT and Claude use the information in a due diligence report?
Yes, pasted or uploaded, the whole report goes to the AI company's servers and is processed there to produce a reply. As at October 2026, whether a conversation on a personal plan (ChatGPT Free, Plus or Pro; Claude Free, Pro or Max) can be used to train the models depends on a setting each user controls. Business plans (ChatGPT Business and Enterprise, Claude Team and Enterprise) and the developer APIs sit under commercial terms, and OpenAI and Anthropic each say they do not train on that content by default (OpenAI, Anthropic). On either product, the thumbs up and thumbs down buttons can send a whole conversation back for training. This report carries the buyers' limit of $2,700,000, Tomas Beranek's stated intention to leave and vendor records handed over under a confidentiality deed.
Is it safe to paste a due diligence report into ChatGPT or Claude if we remove the names?
No, because the figures and facts still point to one deal. Removing names rarely makes a document anonymous. Information stays personal information while the person is reasonably identifiable, and the OAIC warns that information can be at risk of re-identification even when it has been de-identified or anonymised. A normalised EBITDA of $735,900, a customer at 31% of revenue with no contract past March 2027 and a June 2026 BAS lodged five weeks late identify a single target. The Office of the Australian Information Commissioner (OAIC) recommends in its guidance on commercially available AI products that organisations do not enter personal information, and particularly sensitive information, into publicly available generative AI tools, because of the significant and complex privacy risks. The vendors are not the firm's clients, and their records arrived under a confidentiality deed.
Does a ChatGPT Business or Claude Team plan make it safe for a due diligence report?
Only in part. A business plan changes the default on training, but it does not change who receives the content. On a personal plan the user cannot choose where conversations are stored or processed. Some business plans let an organisation choose to store data at rest in Australia (OpenAI), which still leaves the content with the AI company. The OAIC's guidance also tells organisations to review carefully the terms and settings that will apply to their use of any AI product. The vendors handed their records over under a confidentiality deed dated 12 October 2026, so the firm should check what that deed allows before any of it reaches a third company. Our comparisons with ChatGPT Enterprise and Claude weigh the trade-offs.
How can an accounting practice use AI for a due diligence report without sending it to ChatGPT or Claude?
Ermos is built so the document stays under your control. On the Dominion AI unit it is drafted inside your office and none of it is sent to an AI provider. On Ermos Edge your documents and index stay on your own instance in an Australian data centre, and only the question and the excerpts the user is permitted to see go to a named Australian provider that is contractually barred from keeping them or training any model on them. Ermos drafts the report from the deal file and the practice's own due diligence template. A partner checks every adjustment and signs it before it goes to the buyers.
Does APES 110 cover information from the vendors?
APES 110 Subsection 114 covers confidential information acquired as a result of professional and business relationships, and R114.2 bars disclosing it without a legal or professional duty or authority. The vendors are not the firm's clients, but they handed over their records for this engagement, usually under a confidentiality deed, so the firm owes them care as well as the buyers.
Are accountants now regulated by AUSTRAC?
Only where they provide a designated service. AUSTRAC's table 6 includes assisting in the planning or execution of a transaction to sell, buy or transfer a body corporate, covering a controlling interest. Obligations began on 1 July 2026, and a business must enrol within 28 days of starting to provide a designated service. AUSTRAC gives tax advice on the implications of selling as an example that does not directly advance a transaction, and lists conducting due diligence among the preparatory steps that do.
Why is the price paragraph the riskiest part of the report?
It states what the buyers will pay and where they will stop. The firm can give that information to the buyers only, and a draft that goes through a provider's servers is outside the firm's control. For a registered tax agent or BAS agent, TPB Code item 6 requires the client's permission before information about their affairs goes to a third party, unless there is a legal duty to disclose it, and TPB(GS) 55/2026 says that can include entering client information into AI tools.

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