Financial Reporting · Professional and Ethical Duty of a Chartered Accountant

Confidentiality under Subsection 114 of the ICAI Code of Ethics

Updated 5 October 2026

Confidentiality is a fundamental principle of the Code of Ethics. Do not disclose information from a professional relationship, or use it for personal advantage. Disclose only where the law permits and the client or employer authorises it, where the law requires it, or where a professional duty or right applies and the law does not bar it.

Understand Confidentiality under Subsection 114

Confidentiality is one of the fundamental principles of the Code of Ethics, examined in Paper 3 (Advanced Auditing, Assurance and Professional Ethics). In your work you see client data, plans, pricing, and sometimes problems the client wants kept quiet. Clients share this because they trust you. If that trust fails, they stop sharing, and your work suffers.

The confidentiality section of the Code deals with this duty. The core idea is simple: information you get from a professional or business relationship is not yours to share or exploit. Two things are barred. One is disclosure to anyone, including to people inside your own firm who have no need to know. The other is use of the information for your own benefit or for a third party's benefit.

The duty is not absolute. The Code and its application material set out when disclosure is permitted. In general, there are three kinds of situation:

Permitted by law and authorised by the client or employer. You must consider the interests of all parties, including third parties who could be harmed.
Required by law. For example, disclosure under court process, or reporting an infringement of law as the law demands.
A professional right or duty to disclose, where the law does not prohibit it. For example, a quality review, responding to an inquiry or investigation by a professional body, protecting your professional interests in legal proceedings, or complying with technical and professional standards.

The exact wording and the full list of permitted cases are in the current ICAI Code of Ethics, so read that text once from the study material.

The duty also does not end with the engagement. It continues after the relationship ends. It applies in social settings too, for example when you talk casually with family or friends. You must also be careful about information you learn from a prospective client, even if they never hire you.

Do not confuse this with professional behaviour. Confidentiality is about what you do with information. Professional behaviour is about compliance with laws and avoiding conduct that discredits the profession. A case may test both, so keep them apart in your answer.

Key rules to remember

Core duty: No disclosure to any party, including within the firm to those without a need to know + no use for personal advantage or for a third party's advantage, unless an exception applies; State both limbs: disclosure and use. Students often write only disclosure.
When disclosure is permitted: Permitted by law and authorised by the client (with the interests of all parties considered) OR required by law OR a professional right or duty to disclose (e.g. quality review, inquiry by a professional body, protecting professional interests in legal proceedings, complying with standards); Client authority should be specific. A general or assumed consent is weak. Check the current Code text for the full list of situations.
Duration of the duty: Continues after the relationship ends; also covers prospective clients and employers; Use this when the case says the client has left or never engaged you.
Internal handling: Protect information in your care; take reasonable steps so staff and others you work with respect the duty; Applies to team members, outsourced providers and technology storage.

How to solve Confidentiality under Subsection 114 questions

Quickest way: Four-gate check

When to use it: Use for MCQs and for short written answers when time is tight.

Gate 1: Was the information acquired through a professional or business relationship? If no, the duty may not apply.
Gate 2: Was it disclosed or used for advantage? If neither, no breach.
Gate 3: Did the client or employer authorise the disclosure, and does the law permit it? If yes, disclosure may be fine.
Gate 4: Did the law require the disclosure, or was there a professional right or duty to disclose? If yes, disclosure may be fine. If all gates fail, it is a breach.

Common mistakes in Confidentiality under Subsection 114

Treating confidentiality as absolute with no exceptions.
The word sounds strict, so students stop at the default rule.
Fix: Always add the exceptions: disclosure permitted by law and authorised by the client, disclosure required by law, and a professional right or duty to disclose.
Forgetting that personal use of information is also barred.
Students focus on disclosure to outsiders.
Fix: Write both limbs: no disclosure and no use for personal or third-party advantage. Check cases for trading or business gains.
Assuming the duty ends when the engagement ends.
Students link the duty to the live client relationship.
Fix: State that the duty continues after the relationship ends and covers prospective clients.
Accepting vague or implied consent as authority.
Students read silence or a general engagement letter as permission.
Fix: Look for specific authorisation from the client. If it is missing, check whether the law requires disclosure or a professional right or duty applies.
Mixing confidentiality with professional behaviour.
Both are fundamental principles and both appear in the same cases.
Fix: Use confidentiality for handling information. Use professional behaviour for law compliance and avoiding discredit to the profession.
Concluding without a recommended action.
Students stop once they spot the breach.
Fix: End with what the accountant should do, such as seeking the client's specific authority or limiting the disclosure.

Exam tips

Case questions often hide the breach in a casual setting, such as a dinner, a social media post or a chat with family. Look for it.
Always quote both limbs of the duty: disclosure and use. Examiners reward the second limb because students miss it.
Name the exception you rely on. A bare statement like 'disclosure was allowed' loses marks.
If a case also involves compliance with law, add one line on professional behaviour as a separate principle, but do not mix the two.
No negative marking on MCQs. Eliminate options that call confidentiality absolute or that say the duty ends with the engagement.