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CA Final · Financial Reporting · Professional and Ethical Duty of a Chartered Accountant

CA Anita Rao is told that a firm she audits plans to appoint her as consultant. During pre-engagement meetings, the prospective client, Vihaan Steels Ltd., shares details of its confidential expansion plans. The engagement is not finally awarded to her. At a family dinner, her brother, who works for a rival steel company, asks about the matter. Which statement is consistent with the ICAI Code of Ethics (13th edition)?

She must keep the information confidential. The Code extends the duty to information disclosed by a prospective client and requires alertness to inadvertent disclosure in social settings, especially to close family members, so neither the lack of an engagement nor the family dinner permits sharing.

  1. AShe may share the plans because Vihaan Steels is not yet her client
  2. BShe may share the plans with her brother because he is a close family member
  3. CShe must maintain confidentiality of information disclosed by a prospective client and be alert to inadvertent disclosure to family membersCorrect
  4. DShe may share the plans if she does not name Vihaan Steels

Explanation

The Code requires an accountant to maintain confidentiality of information disclosed by a prospective client and to be alert to inadvertent disclosure, including in a social environment and particularly to close family members. Hence the lack of a formal engagement and the family setting do not remove the duty. Option 2 is wrong because family closeness is specifically named as a risk, not an exemption.

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