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

CA Arjun Rao is approached by Kesari Foods Pvt Ltd to take on audit work. During discussions the company's CFO shares confidential details of a planned acquisition. Arjun later declines the engagement. Under the ICAI Code of Ethics (13th edition), which statement is correct?

Arjun must keep the information confidential. The Code expressly requires a chartered accountant to maintain confidentiality of information disclosed by a prospective client, so declining the engagement or the absence of a signed letter does not release him from the duty.

  1. AArjun must maintain confidentiality of information disclosed by the prospective clientCorrect
  2. BArjun may use the information for another client since no engagement was accepted
  3. CConfidentiality applies only after an engagement letter is signed
  4. DArjun may share it with a close family member if it is not misused

Explanation

The Code requires a chartered accountant to maintain confidentiality of information disclosed by a prospective client. The duty does not depend on a signed engagement. Sharing with a close family member is a risk of inadvertent disclosure that the accountant must guard against.

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