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CA Final · Advanced Auditing, Assurance and Professional Ethics · Professional Ethics & Liabilities of Auditors

CA Desai, a proposed auditor of Bhima Motors Ltd, wants to speak to the predecessor accountant, CA Patil, about the client's affairs. Under the Code of Ethics, whether Patil may discuss the client's affairs depends on:

Patil's ability to discuss the client's affairs depends on whether he has the client's permission and on the legal and ethics requirements for such communication and disclosure. As a predecessor accountant he is bound by confidentiality, so he cannot disclose freely merely because a proposed accountant asks.

  1. AOnly whether Desai is a member of the same firm network
  2. BWhether Patil has the client's permission and the legal and ethics requirements on such communication and disclosureCorrect
  3. CWhether Desai pays a fee to Patil for the information
  4. DNothing, because predecessor accountants must disclose everything to the proposed accountant

Explanation

The Code says an existing or predecessor accountant is bound by confidentiality. Whether he may or must discuss the client's affairs depends on the nature of the engagement, whether he has the client's permission, and the legal and ethics requirements relating to such communication and disclosure. Automatic disclosure ignores confidentiality.

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