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

CA Firm Desai & Associates audits Kaveri Textiles Ltd. During the audit, a partner, CA Anita, discovers an infringement of law by the company. The firm's staff member Ravi has also, in a family dinner, mentioned the client's pending order book to his brother. Which combination of statements is consistent with the ICAI Code of Ethics (13th edition)?

The first statement is consistent with the Code. Disclosure to appropriate public authorities of infringements of law is a recognised circumstance where disclosure may be required by law. The accountant must also be alert to inadvertent disclosure in social settings and take reasonable steps so that personnel under her control keep client information confidential.

  1. AAnita may disclose the infringement to the appropriate public authorities where the law requires it; the firm should take reasonable steps to ensure that personnel such as Ravi comply with the duty of confidentialityCorrect
  2. BAnita may never disclose anything to authorities; Ravi's remark is acceptable in a family setting
  3. CAnita may disclose the infringement to the press at her discretion; Ravi's remark is the firm's concern only if the client complains
  4. DAnita must first obtain the client's consent for any disclosure to authorities, even if the law requires it; Ravi's remark is a purely personal matter

Explanation

The Code lists disclosure required by law, including disclosure to appropriate public authorities of infringements of the law that come to light, as a circumstance where disclosure may be required. It also requires alertness to inadvertent disclosure, including in a social environment and to family members. It also requires reasonable steps to ensure that personnel under the accountant's control comply with confidentiality. The other options deny these duties or invent a consent or press route.

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