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

CA Nair is proposed as the new auditor of Orion Foods Ltd. He wants to learn about the client from the predecessor accountant, CA Bhatt. CA Bhatt remains bound by confidentiality. Which conclusion is most consistent with the Code of Ethics?

CA Bhatt remains bound by confidentiality, so whether he may discuss the client's affairs depends on the nature of the engagement, whether the client has given permission, and the legal and ethics requirements on communication and disclosure. Collegial status or fee details do not by themselves permit disclosure.

  1. ACA Bhatt may freely discuss all client affairs because a proposed accountant is a professional colleague
  2. BCA Bhatt may discuss only if he has the client's permission and subject to legal and ethics requirements on such communication and disclosureCorrect
  3. CCA Bhatt is never permitted to discuss anything under any circumstances
  4. DCA Bhatt may discuss if the proposed fee is disclosed to him

Explanation

Whether the existing or predecessor accountant 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 on such communication. The free-discussion option ignores confidentiality, and the never-permitted option ignores that permission or legal requirement can allow it.

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