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

CA Rhea Kapoor discovers during an audit of Zenith Pharma Ltd that the client has breached a law. She considers four courses of action regarding the information. Her firm's junior, Tarun, also knows the facts. Which course is consistent with the ICAI Code of Ethics (13th edition) on confidentiality?

The consistent course is disclosure to the appropriate public authorities where required by law, while taking reasonable steps to ensure personnel such as Tarun also keep confidentiality. The Code prohibits informal disclosure and use of confidential information for anyone's advantage.

  1. ATelling a close family member informally, as it is in a social setting and harmless
  2. BUsing the information to advise another client for gain, since the infringement is a legal matter
  3. CDisclosing to the appropriate public authorities where required by law, and taking reasonable steps to ensure Tarun also complies with confidentialityCorrect
  4. DDisclosing to any third party whenever she personally feels it is in the public interest

Explanation

The Code recognises disclosure to appropriate public authorities of infringements of the law that come to light when required by law. It also requires reasonable steps so that personnel under the accountant's control comply with confidentiality. Informal disclosure to family and use for another client's advantage are prohibited, and personal judgment alone does not permit disclosure to any third party.

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