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

CA Ritu, proposed auditor of Zenith Pharma Ltd., writes to the existing accountant, CA Bhat, asking about the client's affairs. Bhat has no client permission and no law requiring disclosure. Under the Code of Ethics, what is the correct conclusion?

Bhat should not disclose. An existing or predecessor accountant is bound by confidentiality, and discussing the client's affairs with a proposed accountant depends on client permission and legal or ethical requirements. Since neither exists here, being a fellow chartered accountant gives Ritu no right to the information.

  1. ABhat may share everything because Ritu is a fellow chartered accountant
  2. BBhat is bound by confidentiality; whether he can discuss depends on client permission and legal and ethical requirements, so he should not disclose hereCorrect
  3. CBhat must disclose since the proposed accountant has a right to know
  4. DBhat may disclose only the fee details

Explanation

An existing or predecessor accountant is bound by confidentiality. Discussion with a proposed accountant depends on whether permission has been obtained from the client and on legal and ethical requirements. With neither present, disclosure is not permitted. Collegiality does not override confidentiality.

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