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

CA Rohan Desai is the engagement partner at a mid-sized firm. A tax authority issues a legal summons requiring him to produce specified working papers of his client, Sagar Foods Pvt. Ltd., in the course of legal proceedings. The client objects to the disclosure. Under the ICAI Code of Ethics (13th edition), how should Rohan view the position?

Disclosure is permitted. The Code recognises that a chartered accountant may be required by law to disclose confidential information, and gives production of documents or evidence in legal proceedings as an example. Client objection does not override the legal duty, and no prior consent or Institute approval is needed.

  1. ADisclosure is permitted because production of documents in legal proceedings is a circumstance where disclosure may be required by lawCorrect
  2. BDisclosure is prohibited unless the client consents in writing
  3. CDisclosure is allowed only after the engagement has been formally terminated
  4. DDisclosure is allowed only to the extent the Institute has first approved it

Explanation

The Code lists, as circumstances where disclosure may be required by law, the production of documents or other provision of evidence in the course of legal proceedings. A legal duty to disclose is an exception to the general rule, so client consent is not the only route. Option 1 wrongly makes consent the sole exception.

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