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

CA Rohit Mehra, a partner in a Pune firm, finishes a statutory audit engagement for Sahyadri Foods Ltd. and the engagement ends. Eight months later, a new client in the same industry asks him about Sahyadri's pricing arrangements with its distributors, which he learnt during the audit. A trade journal has already published part of this information. Under the ICAI Code of Ethics (13th edition), what is the correct position?

Rohit must not use or disclose the information. Under the Code of Ethics, the confidentiality duty continues after the engagement ends, and it still applies when the information has become public, whether properly or improperly. Neither the end of the audit nor the trade journal report releases him from it.

  1. AHe may disclose it, because the engagement has ended and the duty of confidentiality lapses with it
  2. BHe may disclose it, because part of the information has already become publicly available
  3. CHe must not use or disclose it, because the duty continues after the relationship ends and applies even if the information has become publicCorrect
  4. DHe may disclose it if he charges the new client a higher fee for the advice

Explanation

The Code bars use or disclosure of confidential information after the professional relationship has ended. It also bars use or disclosure of information subject to the duty even when it has become publicly available, whether properly or improperly. The first two options therefore contradict the Code. A fee has no bearing on the duty.

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