Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

M/s D & D Associates was the auditor of M/s Paraline Company Pvt. Ltd. One of the shareholders of the company filed a case in court against the company. The court sought some information from the auditor M/s D & D Associates and one of the partners of the firm disclosed the required information to the court without informing the client. Judge whether the Auditor has complied with the code of ethics issued The Institute of Chartered Accountants of Nepal?

Answer
Code of ethics issued The Institute of Chartered Accountants of Nepal has outlined the detail of ethics that Professional accountants have an obligation to respect the confidentiality of information about a client‟s or employer‟s affairs acquired in the course of professional services. The duty of confidentiality continues even after the end of the relationship between the professional accountant and the client or employer. Confidentiality should always be observed a professional accountant unless specific authority has been given to disclose information or there is a legal or professional duty to disclose. The following are examples of the points which should be considered in determining whether confidential information may be disclosed:

a. When disclosure is authorized. When authorization to disclose is given the client or the employer the interests of all the parties including those third parties whose interests might be affected should be considered.

b. When disclosure is required law. Examples of when a professional accountant is required law to disclose confidential information are:
i. to produce documents or to give evidence in the course of legal proceedings; and
ii. to disclose to the appropriate public authorities infringements of the law which come to light.
In the light of code of ethics issued The Institute of Chartered Accountants of Nepal, the auditor who provided information about the clients business to the court without informing the client has complied the code of ethics and it is not necessary to inform the client for any information sought the court to produce documents or to give evidence in the course of legal proceedings.



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