Page 370 - CA Final PARAM Digital Book.

NOCLAR, under Code of Ethics, is applicable on professional accountants in service, and in practice. Among
those in practice, it applies to Auditors, as well as professional services other than Audit.

It is applicable to Senior Professional Accountants in service, being employees of listed entities. Senior
professional accountants in service (“senior professional accountants”) includes directors.

NOCLAR takes into account non-compliance that causes substantial harm resulting in serious consequences
in financial or non-financial terms.

As per NOCLAR, in exceptional circumstances, the professional accountant might become aware of an
imminent breach of a law or regulation that would cause substantial harm to investors, creditors, employees
or the general public. Having first considered whether it would be appropriate to discuss the matter with
management or those charged with governance of the company, the accountant shall exercise professional
judgment and determine whether to disclose the matter immediately to an appropriate authority in order to
prevent or mitigate the consequences of such imminent breach. If disclosure is made, that disclosure is
permitted.

CA Rahul, Director-Finance is expected of taking the following action/responses:
• Obtaining an Understanding of the Matter.
• Addressing the Matter.
• Determining Whether Further Action Is Needed.
• Seeking Advice.
• Determining Whether to Disclose the Matter to an Appropriate Authority.
• Imminent Breach.
• Documentation.

QNO Fundamental Principles & Threats Old Course-- (N16E, N22E)
780.000 TITANIUM CNO – PE.080
The professional accountants need to observe certain fundamental principles, which are covered in the
Code of Ethics of the Institute of Chartered Accountants of India. Briefly explain each of the five principles
which needs to be complied by the Chartered Accountants?
In order to achieve the objectives of the Accountancy profession, professional accountants have to observe
a number of prerequisites or fundamental principles. The fundamental principles as discussed in Code of
Ethics of ICAI, to be complied, are given below:

i) Integrity – A professional accountant shall comply with the principle of integrity, which requires an
accountant to be straightforward and honest in all professional and business relationships. Integrity
implies fair dealing and truthfulness.
ii) Objectivity – A professional accountant shall comply with the principle of objectivity, which requires
an accountant not to compromise professional or business judgment because of bias, conflict of
interest or undue influence of others.
iii) Professional Competence and Due Care – A professional accountant shall comply with the principle
of professional competence and due care, which requires an accountant to:

(a) Attain and maintain professional knowledge and skill at the level required to ensure that a
client or employing organization receives competent professional service, based on current
technical and professional standards and relevant legislation; and
(b) act diligently in accordance with applicable technical and professional standards.

iv) Confidentiality – A professional accountant shall comply with the principle of confidentiality, which
requires an accountant to respect the confidentiality of information acquired as a result of
professional and employment relationships.

v) Professional Behaviour – A professional accountant shall comply with the principle of professional
behaviour, which requires an accountant to comply with relevant laws and regulations and avoid any
conduct that accountant knows or should know might discredit the profession.

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