Page 432 - CA Final PARAM Digital Book.

of relevant SA’s. Like wherever there is breach of confidentiality you should refer SA 200 also.

QNO Second Schedule, Part I, Cl,1 - Confidentiality Old Course – (M23E)
738.500 TITANIUM CNO -- PE.1460
SR and Associates are the statutory auditor of ABC Ltd. Audit of the company is pending for F.Y 2021-22
and 2022-23 due to a dispute between auditor and company with respect to certain proposed remarks by
the auditor in the audit report for F.Y. 2021-22. The company removed the auditor on 02.05.2023 in
shareholders meeting complying with all legal formalities. SR and Associates after coming to know about
the removal, intimated the Registrar of Companies (ROC) through letter highlighting the points of dispute
including non-existence of fixed assets, bogus creditors etc. ABC Ltd complained to ICAI against SR and
Associates for their above letter to ROC. Comment with reference to the Chartered Accountants Act, 1949
and Schedules thereto.
Answer Clause (1) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 states that a chartered
accountant in practice shall be deemed to be guilty of professional misconduct, if he discloses information
acquired in the course of his professional engagement to any person other than his client so engaging him,
without the consent of his client or otherwise than as required by any law for the time being in force.

An accountant, in public practice, has access to a great deal of information of his client which is of a highly
confidential character. It is important for the work of an accountant and for maintaining the dignity and
status of the profession that he should treat such information as having been provided to him, only to
facilitate the performance of his professional duties for which his services have been engaged. The Code of
Ethics further clarifies that such a duty continues even after completion of the assignment.

In the given situation, SR & Associates complained to the Registrar of Companies (ROC) through letter
highlighting the points of dispute including non-existence of fixed assets, bogus creditors, etc. after coming
to know about the removal. SR & Associates made voluntary disclosure of the information acquired during
the professional engagement without the consent of the client and without there being any requirement in
law to disclose the same.

Second Schedule, Part I, Cl,1 --Confidentiality Old Course-- (M04E, N14E, N16R, PM17, SM17, M22M)
QNO Breached While Presenting Paper New Course—(SM23)
739.000
TITANIUM CNO – PE.1460
Mr. Parekh, a Chartered Accountant was invited by the Chamber of Commerce to present a paper in a
symposium on the issues facing Indian Leather Industry. During the course of his presentation he shared
some of the vital information of his client’s business under the impression that it will help the Nation to
compete with other countries at international level
OR
Mr. Shreyansh, a Chartered Accountant in practice was invited to deliver a seminar on Amendments in
Schedule III and CARO 2020 which was attended by professionals as well as by representatives of various
Industries. One section of audience raised a particular issue unique to the industry to which it pertains.
Mr. Shreyansh enthusiastically explained the issue and elaborated how he solved this, for his client
facing the same issue with worked out examples from the computer storage device using the actual data
of one of his clients with full identification of client details being displayed to the group for the sake
giving clarity on a topic in a real-life situation. Comment with reference to the Chartered Accountants
Act, 1949, and Schedules thereto.
Answer Part I -- Relevant Standards & Laws
▪ Clause (1) of Part I of the Second Schedule to the Chartered Accountants Act, 1949
▪ Code of Ethics
▪ SA 200 on "Overall Objectives of the Independent Auditor and the Conduct of an Audit in
Accordance with Standards on Auditing"

Part II -- Requirements of Relevant Standards & Laws
➢ Disclosure of Client’s Information:
Clause (1) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 deals with the
professional misconduct relating to the disclosure of information by a chartered accountant in
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