CA. Lalit, the engagement partner for QBL, receives a formal request from Nationalized Bank and a consortium of other banks during their due…

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 practice relating to the business of his clients to any person other than his client without the consent of his client or otherwise than as required by any law for the time being in force would amount to breach of conduct. The Code of Ethics further clarifies that such a duty continues even after completion of the assignment. The Chartered Accountant may, however, disclose the information in case it is required as a part of performance of his professional duties. The only circumstance in which this duty of confidence may give rise to a difficulty is where the accountant has reason to believe that the client has been guilty of some unlawful act or default. This matter is of special significance in the case where the client is guilty of tax evasion. Further, SA 200 on "Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing" also reiterates that, "the auditor should respect the confidentiality of information acquired in the course of his work and should not disclose any such information to a third party without specific authority or unless there is a legal or professional duty to disclose". Accordingly, an auditor is not required to provide the client or other auditors of the same enterprise or its related enterprise such as a parent or a subsidiary, access to his audit working papers. However, the auditor may, at his discretion, in cases considered appropriate by him, make portions of or extracts from his working papers available to the client. In the instant case, the nationalized bank and consortium of other banks has requested the auditor for detailed extracts from his audit working papers relating to fixed asset valuation and projected useful life. Working papers are the property of the auditor. The auditor may at his discretion, make portions of or extracts from his working papers available to his client. If disclosure is required in other cases, it would be necessary to ensure that the consent of the client is obtained by a person who is competent to accord such consent. In the absence of above, the auditor CA. Lalit will be held guilty of professional misconduct.