Clause 1 – Part I – Second Schedule

Question 1

Mr. Shreyansh, a Chartered Accountant in practice was invited to deliver a seminar on
Amendments in Schedule Ill 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 1

Disclosure of Information to third Party: 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, without the consent of the client or
otherwise than as required by law for the time being in force.
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 during 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”.
In the instant case, Mr. Shreyansh is a Chartered Accountant in practice and he was invited to
deliver a seminar on Amendments in Schedule Ill and CARO 2020 which was attended by
professional as well as by representatives of various industries. During his session, a query was
raised on particular issue and Mr. Shreyansh used the actual data of one of his clients with full
identification of client details displayed to explain and elaborate such query. Applying the above
provision, the auditor cannot disclose the information in his possession without specific permission
of the client.
Thus, CA. Shreyansh will be liable for professional misconduct under clause 1 of
Part I of the Second Schedule to the Chartered Accountants Act, 1949.