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SIR,
i have a doubt regarding confidentiality in the given problem
for client screening before accepting engagement, the prospective client is required to communicate to the existing auditor for professional clearance
now if the firm has committed, for example, money laundering, then can the existing auditor inform this to the prospective or the confidentiality comes into play and the existing auditor can only provide this information to appropriate public authority?
and same with any breaches of law and regulation, can the existing auditor give this information to prospective auditor or confidentiality is required?PA = prospective auditor
EA = existing auditor
AC = audit client/prospective audit clientWhen AC invites PA to accept nomination, PA asks AC for permission to communication with EA.
If AC refuses, PA must decline nomination.
If AC gives permission, PA writes to EA asking if there are any professional reasons why the nomination should not be accepted.
EA asks AC for permission to communicate with PA. If AC refuses, EA responds to PA that they do not have permission to respond to the enquiry. PA should decline nomination.
If AC gives EA permission to communication, EA must respond with information/facts relevant to PA deciding whether to accept the nomination.There is no risk of breach of confidentiality if the above procedure, which is required by the Code of Ethical Conduct is adhered to.
But then it seems obvious that if client has indulged in money laundering, why would he give exisiting aiditor permission
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