(a) Matters to Consider in Responding to Mabel Mama’s Request

1. Conflict of Interest:
   • Acting for both Naija Seven Limited and Nigeri Heaven could compromise the audit firm’s objectivity and independence.
   • Nigeri Heaven is a direct competitor to Naija Seven Limited, raising significant risks of conflicting loyalties.
2. Confidentiality of Client Information:
   • Providing information about Praise Caro’s remuneration to Mabel Mama breaches the confidentiality obligation owed to Naija Seven Limited.
   • Auditors must not disclose sensitive client information without proper authorization.
3. Independence of the Audit Firm:
   • Acting as an auditor and financial adviser to a competitor (Nigeri Heaven) may impair the audit firm’s perceived and actual independence.
   • Regulatory bodies may view such dual roles as unethical.
4. Professional Ethics and Code of Conduct:
   • Adherence to ICAN and IESBA ethical guidelines is essential, particularly regarding conflicts of interest, confidentiality, and independence.
   • The firm must avoid actions that could discredit the profession.
5. Client Consent:
   • The firm cannot act on behalf of Mabel Mama unless authorized by Naija Seven Limited to disclose remuneration details or provide services.
6. Reputation Risk:
   • Accepting Mabel Mama’s requests could damage the firm’s relationship with Naija Seven Limited, potentially leading to the loss of a longstanding client.
7. Legal Obligations:
   • Verify if there are legal requirements mandating disclosure of remuneration details or barring engagement with competing entities.
8. Nature of Services to Nigeri Heaven:
   • Assess whether the services requested are purely advisory or include audit responsibilities. Advisory roles may have less impact on independence compared to audit roles.
9. Safeguards to Address Conflicts:
   • If the firm considers accepting the engagement, implement measures like separate teams and confidentiality walls to manage conflicts of interest.
10. Professional Duty of Care:
    • The firm must ensure that any decision aligns with the public interest and does not compromise professional standards.

(b) Importance of Confidentiality in Auditor-Client Relationship

1. Trust and Professional Integrity:
   • Confidentiality builds trust, encouraging clients to provide auditors with complete and accurate information.
2. Legal and Ethical Compliance:
   • Maintaining confidentiality ensures compliance with ICAN and IESBA ethical standards, as well as legal obligations.
3. Avoidance of Competitive Risks:
   • Protecting client information prevents competitors from gaining undue advantages, preserving market integrity.
4. Independence and Objectivity:
   • Upholding confidentiality safeguards the auditor’s impartiality and professional independence.
5. Reputational Protection:
   • Breaching confidentiality can damage the auditor’s reputation, resulting in loss of current and potential clients.