Reviewing a book by someone you know

Is it professionally ethical to review a book when you know the author?

Yes, provided the relationship is disclosed and the reviewer remains candid, fair, and willing to make the same criticism face to face.

A reviewer can assess a book by someone they know if the relationship is stated openly so readers can judge the connection. Acquaintance is no reason to hide errors or soften substantive criticism. A useful practical rule is never to publish something about an author's work that you would not be willing to say directly to that person.