Conflict of Interest

The potential threats which may lead to conflicts of interest and lack of independence were discussed in detail in the audit and compliance chapter. 

These are:

– Self-interest

– Self-review

– Advocacy

– Familiarity

– Intimidation.

A threat to independence is any matter, real or perceived, that implies the accountant is not providing an independent view or report in a specific situation. 

– An accountant needs to be independent so others can place reliance on his/her work.

– Lack of independence implies bias, meaning less reliance would be placed.

Safeguards: 

Safeguards seek to reduce or eliminate threats. They fall into three categories created by the: 

Profession: 

These include: 

– Education and training including CPD requirements 

– Setting of corporate governance regulations and professional standards 

– Monitoring of professional work including disciplinary proceedings. 

 Work environment: 

These include: 

– Internal control systems 

– Review procedures 

– Disciplinary procedures 

– Organisational codes of ethics 

– Separate review and reporting for key engagements. 

Individual: 

These include: 

– Complying with professional standards 

– Maintaining records of contentious issues 

– Mentoring 

– Contacting professional bodies with queries.