Conflicts of Interest in Accounting Practice

Conflicts of interest may arise during the course of conducting an accounting practice. In the event that a conflict does arise there is a potential for a professional indemnity claim as well a possible breach of a code of ethics.

How to Avoid Conflicts

The Accounting Professional and Ethical Standards Board (APESB) Code of Ethics for Professional Accountants includes the following points:


A Member in Public Practice shall take reasonable steps to identify circumstances that could pose a conflict of interest. Conflicts can arise where the Member performs services for clients whose interests are in conflict or the clients are in dispute with each other in relation to the matter or transaction in question.


Depending upon the circumstances giving rise to the conflict, application of one of the following safeguards is generally necessary:

Notifying the client of the Firm’s business interests or activities that may represent a conflict of interest and obtaining their consent to act in such circumstances; or

Notifying all relevant parties that the Member in Public Practice is acting for two or more parties in respect of a matter where their respective interests are in conflict and obtaining their consent to so act.


Where a conflict of interest creates a threat to one or more of the fundamental principles, including objectivity, confidentiality, or professional behaviour, that cannot be eliminated or reduced to an acceptable level through the application of safeguards, the Member in Public Practice shall not accept a specific engagement or shall resign from one or more conflicting engagements.


Where a Member in Public Practice has requested consent from a client to act for another party (which may or may not be an existing client) in respect of a matter where the respective interests are in conflict and that consent has been refused by the client, the Member shall not continue to act for one of the parties in the matter giving rise to the conflict of interest.

Examples of Conflicts

Some examples of conflicts of interest that the Claims Committee has become aware of:

An accountant receiving an introductory commission from one client to arrange loan finance from that client to another of the accountant’s clients.

Where a client partnership is dissolved, particularly if the dissolution is not harmonious, the accountant must decide which party he can act for, or whether he should withdraw from the case altogether. Once the decision has been made, all parties involved must be advised accordingly.