Two weeks ago, we discussed the issue of conflict of interest. We stated that a conflict of interest occurs in a situation where a public official’s decisions are influenced by his or her personal interest. It has the potential to undermine the impartiality and objectivity of the official because of the possibility of a clash between the official’s self-interest and his or her professional or public interest. A conflict of interest exists whether or not that influence actually takes place, once there is a reasonable belief that there is a risk that decisions may be unduly influenced by secondary interests. It can also exist even if there are no improper acts since differing roles are likely to provide an incentive for improper acts in certain situations.
We then proceeded to consider conflict of interest from an accountant’s perspective, particularly as it relates to rendering audit services. We noted that the bar is significantly higher compared with other professions since independence from those whose work the auditor has to evaluate is the cornerstone, indeed the foundation pillar, of the auditing profession. A leading authority in the United Kingdom in the 1980s, Emile Woolf once wrote that the concept of an audit and concept of independence are the twin sides of the same coin and that a dependent auditor has lost his/her raison d’être and is a contradiction in terms.
The Institute of Internal Auditors considers that competing interests can make it difficult to fulfill the internal auditor’s duties impartially and could impair the individual’s ability to perform his or her duties and responsibilities objectively. The American Institute of Certified Public Accountants (AICPA) asserts that certain professional engagements, such as
