Have you been checking out our free video lectures and deep dives? They’re pretty awesome.

This time around, we’re featuring a video lecture from Prof. Robert Prentice, JD, who teaches business law at the University of Texas-Austin.

He provides a helpful overview of one of the trickiest CPA Exam topics: Conflicts of Interests. He specifically addresses how directorship positions and things like gifts and entertainments can create such conflicts and how to handle them.

Check it out:

What Is A Conflict of Interest?

You don’t have to be an attorney to encounter conflicts of interest. The AICPA Code of Professional Conduct addresses conflicts of interest and the best ways to handle how them.

The AICPA code states a conflict may occur whenever you or someone in you firm “has a relationship with another person, entity, product, or service that could, in the member’s professional judgment, be viewed by the client, employer, or other appropriate parties as impairing the member’s objectivity.”

The rule does not prohibit providing a non-attest service, such as tax services, where such circumstances exist, as long as “the member believes that the professional service can be performed with objectivity, and the relationship is disclosed . . . and consent is obtained”

Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service, also governs conflicts of interest and identifies them as:

  1. The representation of one client will be directly adverse to another client; or
  2. There is significant risk that representation of one or more clients will be materially limited by your responsibilities to another client, former client or third person, or by a personal interest of the practitioner.

According to the Treasury Circular, you may still represent the client if 1) you reasonably you will be able to provide competent and diligent representation to each affected client; and (2) assuming the representation is not prohibited by law, each affected client waives the conflict of interest and gives informed written consent.