Behavioral Aspects
People tend to choose this over deferred benefits, making conflicts of interest tempting
What is instant gratification?
The principal objective of the profession or activity
What is a primary interest?
This form of consent is when the client gives direct consent to waive potential conflict
What is Actual Consent?
This standard is used by accountants to evaluate their impartiality
What is the reasonable person standard?
Establishing this resource that contains information on all of a firm’s clients is a great way to manage conflicts of interest
What is a Database?
This occurs when people who have performed a good deed feel entitled to engage in a bad deed
What is moral licensing?
This interest goes beyond financial stakes and includes relationships, values, or personal loyalties
What is a secondary interest?
This type of disclosure typically states that it is common for an accountant to serve numerous clients, including some who may be competitors, suppliers, or customers
What is a General Disclosure?
In common law systems, this principle requires courts to follow prior rulings when deciding similar cases (double for the Latin term!)
What is precedent?
Email filtering is a form of this conflict management tool
What are information barriers?
An advisor who fully discloses a conflict of interest exaggerates his advice by this much
What is 30%?
According to this standard, a COI is considered to exist at this point
What is ... when it is reasonably foreseeable that interests will diverge?
This degree of consent is required from a client when waiving a conflict of interest
What is Informed consent?
These two ethical components align closely with actual and apparent conflicts, respectively
What is independence in fact and appearance?
This element regarding employees is crucial within a company to prevent future liability
What is education/training?
When a client diminishes the reliability of an accountant’s advice and disclosure, they are engaging in this
What is improper discounting?
A “tainted” client relationship can be maintained as long as this standard is followed
What are adequate safeguards/barriers?
These are the two options for when a client chooses not to give consent
What is ... Discontinue serving the client OR Terminate other relationships or personnel that caused the original conflict?
According to the AICPA code, confidential information comprises these three elements
What is ... unknown to the general public, reasonable expectation of secrecy, and potentially harmful if disclosed?
This internal control involves the core functions of custody, recordkeeping, and authorization
What is segregation of duties?
In a conflict of interest disclosure, an accountant issues a formal statement identifying conflicts among these three types of relationships
What is Personal, Financial, and Professional?
These two threats are closely associated with accountant-client conflicts
What are Familiarity and self-review?
This exception required the accountant in the scenario involving Chris and Jessica not to continue with the engagement
What are Taxes?
This state’s district court ruled against Arthur Andersen’s decision to prioritize confidentiality
What is the state of New York?
When dealing with a conflict of interest in the tax practice, you must retain written consent for this period of time
What is 3 years?