What is a conflict of interest?

By Eleanor O'Neill, Student Blog

11 February 2019

A clash between personal priorities and public or professional duty is known as a 'conflict of interest' (COI) and can have serious ethical implications for CAs.

Undeclared interests that may influence or corrupt professional decisions call into question the integrity and objectivity of an individual or organisation and directly contravenes the high ethical standards of the ICAS membership.


Positions of authority and responsibility in the financial world are some of the most highly scrutinised roles when it comes to COI. For example, the former Deputy Governor for Markets and Banking at the Bank of England, Charlotte Hogg, was forced to resign her post when it came to light that her brother was a Director at Barclays.

Theoretically, she could have used her position at the Bank of England to influence policy in favour of Barclays and, by extension, her brothers' benefit. By failing to declare this potential conflict when she first joined the Bank, Ms Hogg cast doubt on her ability to perform without bias or desire for personal gain.

How does it relate to the CA qualification?

A family link that could influence any decision-making processes is flagged by the Financial Reporting Council ethical standard as one of the major threats to independence for auditors and assurance providers. Such practitioners are expected to have total independence from the party being audited in order for their work to be regarded as credible.

Objectivity is a fundamental principle of the ICAS Code of Ethics covered at various levels of your studies, including TC, TPS and Business Ethics. It states: "A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgements."

Why is it so important?

Being compromised by a conflict of interest will call into question the quality and reliability of an auditor's professional judgement. A lack of independence directly contravenes the purpose and intention of an external audit and has a significant impact on the reduction of agency risk. Without independence, an audit provides little credibility.


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