Introduction (210.1 to 210.3)
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Professional accountants are required to comply with the fundamental principles and apply the conceptual framework set out in Section 120 to identify, evaluate and address threats.

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A conflict of interest creates threats to compliance with the principle of objectivity and might create threats to compliance with the other fundamental principles. Such threats might be created when:

  • A professional accountant undertakes a professional activity related to a particular matter for two or more parties whose interests with respect to that matter are in conflict; or

  • The interest of a professional accountant with respect to a particular matter and the interests of a party for whom the accountant undertakes a professional activity related to that matter are in conflict.

A party might include an employing organization, a vendor, a customer, a lender, a shareholder, or another party.

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This section sets out specific requirements and application material relevant to applying the conceptual framework to conflicts of interest.

Requirements and Application Material

General (R210.4 to 210.4 A1)
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A professional accountant shall not allow a conflict of interest to compromise professional or business judgment.

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210.4 A1

Examples of circumstances that might create a conflict of interest include:

  • Serving in a management or governance position for two employing organizations and acquiring confidential information from one organization that might be used by the professional accountant to the advantage or disadvantage of the other organization.

  • Undertaking a professional activity for each of two parties in a partnership, where both parties are employing the accountant to assist them to dissolve their partnership.

  • Preparing financial information for certain members of management of the accountant's employing organization who are seeking to undertake a management buy-out.

  • Being responsible for selecting a vendor for the employing organization when an immediate family member of the accountant might benefit financially from the transaction.

  • Serving in a governance capacity in an employing organization that is approving certain investments for the company where one of those investments will increase the value of the investment portfolio of the accountant or an immediate family member.

Conflict Identification (R210.5 to R210.6)
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A professional accountant shall take reasonable steps to identify circumstances that might create a conflict of interest, and therefore a threat to compliance with one or more of the fundamental principles. Such steps shall include identifying:

  • The nature of the relevant interests and relationships between the parties involved; and

  • The activity and its implication for relevant parties.

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A professional accountant shall remain alert to changes over time in the nature of the activities, interests and relationships that might create a conflict of interest while performing a professional activity.

Threats Created by Conflicts of Interest (210.7 A1 to 210.7 A3)
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210.7 A1

In general, the more direct the connection between the professional activity and the matter on which the parties' interests conflict, the more likely the level of the threat is not at an acceptable level.

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210.7 A2

An example of an action that might eliminate threats created by conflicts of interest is withdrawing from the decision-making process related to the matter giving rise to the conflict of interest.

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210.7 A3

Examples of actions that might be safeguards to address threats created by conflicts of interest include:

  • Restructuring or segregating certain responsibilities and duties.

  • Obtaining appropriate oversight, for example, acting under the supervision of an executive or non-executive director.

Disclosure and Consent (210.8 A1 to 210.9 A1)
  • Non-Authoritative Guidance
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210.8 A1

It is generally necessary to:

  • Disclose the nature of the conflict of interest and how any threats created were addressed to the relevant parties, including to the appropriate levels within the employing organization affected by a conflict; and

  • Obtain consent from the relevant parties for the professional accountant to undertake the professional activity when safeguards are applied to address the threat.

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210.8 A2

Consent might be implied by a party's conduct in circumstances where the professional accountant has sufficient evidence to conclude that the parties know the circumstances at the outset and have accepted the conflict of interest if they do not raise an objection to the existence of the conflict.

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210.8 A3

If such disclosure or consent is not in writing, the professional accountant is encouraged to document:

  • The nature of the circumstances giving rise to the conflict of interest;

  • The safeguards applied to address the threats when applicable; and

  • The consent obtained.

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210.9 A1

When addressing a conflict of interest, the professional accountant is encouraged to seek guidance from within the employing organization or from others, such as a professional body, legal counsel or another accountant. When making such disclosures or sharing information within the employing organization and seeking guidance of third parties, the principle of confidentiality applies.

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December 2021

You are now leaving the extant Code to view another version that contains passages that have either been superseded or that have been issued but are not yet effective.

This version of the eCode incorporates revisions to the Code to promote the role and mindset expected of professional accountants.

Revisions to the Code to promote the role and mindset expected of professional accountants will be effective as of December 31, 2021. Early adoption will be permitted


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