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At a glance
In this INTHEBLACK podcast episode, Dr Michelle Cull FCPA, head of discipline in accounting and financial planning at Western Sydney University, and Belinda Zohrab, regulations and professional standards lead at CPA Australia, discuss the growing complexity of conflicts of interest and the practical steps professionals can take to navigate them.
Keep on the lookout
Conflicts of interest are unavoidable, Zohrab notes, “but that does not mean they cannot necessarily be managed. In some circumstances, they may not be manageable, but in others, they can be just an anticipated and expected part of doing business.”
Cull agrees. “There are inevitably going to be times when there is a crossover between personal and professional relationships or some other type of conflict that you may not be expecting, but we have to be on the lookout for it.”
When disclosure is not enough
In situations where conflicts are managed appropriately, the perception of bias can remain, Zohrab notes.
“Even though the right safeguards are put in place and disclosure is made and the relevant parties involved are all fully informed and even consent, there may still be the appearance of bias, which may have negative consequences. There are sometimes circumstances when you just have to potentially walk away, recuse yourself or suggest perhaps a client find another adviser.”
"Understanding what conflicts could arise and managing them beforehand could actually save you a lot of time and stress — and perhaps the loss of some valuable clients."
Cull reinforces this, warning against treating disclosure as a checkbox exercise.
“It is easy to think, oh well, if it has been disclosed, you have ticked that box and you have managed the conflict — but it does not really manage the conflict, it is just a disclosure.”
Manage conflicts of interest
Cull introduces a structured ethical decision-making tool called the PLUS framework that can help professionals identify if they need to take action in a situation or not.
“‘P’ stands for policies, ‘L’ stands for legal, ‘U’ for universal and ‘S’ for self. So, we look at what sorts of policies are in place that can help guide our decisions, what legal or what laws there are that state what we must do in certain situations.
What are the universal laws, such as the reasonable person tests? And then what about yourself? If something does not sit right, then you need to pay attention,” she explains.
Zohrab advises professionals to get to know their clients better, including the industries they operate in and the risks they face. She believes that anticipating conflicts before they arise is key to prevention.
“Understanding what conflicts could arise and managing them beforehand could actually save you a lot of time and stress — and perhaps the loss of some valuable clients.”
Production credit
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