How to perform client ethics and conflict checks

Before you agree to work with a new client, you must formally verify that the engagement won't compromise your professional integrity or create a clash with your existing responsibilities. This "ethics and conflict check" is a vital safeguard that protects your reputation and ensures you can provide impartial, objective advice. If a conflict is too great to manage, the most professional action is to decline the work.

Why these checks matter

In the professional services world, your value is built on trust. If you are seen to have a "side" or a personal interest in a client's outcome, your advice loses its authority. Furthermore, UK professional bodies (like the ICAEW, ACCA, or AAT) require these checks as part of their code of ethics. Failing to perform them could lead to disciplinary action or even the loss of your practising certificate.

The five ethical threats to look out for

When evaluating a new client or a specific project, you should check against these five common threats to your independence:

• Self-interest: You or a close family member have a financial or other interest in the client (e.g., you own shares in their company).
• Self-review: You are being asked to check your own previous work (e.g., auditing accounts that you originally prepared).
• Advocacy: You are asked to promote a client's position to the point that your objectivity is compromised (e.g., acting as their lead negotiator in a legal dispute).
• Familiarity: You are too close to the client personally, making you too sympathetic to their interests (e.g., your best friend or sibling).
• Intimidation: You feel pressured or deterred from acting objectively by the client's conduct or influence.

How to perform the check

You should follow a consistent step-by-step process for every single lead that comes through your door.

1. Identify the parties: List the potential client, its directors, and any major shareholders. Check these names against your current client list to see if there is a direct competitive conflict (e.g., representing two rival businesses in a small town).
2. Assess the service: Look at what they want you to do. Does it involve reviewing work you've done before? Or does it require you to take an aggressive stance against a third party?
3. Evaluate the relationship: Do you have any personal, financial, or historical ties to these individuals?
4. Decide on "Significance": If a threat exists, is it small enough to be managed, or is it so significant that it cannot be ignored?

Implementing safeguards

If you identify a moderate conflict or threat, you don't always have to walk away. You may be able to implement "safeguards." These are actions that reduce the threat to an acceptable level. Common examples include:

Threat	Potential Safeguard
Familiarity	Ensure a different staff member performs the final review of the work.
Conflict of Interest	Disclose the conflict to both parties and obtain their written consent to act for both.
Self-review	Have an external, qualified professional review the work before it is finalised.

Top Tip: If you are a sole practitioner and find a "Self-review" threat, it is much harder to implement safeguards. In many cases, it is safer to decline one part of the service (e.g., offer to do the bookkeeping OR the audit, but not both).

Documenting your findings

In the eyes of a regulator, if it isn't written down, it didn't happen. You should create a simple "Ethics and Conflict Memo" for every client file. This should state:

• The date of the check.
• The names of the people and entities checked.
• A clear statement on whether any threats were identified.
• If threats were found, a description of the safeguards you put in place.
• Your final "OK" to proceed with the engagement.