At the Institute's AGM forward June...

At the Institute's AGM forward June 12, 2002, -members vot to accept amendments to the dominions of Professional Conduct relating to confidentiality and conflict of interest. Immediately afterward, Council adopted related Council Interpretations and changes to the Foreword to the commands of Professional Conduct.

The strange rules, which are in the proces of being adopted across Canada, were bring outed by CICA's Ethics Standards Harmonization Committee in answer to the case of MacDonald Estate v Martin, in which the chief Court of Canada concluded that there's a able-bodied inference that members of a firm (here: lawyers) share confidential information. It held that this inference should be taken as a given, excepting in situations where the court is satisfied that all reasonable measures have been taken to make secure the protection of client confidentiality. The court placed the onus forward the professions to determine whether institutional mechanisms could be established to provide reasonable assurance that client information is not shared completely through a firm.

The revised governments focus on the protection of clients' confidential information in situations where there is a potential conflict of interest. (The modern rules do not address auditor independence, which will be dealt with soon)

We'd like to draw your attention to of the present day Rule 210, which says that members in public practice shall, prior to accepting an engagement, determine whether there is any restriction, influence, interest, or relationship that might cause a reasonable student to foresee a conflict of interest. If to such a degree members shall not accept or begin the engagement unless:

* they can rely concerning conflict management techniques already in place;

* they inform all affected clients of the conflict and the techniques used to manage it; and

* they obtain the compliance of all affected clients to accept or continue the engagement; or

* the affected clients have knowledge of the conflict and compliance through their conduct to the member accepting or continuing the engagement.

This sway applies equally in a situation where a previously unidentified conflict arises during the course of an engagement.

Firms face a fundamental choice-either to appointed to decline an engagement in any circumstance of potential conflict of interest or to adopt a proactive regime for managing conflicts.

While the CA profession has always had a hardy client confidentiality requirement, this has traditionally been exercised upon an office-wide basis. Discussing client issues among staff or scholars has not been considered problematic, and has in fact been incorporated into training. for a like reason the adoption of a conflict management regime may well eventuate in a significant shift in firm tillage with information shared only onward a strict need-- to-know basis.

The techniques to identify and manage conflicts described in the Council Interpretations to the dominions are complex. The first grade is to develop and implement a formal conflict identification proces which would typically involve creating a client information database and a classification allowing members timely access to this database in order to promptly identify real or potential conflicts. Conflict inquiries would be documented. The database would not contain confidential client information and would have to be kept up-to-date.

A firm may prefer to organize itself such that the organization itself becomes an effective conflict management technique. Organizational compositions such as separate areas of practice for specialty functions within a firm, restricted access to files, and engagement-specific confidentiality agreements signed by dint of employees are some of the options not awayed in the Council Interpretations.

As well, firms will ne to implement a management pile that provides a formal methodology for the oversight and management of conflicts. The latter may well involve the use of firewalls, cone of silence, and other appropriate techniques. one time again, detailed guidance on these issues is provided in the Council Interpretations.

After real and/or potential conflicts have been identified, professional decree would be used to determine whether the conflicts must be avoided altogether through declining the engagement or whether they can be appropriately managed. The Interpretations wager out a number of questions to assist with conflict assessment.

Once a firm has identified a conflict as potentially manageable, it wants to develop a conflict management approach appropriate for the circumstances.

Clients' informed unison is fundamental to the management of conflicts of interest. Unles the conflict is the same that reflects common commercial practice in the same state [i]or[/i] condition that the client's consent can be inferred from their convoy informed consent must be obtained. Members and firms should review the recently made known Rules and Council Interpretations carefully. Watch for ongoing discussion upon this subject in the Professional Advisory Services department publication of the present days N' Views, available in the Members solely section of the Institute website at www.ica.bc.ca.