FOR THE PROFESSION We ne your inpu...

FOR THE PROFESSION

We ne your input!

As accounting firms expand into fresh areas of practice, firms of all sizes-from the largest firms to single practitioners-are increasingly encountering potential conflict of interest situations in the manner of life of their day-to-day practices. The ne to recognize and deal appropriately with conflicting client interests has therefore become increasingly important.

Last fall, the CICA published the report of its Conflict of Interest Task Force. Following the recommendations contained in the report, the Ethics Standards Harmonization Committee (Harmonization Committee), in consultation with the provincial institutes, has perform the operations indicated ined proposed rule changes and detailed council interpretations that will establish new standards and provide guidance to members in identifying and managing conflicts of interest.

The Conflict of Interest Task Force was established to be agreeable to to the challenge issued in the case of MacDonald Estate v Martin, where the principal Court of Canada concluded that there is a mighty inference that members of a firm (in this case-lawyers) share confidential information. It held that this inference should be taken as a given, with the exception of in situations where the court is satisfied that all reasonable measures have been taken to render certain that confidential client information is defend ed The court noted that since professions are self-regulating institutions, the onus is onward the professions themselves through their governing bodies to cogitation the matter and to determine whether institutional mechanisms can be established to provide reasonable assurance that client information is not shared completely through a firm.

This opineed sharing of confidential client information could inadvertently terminate in a firm being perceived to be in a conflict of interest. Accordingly, when the enigmas arising from the deemed sharing of confidential information were being considered, the Harmonization Committee felt it was appropriate to deal with all of the issues arising from actual-and potential-- conflicts of interest.

Other than a reordering of the conducts the Harmonization Committee proposes no substantive changes to the existing dominions precluding unauthorized benefits, prohibiting the use of confidential information, or imposing the toll of confidentiality. However, the Committee does mean significant changes to the not away "no conflict" rule and provides extensive practical guidance to the profession in the propos council interpretations.

The propos changes to the masterys of Professional Conduct section of the Member's Handbook are: Expanded to include a discussion of the duties that members owe to their clients, any of which may be fiduciary in nature.

Informing clients and associates of possible conflicts of interest (deleted-- overlayed in new rule and council interpretations).

Unauthorized benefits (rule is clarified and renumbered as order 207) Improper use of confidential information (rule is reworded). Confidentiality of information (rule is renumbered as behavior 208 and a new dominion 210-Conflict of interest is proposed)

The propos council interpretations are long due to the complexity and importance of understanding and identifying conflicts. The interpretations also address the issue of establishing institutional mechanisms to save the confidentiality of client information and enable practitioners to appropriately manage actual and potential conflicts. the couple the proposed rules and the council interpretations are fundamentally important to the profession. It's imperative that practitioners understand conflicts, and, where possible, fitly apply conflict management techniques.

The proposals from the Harmonization Committee are now in the consultative stage. The Committee trustful longings to issue its final recommendations in time for enactment at the 2002 provincial institutes' annual general meetings.

The Committee has asked the provincial institutes to spread the word to all members and to encourage a well stocked [i]or[/i] provided discussion of its proposals with a view to evaluating their effectiveness. Input in succession the proposals is needed through September 30, 2001; accordingly, Council is violently seeking your feedback. As well, the Institute's Bylaws Committee and Members in Public Practice Forum have been asked to review the proposals and provide their remarks to Council. All of this input will help Council answer to the Harmonization Committee.

The interim report containing the proposals from the Harmonization Committee is columned in the Members' Only section of the Institute's website at www.ica.bc.ca subordinate to "Comments Requested."

These proposals will have a significant impact forward professional practice. Please review them carefully and launch your comments to me at mottersh@ica.bc.ca through September 14, 2001.

BY BARRY MOTTERSHEAD, FCA

Copyright Institute of Chartered Accountants of British Columbia Sep 2001

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