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Auditing & Assurance › Ethics & Independence

How does the auditor deal with a conflict of interest?

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Answer

Identify conflicts (e.g., acting for two clients with opposing interests, or a firm interest conflicting with a client's). Evaluate the threat to objectivity and confidentiality, then apply safeguards—separate engagement teams with information barriers, disclosure and consent, or, if the conflict can't be managed, decline or withdraw. Document the assessment and safeguards.
Real-world example Auditing two companies in a takeover, the firm uses separate teams with information barriers and obtains informed consent.

Common follow-ups: What safeguards manage conflicts? | When must the auditor decline?