American Institute of Certified Public Accountants (AICPA) Practice Exam

Is there a conflict of interest if a member in public practice serves as a director in a nonclient bank?

1. No, as long as they don’t audit the bank.

2. Yes, a conflict of interest would exist.

3. Only if the services overlap directly.

4. No, because it’s a nonclient.

The correct answer is: Yes, a conflict of interest would exist.

A member in public practice serving as a director in a nonclient bank could create a conflict of interest due to the potential for divided loyalty and the risk of impairing objectivity. Even though the bank is not a client of the member’s firm, the role of director typically involves responsibilities that may influence the member’s judgment in their professional duties. If the member has decision-making authority or access to sensitive information that could impact their work with existing clients, it raises concerns about impartiality and the perception of independence. Additionally, the regulatory framework governing the profession emphasizes the necessity for members to ensure that their roles do not compromise their professional obligations. A member’s position in a bank could lead to situations where their judgment may be swayed by their interests as a director, particularly if the bank were to become a client in the future. This potential intersection of interests is precisely why the situation is considered a conflict, affirming the importance of maintaining a clear boundary between professional responsibilities and personal interests.