American Institute of Certified Public Accountants (AICPA) Practice Exam

What should a member do if there’s a significant relationship causing a conflict of interest?

1. Ignore it if no one else knows.

2. Report it immediately to the client.

3. Obtain consent from the client after disclosure.

4. Discontinue all services related to the conflict.

The correct answer is: Obtain consent from the client after disclosure.

In situations involving a significant relationship that creates a conflict of interest, the appropriate action is to obtain consent from the client after full disclosure of the potential conflict. This approach aligns with ethical standards and principles of transparency, which are crucial for maintaining trust and integrity in professional relationships. When a member identifies a conflict of interest, it is essential to inform the client about the situation, ensuring they are aware of how the relationship may affect the services provided. By obtaining consent after making the necessary disclosures, the member respects the client's autonomy and right to make informed decisions regarding their engagement. This course of action upholds the ethical obligation to act in the best interest of the client while also protecting the member’s professional integrity. The alternative options do not align with ethical practices. For instance, ignoring the conflict simply because it is not widely known fails to address the responsibility of managing conflicts of interest adequately. Reporting it immediately to the client without first evaluating the situation may not provide the client with the clarity needed to make informed decisions. Finally, discontinuing all services could be overly drastic and might not be necessary if the conflict can be managed appropriately through disclosure and consent. Thus, obtaining consent after disclosure is the balanced and ethical response in such situations.