Conflicts of Interest, Directorships, and Gifts Flashcards
T/F: Conflicts of interest pose a threat to integrity and objectivity?
TRUE
What are the two types of conflict interests?
1) Client A versus Client B
2) Firm and members Versus Client
Example:
1) Client A VS Client B: Provide litigation services in connection with a lawsuit filed against a client. Providing tax services to both members of a couple embroiled in a divorce.
2) Firm versus client: Suggesting that a client invest in a business in which the member has a financial interest. Suggesting that a client hire an insurance broker who refers clients to the members under a exclusive arrangement to do so.
Threats to objectivity are reduced to an acceptable level if:
1) There is full disclosure to the client
2) The client consents
Client has a large tax refund and wants to invest. You tell the client that they should invest in company XYZ but you have to disclose that you have a financial interest in the firm. They can make the decision themselves as to whether or not they want to invest.
Objectivity is threatened when a member services as a director of a client entity?
TRUE
Can a member serve as a consultant to a client’s board?
YES, CANNOT BE A MEMBER OF THE BOARD.
Gifts and Entertainment Rules define:
Objectivity and integrity are treated if MIPPS receive gifts or entertainment from (or give to) client or its:
1) Officers
2) Directors
3) 10% shareholders of the client
When is a violation presumed on gifts and entertainment?
A violation is presumed if: The member receives gifts or entertainment from a client that violate the member’s or client’s policies or applicable laws and regulations
The member knows of a the violation or reckless
If no rules are violated, fits and entertainment must still be:
Reasonable in the circumstances- common sense in the following areas:
1) Nature of the gift
2) Occasion giving rise to the gift or entertainment
3) Cost or value
