Independence and Conflicts of Interest

Accountants in public practice should be independent in fact and appearance when providing auditing and other attestation services. If you provide attestation or assurance services to clients, a conflict of interest may prevent you from also providing investment advisory services.

AICPA rules state that an accountant’s independence will be impaired if the accountant:

  • makes investment decisions on behalf of audit clients or otherwise has discretionary authority over an audit client’s investments.
  • executes a transaction to buy or sell an audit client’s investment.
  • has custody of assets of the audit client, such as taking temporary possession of securities purchased by the audit client.

Accountants may provide certain advisory services to audit clients without impairing independence. Accountants can:

  • recommend the allocation of funds that an audit client should invest in various asset classes, based on the client’s risk tolerance and other factors.
  • provide a comparative analysis of the audit client’s investments to third-party benchmarks.
  • review the manner in which the audit client’s portfolio is being managed by investment managers.
  • transmit an audit client's investment selection to a broker-dealer, provided the client has made the investment decision and has authorized the broker-dealer to execute the transaction.