Fact
Members in public practice and their firms must avoid financial relationships with clients that create conflict of interest.
For example, they should not:
- Make loans to clients;
- Guarantee client’s borrowings;
- Accept loans from clients;
- Have borrowings guaranteed by clients; Be indebted to a client more than RM25,000 (unless allowed by law).
Elaboration
These situations can create self-interest threat and reduce independence.
Example
- An audit partner has a personal loan of RM100,000 from the audit client.
- This is not allowed because the partner might be afraid to upset the client and lose the loan facility
Ethical conduct towards clients:
- Identify any conflicting interests between different clients or between the member and the client.
- Where conflicts cannot be managed with safeguards and informed consent, decline or withdraw from the engagement.
- Always put professional obligations and ethical requirements above client pressure.
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