CFA Level II Exam · Guidance for Standard IV: Duties to Employers

Disclosure of Conflicts to Employers Under Standard VI(A)

Updated 7 October 2026 · Fact-checked

Standard VI(A) requires members and candidates to make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with their duties to their employer, clients, and prospects. Disclosure must be prominent, plain, and specific enough for the recipient to understand the conflict. Where possible, avoid the conflict.

Understand Disclosure of Conflicts to Employers

A conflict of interest exists when your own interests, or those of someone you are tied to, could affect your judgment or your duties to others. Standard VI(A) says you must avoid conflicts where you can, and disclose them fully and fairly where you cannot.

The Standard names three audiences: your employer, your clients, and your prospects. This page focuses on the employer. Disclosure to the employer lets the firm decide whether to manage the conflict, restrict your activity, or approve it. Disclosure to clients lets them judge how much weight to give your advice.

Disclosure must be full and fair. That means it is prominent, written in plain language, and specific enough that the reader understands the nature and extent of the conflict. A vague note buried in a long document does not meet the Standard. The Handbook recommends written disclosure to the employer. Check the exact wording of the Standard in your curriculum.

Typical employer-side conflicts include owning stock in a company your firm covers, serving on the board of a company your firm researches or invests in, outside business interests, and gifts or compensation from third parties. Compare this with Standard IV(B), which is narrower. IV(B) applies to additional compensation or benefits from anyone other than your employer for services that might create a conflict with your employer's interests, and it requires written consent from all parties involved, including your employer, before you accept. Where the possible conflict is with your employer, the employer's written consent is the key requirement. VI(A) covers any conflict, not only pay, and requires disclosure. IV(B) is the primary Standard for outside pay, and VI(A) may also apply if the arrangement could impair your independence or objectivity toward clients. Where both apply, comply with both.

The key habit for exam answers: first ask whether the conflict can be avoided, then ask who may need to be told, then ask whether the disclosure is clear and specific.

Key formulas to remember

Core duty of Standard VI(A): Avoid conflicts where possible; otherwise make full and fair disclosure to employers, clients, and prospects; Disclosure must be prominent, plain, and specific. Wording of the Standard is in your curriculum.
Disclosure to employer: Disclose matters that could impair independence and objectivity or interfere with duties to the employer; Best practice is written disclosure, and promptly when the conflict arises.
VI(A) vs IV(B) test: VI(A): any conflict, disclose. IV(B): extra compensation or benefits from others, written consent from all parties involved (including the employer); If outside pay or benefits create a possible conflict with the employer, IV(B) is the primary Standard. VI(A) may also apply if the arrangement could impair independence or objectivity toward clients.
Who may need to be told: Employer, and clients and prospects where the conflict affects them; Check whether the conflict affects the employer relationship, client relationships, or both. The employer is told so it can manage the conflict.

How to solve Disclosure of Conflicts to Employers questions

Use this sequence on any item-set question about conflicts and disclosure to an employer.

1Find the facts in the vignette that create the conflict: stock ownership, board seat, outside pay, gifts, family ties, or a business relationship.
2Decide whether the conflict could reasonably impair independence and objectivity or interfere with duties to the employer, clients, or prospects.
3Check if the conflict can be avoided. If yes, avoiding it is the first-choice action.
4If not avoidable, identify who must be told: the employer, and clients or prospects if they are affected.
5Check whether outside compensation or benefits are involved. If so, IV(B) also applies and needs written consent from all parties involved, including the employer.
6Judge the quality of disclosure: is it timely, prominent, plain, and specific? Written is best.
7Pick the answer that names the correct Standard and the required action. Reject answers that rely on oral, vague, or after-the-fact disclosure.

Quickest way: Three-question conflict check

When to use it: Use when the vignette is long and you need to pick the answer fast.

Is there outside pay or benefit? If yes, think IV(B) with written consent, plus VI(A).
Is the conflict about ownership, relationships, or roles with no extra pay? Think VI(A) disclosure.
Is the proposed disclosure written, specific, and prompt? If not, it is probably the wrong answer.

Common mistakes in Disclosure of Conflicts to Employers

Treating VI(A) and IV(B) as the same Standard.
Both deal with conflicts and employers, so they blur together.
Fix: Link IV(B) to extra compensation needing written consent from all parties involved, including the employer. Link VI(A) to any conflict needing disclosure.
Thinking disclosure alone is always enough.
Students forget the phrase 'avoid or disclose'.
Fix: Avoid the conflict where possible. Disclose where it cannot be avoided, and follow employer restrictions as well.
Accepting vague or oral disclosure as sufficient.
Students focus on whether disclosure happened, not its quality.
Fix: Look for prominent, plain, specific, and preferably written disclosure.
Disclosing only to the employer when clients are affected.
The topic title mentions employers, so students forget clients and prospects.
Fix: Ask who relies on your judgment. Disclose to each affected party.
Assuming employer knowledge removes the need for client disclosure.
Students think one disclosure covers everyone.
Fix: Each audience needs the information relevant to its relationship with you.

Worked examples

Example 1

Priya Nair is a research analyst at a global asset manager. She owns shares in Corvane Ltd, a company she is about to initiate coverage on. She has not told her employer. Q1: Which Standard is most directly relevant? Q2: What should she do? A) Sell the shares and say nothing. B) Promptly disclose the holding to her employer, preferably in writing, and follow the firm's direction, which may include selling the shares or restricting or reassigning her coverage. C) Disclose the holding verbally to a colleague.

Show the solution

Q1: Share ownership in a covered company could impair independence and objectivity. This is a conflict of interest, so Standard VI(A) applies.
Q2: She has not yet disclosed the holding to her employer. The first step is to tell her employer promptly. The Handbook recommends written disclosure, which is clear and creates a record.
Until the employer decides, she should refrain from initiating coverage.
The employer then decides how to handle it. The firm may require her to sell, restrict her coverage, or reassign the company. She should follow that direction.
Option A is wrong because selling without telling anyone leaves the conflict undisclosed to the employer. Removing the holding does not replace disclosure.
Option C is wrong because it is oral and goes to a colleague, not to the employer in a prominent, clear way.
Option B gives prompt disclosure to the employer, preferably in writing, and lets the firm decide whether to divest, restrict, or reassign coverage.

Answer: Q1: Standard VI(A). Q2: Option B.

Example 2

Daniel Osei is a portfolio manager. A client's family company offers him a fee for advisory work outside his firm. The work may compete with his employer's interests. He tells his supervisor in a hallway chat and starts the work. Q1: Which Standards are involved? Q2: Was his action sufficient? A) Yes, the supervisor knows. B) No, he needed written consent from all parties involved, including his employer, before accepting the fee. C) No, he only needs to tell clients.

Show the solution

Q1: The fee is additional compensation from someone other than his employer for services that may create a conflict with his employer's interests. That is Standard IV(B), the primary Standard here.
Because the payer is a client's family company, the arrangement could also impair his independence or objectivity toward that client. If so, VI(A) may also apply.
Q2: IV(B) requires written consent from all parties involved, including his employer, obtained before he accepts the fee. Because the possible conflict is with his employer, the employer's written consent is the key requirement.
A hallway chat is oral and informal, so it does not meet the requirement. He also started the work before getting consent.
Option A relies on oral awareness only.
Option C ignores the employer, whose interests are the ones at risk.

Answer: Q1: IV(B) is the primary Standard; VI(A) may also apply. Q2: Option B.

Exam tips

Look for the trigger word: extra pay or benefits point to IV(B), while ownership, roles, or relationships point to VI(A).
Prefer answers with written, prompt, and specific disclosure.
Check whether the conflict can be avoided before choosing disclosure.
Name the Standard in your reasoning. Item-set options often differ only in which Standard they cite.
Watch for conflicts affecting clients, not only the employer.

Disclosure of Conflicts to Employers in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Disclosure of Conflicts to Employers: frequently asked questions

What does CFA Standard VI(A) require?

It requires you to make full and fair disclosure of matters that could reasonably impair your independence and objectivity or interfere with your duties to your employer, clients, and prospects. Disclosure must be prominent, plain, and specific.

How is Standard VI(A) different from IV(B)?

VI(A) covers any conflict of interest and requires disclosure. IV(B) covers additional compensation or benefits from outside parties and requires written consent from all parties involved, including the employer. Both can apply to the same facts.

Does disclosure to my employer have to be written?

The guidance recommends written disclosure, as it is clearer and creates a record. For additional compensation under IV(B), written consent is required.

Is disclosure enough, or must I avoid the conflict?

Avoid the conflict where you can. If it cannot be avoided, disclose it fully and fairly, and follow any restrictions your employer sets.