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ACCA Strategic Professional · Strategic Business Leader · Professionalism, ethical codes and the public interest

Hollis Advisory provides tax advice to Garnet Ltd and is also asked by Garnet's competitor, Orchid Ltd, to advise on a bid for the same target company. Both clients' interests conflict, and the firm holds confidential information on each. Which response is most consistent with the ethical approach to conflicts of interest?

Hollis should identify the conflict, apply safeguards such as separate teams and confidentiality barriers, disclose it to both clients and obtain their consent, and decline the work if the conflict cannot be managed to an acceptable level. Using or sharing one client's confidential information would breach fundamental principles.

  1. AIdentify the conflict, apply safeguards such as separate teams and confidentiality barriers, disclose to and obtain consent from both clients, and decline if the conflict cannot be managedCorrect
  2. BAccept both engagements and use Garnet's information to benefit Orchid
  3. CAccept both engagements without informing either client, since the services differ
  4. DDisclose Garnet's confidential information to Orchid to be transparent

Explanation

Conflicts should be identified, then managed through safeguards like separate teams and information barriers, with disclosure and consent from the affected clients. If safeguards cannot reduce the threat to an acceptable level, the firm should decline. Using or sharing confidential information would breach confidentiality and integrity, and concealing the conflict breaches transparency.

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