The service and its implication for relevant parties. 5310.5 A1 An effective conflict identification process assists a sustainability assurance provider when taking reasonable steps to identify interests and relationships that might create an actual or potential conflict of interest, both before determining whether to accept an engagement and throughout the engagement. Such a process includes considering matters identified by external parties, for example clients or potential clients. The earlier an actual or potential conflict of interest is identified, the greater the likelihood of the practitioner being able to address threats created by the conflict of interest. 5310.5 A2 An effective process to identify actual or potential conflicts of interest will take into account factors such as: • The nature of the professional services provided. • The size of the firm. • The size and nature of the client base. • The structure of the firm, for example, the number and geographic location of offices. 5310.5 A3 More information on client acceptance is set out in
Section 5320, Professional Appointments.
A sustainability assurance provider shall remain alert to
changes over time in the nature of services, interests and relationships that might create a conflict of interest while performing an engagement. 5310.6 A1 The nature of services, interests and relationships might change during the engagement. This is particularly true when a sustainability assurance provider is asked to conduct an engagement in a situation that might become adversarial, even though the parties who engage the practitioner initially might not be involved in a dispute.
If the firm is a member of a network, a sustainability assurance provider shall consider conflicts of interest that the practitioner has reason to believe might exist or arise due to interests and relationships of a network firm. 5310.7 A1 Factors to consider when identifying interests and relationships involving a network firm include: • The nature of the professional services provided. • The clients served by the network. • The geographic locations of all relevant parties.
Threats Created by Conflicts of Interest
5310.8 A1 In general, the more direct the connection between the professional service and the matter on which the parties’ interests conflict, the more likely the level of the threat is not at an acceptable level. 5310.8 A2 Factors that are relevant in evaluating the level of a threat created by a conflict of interest include measures that prevent unauthorized disclosure of confidential information when performing professional services related to a particular matter for a sustainability assurance client and another client whose interests with respect to that matter are in conflict. These measures include: • The existence of separate practice areas for specialty functions within the firm, which might act as a barrier to the passing of confidential client information between practice areas. • Policies and procedures to limit access to client files. • Confidentiality agreements signed by personnel and leaders of the firm. • Separation of confidential information physically and electronically. • Specific and dedicated training and communication. 5310.8 A3 Examples of actions that might be safeguards to address threats created by a conflict of interest include: • Having separate teams who are provided with clear policies and procedures on maintaining confidentiality. • Having an appropriate reviewer, who is not involved in providing the service or otherwise affected by the conflict, review the work performed to assess whether the key judgments and conclusions are appropriate.
A sustainability assurance provider shall exercise professional
judgment to determine whether the nature and significance of a conflict of interest are such that specific disclosure and explicit consent are necessary when addressing the threat created by the conflict of interest. 5310.9 A1 Factors to consider when determining whether specific disclosure and explicit consent are necessary include: • The circumstances creating the conflict of interest. • The parties that might be affected. • The nature of the issues that might arise. • The potential for the particular matter to develop in an unexpected manner. 5310.9 A2 Disclosure and consent might take different forms, for example: • General disclosure to clients of circumstances where, as is common commercial practice, the sustainability assurance provider does not provide professional services exclusively to any one client (for example, in a particular professional service and market sector). This enables the client to provide general consent accordingly. For example, a practitioner might make general disclosure in the standard terms and conditions for the engagement. • Specific disclosure to affected clients of the circumstances of the particular conflict in sufficient detail to enable the client to make an informed decision about the matter and to provide explicit consent accordingly. Such disclosure might include a detailed presentation of the circumstances and a comprehensive explanation of any planned safeguards and the risks involved. • Consent might be implied by clients’ conduct in circumstances where the sustainability assurance provider has sufficient evidence to conclude that clients know the circumstances at the outset and have accepted the conflict of interest if they do not raise an objection to the existence of the conflict. 5310.9 A3 It is generally necessary:
