What steps should a member take when faced with a potential conflict of interest in a client engagement?

• A. Disclose fully, document the disclosure, recuse from decision-making if needed, and seek guidance from ethics committee.
• B. Proceed with the engagement and disclose only if questioned.
• C. Ignore the potential conflict if it seems minor.
• D. Share the conflict with the client only.

Answer: (A)

When a potential conflict of interest arises, the way to protect the engagement and maintain trust is to handle it with openness and proper oversight. Disclosing the issue fully to the client and to the firm, and then documenting that disclosure, creates a clear record that you are handling the situation transparently. Recusing from decision-making when the conflict could bias judgments helps preserve the integrity of the work. Seeking guidance from an ethics committee or the appropriate oversight body ensures you apply the right standards and obtain the necessary support for next steps. This combination of transparency, accountability, and external guidance is what keeps the engagement trustworthy and compliant.

Waiting to disclose only if questioned fails to establish proactive transparency. Proceeding with the engagement despite the conflict risks biased decisions and damages credibility. Ignoring the potential conflict or treating it as minor can undermine ethical obligations. Sharing the conflict only with the client may not address internal governance or help ensure appropriate safeguards within the engagement.