American Institute of Certified Public Accountants (AICPA) Practice Exam

Does a conflict of interest exist if a member provides tax services to a divorced couple?

1. Yes, it always exists

2. No, a conflict of interest does not exist

3. Only if both parties are clients of the same firm

4. It depends on the specific circumstances

The correct answer is: No, a conflict of interest does not exist

In the context of providing tax services to a divorced couple, it's essential to understand the nature of a conflict of interest. A conflict of interest arises when the interests of one party could potentially impair the professional judgment or objectivity towards another party. In this case, if a member is providing tax services to each individual separately, and there is consent from both parties for the services to be provided, a conflict of interest does not automatically exist. Each party may have independent tax needs and objectives that do not inherently conflict with one another, assuming the professional maintains clear boundaries and adheres to ethical guidelines. While there are situations, such as when the accountant represents both parties without appropriate safeguards or disclosure, where conflicts may arise, it is indeed possible to provide services without a conflict as long as ethical standards are upheld. Assessing whether a conflict arises pertains to specific circumstances rather than an absolute stance. Hence, stating that a conflict of interest does not exist when proper care is taken aligns with the understanding of professional ethics and the nature of these services.