The Materiality of a Conflict of Interest Should Be Evaluated

question 32

Multiple Choice

The materiality of a conflict of interest should be evaluated from the perspective of:

• A) Whether a reasonable client would consider the conflict to be material
• B) Whether a client, acting unreasonably or reasonably, would consider the conflict to be material
• C) Whether an objective observer who is reasonably informed about the surrounding facts would conclude that a conflict of interest is material
• D) Whether the CPA subjectively, from his or her own vantage point, has concerns about two or more material interests clashing

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Definitions:

Building Material

Building material refers to any substance used in the construction of buildings, such as wood, concrete, metal, or glass.

Restraint On Trade

A practice that limits competition or obstructs free trade among businesses.

Hair Salon

A business establishment where clients receive professional hair cutting, styling, and possibly other cosmetic services.

Contract Clause

A provision found in the U.S. Constitution that prohibits states from enacting laws that retroactively impair contract rights.