Conflict of Interest - Partnership tax preparation

[Eli]

Hello all and happy season!

After many years in public practice, a long-term client of my old firm made me an offer I couldn't refuse. In addition to all the other work, the principals in this business want me to prepare the business partnership tax return and also their personal returns. There are other, passive, partners in this business. Any thoughts on conflict of interest issues I am facing? Thank you all for your thoughts. Much appreciated.

 

[Ashley K. Knowlton MBA]

My significant other is a partner in a law firm. Their accounting firm (not me) does the partnership return and also does the personal returns (at a reduced rate, I might add, because they get the much more lucrative partnership return).

The only potential conflict I could see is if the partners were trying to avoid recognizing the partnership income, or otherwise failing to disclose to the partnership items material to the partnership return. Or, I suppose, vice versa. If that happened, though, I would probably find it a serious enough situation to require withdrawal from the entire engagement i.e. the personal AND partnership returns.

 

[pndaccountants]

CPAs generally feel that they understand the meaning of conflict of interest, but when asked to define the concept they often become less certain. The term “conflict of interest” refers to a situation in which two or more parties have a competing personal or financial interest that would make it difficult for the CPA to fulfill his or her duties fairly.