<p>I am on my way to becoming an accountant. However, as I have increased my knowledge of business, I have become interested in investing in the stock market. I understand that it would be inappropriate to be invested in a client. My question is would there be a conflict of interest if I were to sell all of my investment in a company before taking them on as a client? Particularly, I’m hoping for insight as to the risks of doing this while working for an accounting firm. I understand that I may not always be in control of who I am providing services for and when I provide services for them. Would participating in the stock market present too much potential for a conflict of interest?</p>
<p>It’s hard for someone to tell you what is an is not ethical. Follow laws at a minimum, then apply your personal standards on top. You will be faced with many ethical dilemmas as an accountant, and, without trying to sound rude, if you need to rely on a Internet forum to guide you through them, it may be best to not pursue accounting. I applaud that you are considering ethical conduct, though.</p>
<p>Good point about relying on an internet forum, particularly when it’s not an accounting forum. I already did a little bit of research on my own, and I am planning to do more. I suppose I just got lazy with wanting a quick answer, especially when I know there are people here who have practiced accounting and are more than willing to have a discussion about it. I feel my questions could be answered better by someone with experience, rather than by a specific regulation.</p>
<p>The laws for this are really broad and general. I mean, the ONLY WAY this will be a real conflict is if you work for a Big 4 because publicly traded companies stick to either E&Y, PWC, Deloitte, or KPMG. </p>
<p>If you don’t work for a Big 4, you should have no problems because the companies you will be auditing at a small/midsize firm are nearly never publicly traded. </p>
<p>However, if you do work for a Big 4, you are required to fill out a disclosure form (if you ever watch CNBC, it is similar to the ones they have their contributors fill out - your investments, families investments, firms investments>1%). Also, when you fill out a disclosure form, you will simply be excluded from working on projects for companies for which you are invested in. This ensures the standard of Independence.</p>
<p>That answers my questions. Thank you.</p>
<p>As someone with an admitted laziness issue, I don’t see myself working for one of the Big 4 anytime soon. I don’t even see myself working for a firm on the outskirts of the Big 4, such as Grant Thornton or BDO. </p>
<p>I just love business and would like to be involved with the behind the scenes financial matters on some level. I think accounting is a good choice because it covers essentially all the fundamentals of business, plus it requires a good amount of education which is something I value.</p>
<p>As far as investing, it’s just something I would like to do on the side. So I appreciate your insight regarding the issue. I didn’t even stop to think that a lot of my clients may not even be public companies. And of course, if I were to go to work as a private accountant there would be no conflicts of interest. </p>
<p>Also, I appreciate your insight as to how it is done at the Big 4 firms. While working for one of them is a long-shot for me, I’m still interested in how they would handle that particular situation. If anything, it may be good that I don’t aspire to work at a Big 4 firm. That way, I don’t have to constantly keep the firm updated as to my investing activities.</p>
<p>Everyone invests. Everyone with a retirement account invests (albeit indirectly unless it’s in a Roth). It is not reasonable to assume that you couldn’t actively invests and practice public account simultaneously. </p>
<p>Oh and for what it’s worth, most people (as in probably 99% of the population) do not know what types of securities they hold.</p>
<p>If you sold that would certainly eliminate any possibility of there being a conflict of interest. One of my accounting Professors sold shares in question before taking on a client. Depends on how much risk you are comfortable with, what odds are that you &/ client gets an audit(audit risk). With the internet it is cheap and easy to buy and sell. It’s a subjective issue.</p>