Question

Huang started a small CPA firm several decades ago when he immigrated to the United States. Now, he is the managing partner of the firm, which has grown to have 40 partners and over 90 professional staff members. One of Huang’s clients is Taiwan Western Bank, located in northern California. Many of Huang’s small business clients maintain their checking accounts there. Also, Huang has always had a good working relationship with executives at that bank. Many of the bank’s loan officers find Huang to be trustworthy, and some even call him “charming.” Because of his personal goodwill, Huang can often get his clients’ loan applications approved faster there than at other banks.

Huang has been asked to serve on the bank’s Board of Directors. He has been assured that the Board meets only one night each month and that this position will not interfere with his duties as managing partner of his CPA firm. Huang has asked you to weigh the “pros and cons” for him of accepting the director position at the bank. What are your thoughts?

Answer 1

My thought on this situation is that Huang should not accept the director position at the bank. This is because there is clearly a “conflict of interest” in this case. As Huang has many of his clients having checking accounts and loan facilities availed from Taiwan Western Bank it will lead to a conflict of interest if Huang accepts the director position at Taiwan Western Bank. It may also lead to comprise with regards to regulations, ethics and policies of the bank as well. It should be noted that in this situation Huang will not be independent neither in fact nor in appearance.

Secondly the scenario seems to be a constraint with regards to the duty of integrity and objectivity. This duty applies when it comes to performance of professional service and in this case if Huang accepts the director position at Taiwan Western Bank then he will be compromising on his duty of objectivity and integrity.

Based on the above scenarios I will advise Huang not to accept the director position at the bank.