[etg1991]

Hi there,

Can anyone tell me why this creates a conflict of interest?

GAF was approached by the AAA Airline to see if it would be interested in auditing AAA. GAF was open to the notion, but disclosed to AAA that it had long audited several other airline companies. AAA’s audit committee said: “We know. Your expertise in the industry is exactly why we want to hire you.” Is this a conflict of interest?

This is the given answer but I feel it does not explain much about why there is a conflict of interest. Thanks!

Yes, but a manageable one. With disclosure and with firm-imposed safeguards involving separate engagement teams and policies and procedures to ensure that confidential information belonging to one airline client does not make its way to another airline client, the threat of a violation should be reduced to an acceptable level