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A conflict of interest can create an appearance of impropriety that can undermine confidence in the internal auditor, the internal audit activity, and the profession.
A conflict of interest could impair an individual's ability to perform his or her duties and responsibilities objectively.
An organizational conflict of interest (OCI) may exist in the same way as described above, for instance where a corporation provides two types of service to the government and these services conflict (e.g.: manufacturing parts and then participating on a selection committee comparing parts manufacturers).
Corporations may develop simple or complex systems to mitigate the risk or perceived risk of a conflict of interest.
A conflict of interest exists if the circumstances are reasonably believed (on the basis of past experience and objective evidence) to create a risk that a decision may be unduly influenced by other, secondary interests, and not on whether a particular individual is actually influenced by a secondary interest.
In and of itself, having two roles is not illegal, but the differing roles will certainly provide an incentive for improper acts in some circumstances.)conflict of interest is a situation in which an internal auditor, who is in a position of trust, has a competing professional or personal interest.
In the United States, a law firm usually cannot represent a client if the client's interests conflict with those of another client, even if the two clients are represented by separate lawyers within the firm, unless (in some jurisdictions) the lawyer is segregated from the rest of the firm for the duration of the conflict.