Are You Ready for the New Code of Ethics and Conflict of Interest Practices Bidding Requirements?

Patricia Harris • November 07, 2016
Patricia Harris

As a construction company that actively bids and works on larger infrastructure projects, you will likely be required to provide a signed certification in response to future Requests for Qualifications (RFQs) to confirm that you have effective policies in place regarding conflicts of interest[1] and ethical[2] bidding practices.

In such cases, you will be required to engage the services of an external financial services firm that will prepare an Accounting Firm Letter on your behalf (e.g. as may be required by Infrastructure Ontario), and an expert report prepared in accordance with standard practices for Investigative and Forensic Accounting engagements.

Specifically, an Investigative Forensic Accountant (“IFA”) will assess your Code of Ethics and Conflicts of Interest Practices to provide an opinion on whether:

  1. Your company has designed appropriate internal policies, processes and controls establishing ethical standards for its bidding practices (including with respect to reporting on conflicts of interest);
  2. The policies, processes and controls, if correctly implemented and consistently followed, are designed to provide protection against unethical bidding practices, including failures to disclose conflicts of interest.

Best Practices for Your Code of Ethics and Conflicts of Interest Practices

A formalized, written, and robust Code of Ethics and Conflicts of Interest Practices is essential when bidding on larger infrastructure projects and should contain the following general and best practices:

  1. Ethics and Conflict of Interest policies must be compliant with applicable legislation;
  2. Code of Ethics and Conflicts of Interest Practices should explicitly prohibit any payments or activities that would be considered unethical and not in the best interest of the company;
  3. Employees should avoid any situation that may either be perceived or represent a conflict between their professional responsibilities and their personal interests;
  4. Code of Ethics and Conflicts of Interest Practices should apply to all individuals either working for (e.g. employees, contractors) or managing (e.g. officers, directors) the company;
  5. Rules for gifts to government officials and third parties and the acceptance of gifts by employees should be clearly defined and properly documented;
  6. Rules related to political contributions should be clearly stated and documented; and
  7. Employees should be required to report all issues, potential violations and complaints to designated persons without fear of reprisal.

The IFA that you engage to prepare an Accounting Firm Letter and expert report will review your policy for these elements. In addition, the IFA will conduct interviews with owners, financial executives and key bidding staff, and a review of your company’s internal documentation.

The Fuller Landau Team Can Help

As noted above, the Accounting Firm Letter provides the IFA’s opinion that your company’s code exists and would be effective if correctly implemented and consistently followed. Hiring an expert with experience in these matters ensures a smooth and effective certification process so you can respond in a timely manner to your RFQ. As an added benefit, you may be able to use the certification for multiple bids.

For more information regarding the Accounting Firm Letter requirement, please contact Patricia Harris at Fuller Landau LLP.

 

Patricia Harris, CPA, CA•IFA, CBV, DIFA, CFF is a partner at Fuller Landau, specializing in business valuation, damages quantification, and forensic accounting investigations with particular expertise in the construction industry. Patricia can be reached at 416-645-6570 or at pharris@fullerllp.com.

 

[1]       Conflict of interests – a conflict between the private interest and the official responsibilities of a person in a position of trust. Source: www.merriam-webster.com

[2]       Ethics – rules of behaviour based on ideas about what is morally good and bad. Source: ibid