Managing conflicts of interest: Guidance for public entities.

In a small country like ours, conflicts of interest in our working lives are natural and unavoidable. The existence of a conflict of interest does not necessarily mean that someone has done something wrong, and it need not cause problems. It just needs to be identified and managed carefully.

Many queries to my Office, and a number of my inquiries and reports in recent years, have been about managing conflicts of interest. It has become clear that some general guidance about how to manage conflicts of interest in the public sector would be useful.

Impartiality and transparency in public administration are essential to maintaining the integrity of the public sector. Where activities are paid for by public funds or are carried out in the public interest, members of Parliament, the media, and the public will have high expectations.

When making decisions about conflicts of interest, public entities need to be guided by the concepts of integrity, honesty, transparency, openness, independence, good faith, and service to the public. They also need to consider the risk of how an outside observer may reasonably perceive the situation.

Conflicts of interest are not easily managed by a simple set of rules, because they can arise in all sorts of situations. Also, some situations are not clear-cut and may involve questions of degree. Therefore, public entities (and their members and officials) will often need to exercise prudent judgement on a case-by-case basis.

This guide does not set rules, and does not attempt to provide the answers for all situations. Rather, it is intended to help public entities understand how to exercise their own judgement. It sets out my view of what constitutes good practice in the public sector. The guide discusses how to understand the concept of conflicts of interest, and suggests an approach for dealing with particular issues. It supplements, but does not replace, any specific requirements that may already exist for particular entities or parts of the public sector.

This guidance will be useful for all public entities, and relevant not only to people who exercise governance and management roles, but to everyone who works for or with a public entity.


K B Brady
Controller and Auditor-General

1 June 2007

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