Got approached by a potential client whose spouse works for RG&E in the commercial rates department. The client wants me to audit their manufacturing facility's electric bills. I'm thinking this could be a conflict of interest situation but want to get other opinions. The spouse doesn't directly handle this account but works in the same department that sets the rates. Thoughts?
Conflict of interest question - utility employee spouse
Tom I'd be very careful with that one. Even if the spouse isn't directly involved, the appearance of impropriety could be problematic. Duke Energy has strict policies about this kind of thing and I imagine most utilities do. Could put both you and the employee spouse in a bad position.
Definitely a red flag situation. PSO would probably flag any audit findings that came from a case like that. I'd recommend disclosing the relationship upfront to all parties and probably declining the engagement. Not worth the risk to your reputation or CUBA certification.
The CUBA ethics guidelines specifically address family relationships with utility employees. Even indirect connections can create problems. I had a similar situation in Tucson and ended up passing on the client. Better safe than sorry.
You could potentially do the audit if you get written disclosure and consent from all parties, but that's a lot of paperwork and risk. PG&E requires auditors to sign conflict of interest statements now. Easier to just find another client who doesn't have these complications.
Entergy has blacklisted auditors for less than this. The utility industry is smaller than people think and word travels fast. One questionable case can follow you for years. I'd walk away from this one Tom.
Alabama Power actually has a specific form for disclosing these relationships, but they strongly discourage auditors from taking cases with any family connections to employees. The liability exposure is just too high for everyone involved.
Thanks everyone - you've confirmed my gut feeling. I'll politely decline and refer them to another qualified auditor who doesn't have this conflict. The potential $8,000 fee isn't worth risking my professional standing. Appreciate the guidance.
Smart move Tom. I can recommend a good auditor in Syracuse if you want to help your potential client out. Someone clean who can handle RG&E commercial accounts without any conflicts.
Good outcome. The fact that you even thought to ask shows you're approaching this business the right way. Too many auditors would have just taken the money and worried about consequences later.
Tom made the right call here. We've seen several cases over the years where auditors got in trouble for not properly managing conflicts of interest. The CUBA certification is valuable because utilities trust it - we all need to protect that reputation. Better to err on the side of caution every time.