Kerry is a senior auditor and a member of the team auditing a long-standing client, the listed public company Darcy Industries Ltd. Darcy Industries has just announced a takeover bid for Blacklight Ltd. Kerry has a substantial shareholding in Blacklight through his self-managed superannuation fund. Kerry did CHAPTER 2 Ethics, legal liability and client acceptance 75 not know about the takeover bid until he read it in the paper over breakfast one morning. Kerry’s wife is very worried because she knows that Kerry must abide by strict rules laid down by his audit firm about holding shares in client companies. She asks him if he will be dismissed because of this.

Required

Advise Kerry’s wife of the options available to Kerry to avoid any conflict of interest, and thus avoid being dismissed from the audit firm.