The accounting scandals of the early 2000s led many people to question the legitimacy of:
A) ratio analysis as a means of evaluating the performance of a firm.
B) relying on the recommendations of tax accountants to find ways of reducing the taxes owed by a business organization.
C) publishing financial information about a firm on the Internet.
D) allowing an accounting firm to do both consulting and auditing work for the same company.

Question

Quizplus · Accepted Answer

The accounting scandals of the early 2000s, such as Enron and WorldCom, demonstrated that the practice of allowing an accounting firm to do both consulting and auditing work for the same company created a conflict of interest that compromised the integrity of the financial reporting process. This led to new regulations and restrictions on the provision of consulting services by auditors to their audit clients.

The Accounting Scandals of the Early 2000s Led Many People