A public accounting firm that performs auditing services as well as management consulting services for the same company creates ______.
A) a better reputation
B) an increase in confidence
C) a conflict of interest
D) higher revenues

Question

Quizplus · Accepted Answer

When a public accounting firm performs both auditing services and management consulting services for the same company, a conflict of interest arises. This is because the firm may be more lenient in their auditing to maintain a good relationship with the company and the consulting services may impact the objectivity of the audit. This is why the Securities and Exchange Commission (SEC) has put in place regulations to prevent this type of conflict of interest.

A Public Accounting Firm That Performs Auditing Services as Well