By prohibiting accounting firms from providing both auditing and consulting services to the same corporate clients without permission, the Sarbanes-Oxley Act is attempting to eliminate
A)conflicts of interest.
B)cronyism.
C)reporting transparency.
D)corporate espionage.
E)dual reporting.

Question

Quizplus · Accepted Answer

The prohibition of accounting firms from providing both auditing and consulting services to the same corporate clients without permission aims to eliminate conflicts of interest. This is because if the same firm provides both services, they may prioritize consulting over auditing to maintain their relationship with the client, potentially compromising the independence and objectivity needed for auditing. The act aims to ensure that firms are not influenced by potential consulting revenue when providing audit services.

By Prohibiting Accounting Firms from Providing Both Auditing and Consulting