The external audit is intended to enhance the credibility of the financial statements of a firm. Auditors are supposed to verify and certify the quality of financial statements issued by management. However, over the last several decades, a substantial and increasing portion of an accounting firm’s total revenues have been derived from consulting services of various kinds. Provision of these nonaudit services can potentially hurt the quality of an audit by impairing auditor independence because of the economic bond that is created between the auditor and the client. With the revelation of accounting problems in increasing numbers of prominent companies, potential conflicts of interest generated by the lack of.
