Explore BrainMass

audit engagements

Should accountant take audit engagements from a client that they do other work for?

Solution Preview

Hi there,
<br>No, they should refrain from taking on any other engagements that might alter their ability to provide an unbiased audit opinion. Look at what happened with Arthur Anderson and Enron. AA was receiving tens of millions of dollars in revenues from Enron for performing ancilliary consulting services. When it came to performing an independent audit, AA was unable to do so because if they were to give a negative audit opinion, then they would lose a lot more revenues from the consulting side of their business.
<br>Here's some additional info that might prove to be helpful to you:
<br>Consulting and auditor independence
<br>With Terry Jost, vice president for business development for the Americas, Cap Gemini Ernst & Young
<br>By Jon Surmacz
<br>March 21, 2002 - Terry Jost, vice president for business development for the Americas at Cap Gemini Ernst & Young offers advice on consultants in the wake of the Enron-Arthur Andersen scandal.
<br>How common is it for one company to provide both auditing services and business/technology consulting?
<br>All the Big Five consultancies were created as a result of an additional service from the audit and tax organizations, so it has been very common. We recognized that at Ernst & Young and that's why ...