Non-Audit Services and Conflict of Interest

Non-audit Services and Conflict of Interest
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Non-audit Services and Conflict of Interest
Sometimes, audit firms may earn a significant portion of their revenue from non-audit services (NAS), such as consulting or tax services. Concerns have been raised that providing non-audit services to the same clients may create a conflict of interest that could compromise the independence and objectivity of the audit function. Such situations create an incentive for audit firms to prioritize their relationship with the client and the revenue from non-audit services over their obligation to provide an objective and independent audit. Various scandals such as Carillion in the United Kingdom and Enron in the United States among others have been attributed to such unethical issues in auditing firms.
However, according to Quick (2022) the nature of the NASs has been found to be a significant factor in terms of creating conflict of interest...