Heightened by notorious accounting scandals two decades ago involving Enron, WorldCom, Arthur Andersen accountancy, and many others, suspicions have persistently dogged corporations whose auditors execute consulting expert services for them in addition to main accounting features. And probably no added expert services have evoked extra problem than those associated to taxes.
Indeed, regulatory actions have probable established an environment that enthusiastic firms to cut down or reduce tax service fees compensated to audit corporations to bolster the appearance of independence in their auditor-client marriage, in accordance to a new study in Accounting Horizons. But the evidence is mixed on no matter whether the provision of tax expert services in reality compromises auditors’ independence — and thus diminishes the trustworthiness of their client firms’ economical reporting.
The new study investigates a associated dilemma that has acquired sparse interest: What is the economical impact on firms that fall or greatly cut down