The downside of auditor independence

Recall that Sarbanes-Oxley prohibited an audit firm from providing both internal audit work and external audit work to the same client. The conflicts of interest were obvious. Many also agreed with the large prohibitions on consulting services delivered to tax clients. But three researchers--Douglas Prawitt and David Wood, of Brigham Young University, and Nathan Sharp, of Texas A&M University--have generated some data that show there were lots of efficiencies to be gained by having a single company do both.

Not everyone agrees, of course. It's a moot point in many ways. No one is pressing for a repeal of this aspect of the law, CFO.com notes. But it is interesting, especially in light of AS5's avowal of management work as a guide for auditors.

For more:
- here's the article

Related Article:
Conflicts of interest news from FierceSarbox