Public Accounting

As we know public accounting is a highly competitive, service-oriented business. Publicaccounting firms have a vital interest in pleasing their clients by providing value andexcellent customer service. In order to provide excellent client service, partners maysometimes feel pressure to avoid taking tough stands on a client’s accounting choices. Orthey may run the risk of losing clients to other accounting firms. On the other hand, publicaccounting firms are in the market to generate profit. As owners of a public accounting firm,partners are indeed interested in the financial performance of the firm because, among otherreasons, partner income and bonuses depend on annual revenues. Partners are oftenresponsible for revenue targets each year and they attempt to reach these targets. Oneinteresting note is that audit fee revenues from such companies as Enron are very lucrative—Andersen’s audit fee at Enron was about $48 million per year.Finally, some argue that other services to auditing clients may hold the auditors to beobjective and take tough stands on questionable accounting practices., it is interesting to notethat in 2000 Andersen generate more from Enron in consulting fees than in auditing fees,with consulting fees topping $50 million in that year alone.Finally, The Sarbanes-Oxley Act of 2002 now makes it illegal for external auditors to perform internal auditing and a variety of management consulting services for the same company. which makes it