Most public accounting firms perform consulting services for their clients. Additionally, many CPA firms have now developed software products that they sell to clients. In some cases, CPA firms have even become selling agents for particular brands of software. In at least one case, a CPA firm practicing as a professional corporation owned a computer software and hardware store.

Required:

a. In what ways might the performance of consulting services affect the independence of the auditor? What actions might be taken by the profession and the individual CPA firm to mitigate potential problems affecting audit independence when a firm provides consulting services?

b. Would selling software products be the same as receiving a commission on a product?

Explain.

c. Does owning a computer store constitute a conflict of duties for a public accounting firm? Explain. How does the public accounting profession determine which types of activities would constitute a conflict of interest for a public accounting firm?

d. Does the amount paid to an audit firm for non-audit services really matter as long as the services are performed by non-audit personnel?