The ethics of professional skepticism in public accounting: How the auditor-client relationship impacts objectivity

The public accounting industry is most critically defined by the relationship between auditor and client. Historically, the investing public has relied upon audited financial statements when making investment decisions and they have leaned on the accounting profession to confirm the accuracy and completeness of this financial information. As a result, external auditors are perceived as the "gatekeepers" in protection of the investing public.;Beyond the sphere of public accounting, the accounting profession as a whole was once considered as the bearer of the highest standards of integrity among the professional services fields. The regard that this profession enjoyed, however, deteriorated in the wake of a succession of unethical, high profile scandals, in the first years of the twenty first century. There was growing concern amongst public experts that auditors were performing perfunctory reviews and approvals of client financials based on their chummy relationships with management and beginning to neglect their duties to shareholders. Auditors who are willing to compromise their independence or overlook key information in order to retain a client immediately cause the objectivity of the auditor and the accuracy of the client's financial statements to become suspect.;The public accounting industry prides itself on the importance and necessity of professional values, ethics, independence, objectivity, and professional skepticism. Ethical codes established by field are intended to be designed to guide practitioners in serving the general public, clients, and employers. However, inappropriately close relationships have led to questionable choices. In practice, actively trying to maintain relationships may be a more powerful explanation of behavior than an individualized personal attachment to justice. Internal sanctions like guilt and shame may not be effective enforcement mechanisms when one has the social pressures and personal influences of colleagues to contend with. An understanding of the rules and norms that dictate the appropriateness of relationships can assist in comprehending how personal relationships influence an individual's personal ethics. In an industry where building strong relationships and establishing confidences with clients is a competitive advantage for success, how do we account for the influences of personal attachments and preferential treatment on professional bias and skepticism? With such an emphasis on social interactions and personal relationships in the public accounting field, these associations can essentially redefine the professional's rationalization of ethical choices.