What is the impact on independence if an auditor accepts both litigation consulting services and expert witness services for a client?

Independence is a core ethical principle for auditors, grounded in the need to maintain objectivity and impartiality while conducting audits. When considering the impact of providing both litigation consulting services and expert witness services for a client, it’s critical to evaluate the nature of these services and how they may influence an auditor's independence.

Accepting expert witness services generally poses a higher risk to independence because the auditor may be expected to advocate for a position in a legal context, which can compromise their objectivity. This role transitions the auditor from a neutral party solely providing unbiased financial insights to one who may craft arguments on behalf of the client, potentially leading to a conflict of interest.

On the other hand, litigation consulting services can sometimes be seen as advisory in nature, often not requiring the auditor to take a definitive side in legal disputes. However, these services can also raise concerns about independence if they entail significant involvement in the management’s strategies or operations that could later be evaluated during an audit.

In this context, the statement that litigation consulting services will not impair independence while expert witness services will is accurate because the latter engagement carries a greater risk of diminishing perceived and actual independence. Hence, while both services may raise independence issues, expert witness responsibilities specifically lead auditors closer to scenarios