Question

The clientele of black & company's audit practice consists primarily of privately-owned small and middle market companies. recently, the firm won two audits of public companies, including one issuer. from an independence perspective, what effect will these new client engagements have on black & company?

Answer 1

Black & Co. will have to comply with SEC and PCAOB independence rules

Answer 2

By winning two new clients in form of publicly owned companies black & company increase its chances to open its services to a broader market. If the audit is successful and the new clients are satisfied black & company could get referrals which would lead to a growing clients base and therefore an increase in profits.