Final answer:
Patrick Brown is concerned with 'competing incentives' as he requests audited financial statements to ensure the reliability of financial information from his largest customer, under pressure to meet operating goals.
Step-by-step explanation:
Patrick Brown's request for audited financial statements from his largest customer is primarily driven by competing incentives. Companies are often under pressure to meet financial targets, which may lead to biased reporting or an overstatement of financial health. Patrick is concerned that the management might be incentivizing such practices to reach their operating goals, which could compromise the reliability of the financial information provided to him.
An audit can provide an independent and objective verification of the company's financial statements, ensuring reliability and reducing the risk of financial misstatement. Patrick's concern suggests he needs assurance on the veracity of the financial statements so that he can make informed credit decisions regarding the customer's ability to fulfill their financial obligations.
The audited financial statements serve as an important tool in assessing creditworthiness and managing financial risk, especially when dealing with a large customer that significantly impacts Patrick's business.