Final answer:
Relationships between an auditor and another party might compromise professional judgment when there is a conflict of interest.
Step-by-step explanation:
In business, relationships between an auditor and another party might compromise professional judgment when there is a conflict of interest. This occurs when the auditor has a financial or personal interest in the outcome of the audit, which can undermine their objectivity and independence.
For example, if an auditor has a close personal relationship with an executive of the company being audited, they may be more inclined to overlook financial irregularities or manipulate the audit findings to favor the executive.
To mitigate this risk, auditors are required to adhere to professional codes of conduct and remain independent from the parties being audited. They should not have any personal or financial ties that could potentially compromise their judgment.