Final answer:
No, the CEO and CFO of a company cannot serve as both auditor and consultant due to the conflict of interest that arises. The given statement is false. Option 2
Step-by-step explanation:
No, the CEO and CFO of a company cannot serve as both auditor and consultant. This is because the role of an auditor is to provide an independent and objective assessment of a company's financial statements and internal controls, ensuring their accuracy and compliance with accounting standards.
However, if the CEO or CFO were to serve as the auditor, there would be a conflict of interest as they would be auditing their own work and potentially compromising the objectivity of the audit.
The same conflict of interest applies to the role of a consultant. Consultants are typically hired to provide expert advice and guidance to improve a company's performance or solve specific problems. If the CEO or CFO were to also serve as the consultant, they would be advising themselves, which could lead to biased recommendations and a lack of objectivity.
To maintain the integrity of financial reporting and independent advice, it is important for the roles of auditor and consultant to be separate from the CEO and CFO positions. Option 2