The article presents a study which evaluated the position of the Committee of Professional Ethics of the American Institute of Certified Public Accountants on management services. This evaluation involved both a priori and an empirical analysis of two contentions. The first contention states that potential conflicts of interest between management consulting and the factual independence of a certified public accountant (CPA) are limited to two situations. The second contention states that acting as a management consultant does not impair the CPA's appearance of independence; that is, it does not suggest to a reasonable observer a conflict of interest.

Acting as a management consultant does suggest a conflict of interest to 33% of the reasonable observers. Thus, the contention of the American Institute of Certified Public Accountants' Committee on Professional Ethics that the rendering of management advisory services would not suggest to a reasonable observer a conflict of interest is challenged by the findings of this study. Whether this challenge is serious depends, of course, on one's value judgment. It is inevitable that there will be some doubt with respect to complete independence whenever a Certified Public Accountants (CPA) provides both management services and auditing services to the same client. Surveys generally show, however, that respondents are relatively free with their praise and are loath to criticize. Therefore, in the opinion of this investigator, criticism reflected in this survey by the substantial group of third parties who do see a conflict of interest represents a serious factor about which the public accounting profession should be concerned. The importance of independence to the CPA is so great that the profession cannot afford to ignore a finding to the effect that one third of the best informed users of CPAs' audit reports are in doubt about his independence as a result of his management consulting activities.