Which statement best explains why the Securities and Exchange Commission (SEC) has concerns about the independence of an audit firm when its audit client owes a substantial amount of fees to the firm?
1) The audit firm may have a financial interest in the outcome of the audit, which could compromise its objectivity and independence.
2) The audit firm may prioritize collecting the outstanding fees over conducting a thorough and unbiased audit.
3) The audit firm may be influenced by the audit client's financial situation and may not report any irregularities or issues accurately.
4) The audit firm may face pressure to provide favorable audit results in order to maintain the client relationship and ensure future business.