Abstract This article presents comments of the author on the paper "The Auditor-Firm Conflict of Interests: Its Implications for Independence," by A. Goldman and B. Barlev that was published in the October 1974 of the periodical "The Accounting Review." In this paper, Goldman and Barlev present an interesting discussion of audit independence. Their model of independence is predicated on the assumption that an auditor's behavior when subjected to pressure from a client to produce a report that is not based solely on professional standards is a function of the relative powers of the parties to the conflict. In a conflict between the auditor and the client the authors contend that the client's power is based on management's ability to hire the auditing firm, dismiss the auditing firm, or determine the auditor's employment conditions. Basically, they are proposing that the client's power over its auditor is economic--the power to remove the auditor and thus affect the economic well being of the firm. They contend that non-routine services for the primary benefit of the client results in the least power over the auditor.
Stephen E. Loeb (Wed,) studied this question.
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