Perceptions of the Independence of the Auditor.

Abstract The article focuses on the independence of auditors. Public accountant occupies a unique position in the business community when he or she performs an audit for a client. The accountant is engaged and paid by the client; however, he or she primarily serves other interested third parties such as present and prospective investors, creditors, employees and governmental agencies. The auditor is called upon to attest to the financial statements and to safeguard interests of these various parties. Even though the third parties do not employ the auditor directly, they are entitled to a fair and impartial report of the enterprise. Objectives and interests of management's preparation of the financial statements may at times be in opposition to objectives and interests of those persons who use statements. The independent status of the auditor gives value and significance to audit reports. This paper delves more deeply into the concept of independence by examining particular client-auditor relationships to determine how an informed third party perceives the auditor's independence.