It appears that auditors (and tax professionals alike) are pressured or strongly influenced by their clients to overlook certain mistakes (whether intentional or not) in order to help their clients achieve the numbers they want or in the case of taxes, pay less taxes. The problem seems to lie in the inherent nature of the client service relationship between an auditor and a tax professional with their clients. Audit firms are compensated for their services by the very same people who they are supposed to audit. Yet, the auditors' loyalty are supposed to be with the public and not with their clients.

However, the clients are the ones paying the bills. In my opinion, many of the conflicts discussed in the cases we have evaluated thus far, arrive from this very set up.

1. Can you propose an alternate structure?

2. Who would bear the costs in terms of audit fees in this structure?

3. Are they any other costs/benefits with the current setup and the setup you are proposing? What obstacles would have to be overcome to achieve a better set-up?