The factor of client relationship that creates a power imbalance in favor of the client is money. When partners in the audit firm are compensated according to their number of client, partners are more likely willing to do almost anything to keep their client happy. The independence of auditor is impairing in front of consulting fees, and interpretations of GAAP will be push to the limit to satisfy client’s need. Due to this power imbalanced in favor of client, lots of company went in to bankrupt, each in companies where financial statement misrepresentation had taken place, billions of investment and retirement dollars were lost, and the perception that auditors were not independent from their clients were formed. Finally in 2002, congress passed the Sarbanes/Oxley Act in response to massive accounting scandals. In particular to the problem of the unbalanced relationship in favor of the client, Sarbanes requires boards of directors be independent of organization and exercise oversight over management and the audit function. Further, the board of directors through its audit committee is the “client” of the public accounting firm. The audit committee must have at least one person who is a financial expert, other members must be knowledgeable in financial accounting and control, and must be comprised of “outside” directors, not members of management or have other relationships with the organization. Meanwhile, they have oversight responsibilities over the internal audit and financial reporting process, be apprised of all significant accounting decisions made by management and changes in accounting systems and system control. On the audit company side, audit engagement partners, as well as other partners and managers with significant roles in the audit, must be rotated o ...